Indonesia rolled out a Rp10.3 trillion (US$735.71 million) stimulus package in an effort to cushion the blow of the coronavirus outbreak on its economy - Photo by President Office

JAKARTA (TheInsiderStories) – Indonesia rolled out a Rp10.3 trillion (US$735.71 million) stimulus package in an effort to cushion the blow of the coronavirus outbreak on its economy. The stimulus is channeled to a number of economic sectors affected by the virus and ensures that people’ purchasing power is maintained.

According to finance minister, Sri Mulyani Indrawati, the outbreak, an Indonesia’ top trade partner and a major source of investment and tourists, could further weaken Indonesia’ growth to 4.7 percent in 2020 from 5.02 percent in 2019.

While, deputy minister, Suahasil Nazara, added, this fiscal stimulus aims to ensure Indonesia’ economic growth does not come under pressure amid the prospects of a global economic slowdown. The stimulus in the tourism sector, for example, is expected to balance the potential for decline due to the significant reduction in the number of foreign tourists in this year.

The stimulus is in the form of discounted airline ticket prices for 10 major tourist destinations, incentives for airlines and travel agents that bring tourists, to the policy of hotel and restaurant tax-free schemes for a certain period in these 10 tourist destinations.

“So we hope that economic activity does not go down, the economy continues to spin like hotels can still operate, airlines can also continue to operate and so that we hope it can replace the potential for economic decline that impacted Indonesia,” he stated.

On Tuesday, Indonesian President Joko Widodo asked his staff to accelerates the disbursement of government spending to boost the domestic economy. The decision has been made after the government monitored the impact of coronavirus outbreak to the global economy.

He also instructed the officials to immediately execute the village fund program, social assistance and protection programs, also other government-intensive programs to move the economy.

The Head of State also instructed his staff to immediately execute social assistance and protection programs such as the Hope Family Program and other government-intensive programs. The government, said President, will decided further another steps or fiscal policy that will be taken to boost the economy, both in terms of consumption and investment.

“I also ask the steps to reduce the current account deficit and our trade balance is carried out effectively so that we can suppress the imports,” he told the ministers a the meeting.

One sector that quite affected by the outbreak, according to him, is the tourism sector. To helped the industry, the government also aimed to boosting the tourism sector, especially in Bali, North Sulawesi, and the Riau Islands by giving a stimulus.

Related to this, the President instructed the domestic tourism industry to maximize and grow the tourism potential of Meetings, Incentives, Conferences and Exhibitions(MICE). Tourists from China who are one of the biggest contributors to foreign tourists in Indonesia are experiencing a decline after the virus outbreak.

Earlier, Indrawati, warned the coronavirus effect could harm Indonesia and global economy. Based on her calculation, slowing demand from China will make commodity prices fall and the countries whose economies depend on commodity exports such as Indonesia will suffer.

“So if China’ economic growth fell by 1 percent, it would affect the Indonesia’ economic growth by 0.3 – 0.6 percent,” she rated.

indrawat also sees the second world largest economic growth could drops by 1 percent amid the epidemic. Indonesia, said the minister, must be vigilant because of China’ slump due to the corona virus and will bring the tourism sector sluggish. Chinese tourists account for 13 percent of the total number of tourists entering the country.

President himself saw the potential for exploiting export market niches in other countries that had previously imported a lot from China. Likewise, this has created momentum for the import substitution industry in the country to increase production and develop further.

US$1: Rp14,000

by Linda Silaen, Email: linda.silaen@theinsiderstories.com