Indonesia outlines stimulus package

JAKARTA: Indonesia has prepared a stimulus package worth 10.3 trillion rupiah ($742.6 million) to protect its economy from the impact of the coronavirus outbreak in China, ministers said yesterday.

The announcement came less than a week after Indonesia’s central bank cut interest rates for a fifth time since May, while trimming its 2020 growth outlook over the virus epidemic.

Growth in Indonesia’s economy had already slowed to 5.02% in 2019, its lowest in three years, amid a global slowdown.

Finance Minister Sri Mulyani Indrawati warned the virus outbreak in China, Indonesia’s top trade partner and a major source of investment and tourism, could further weaken growth to 4.7% in 2020, below the government’s target of 5.3%.

The stimulus package that Indrawati laid out includes a 30% increase in subsidies for basic needs for 15.2 million poor households for six months to support consumption. That measure that would cost the government 4.6 trillion rupiah.

A state property financing programme would be expanded by 1.5 trillion rupiah and expected to cover financing for 175,000 homes.

Airlines and travel agents will be given 443.4 billion rupiah to provide 30% discounts on air fares for some seats for three months. Another 298.5 billion rupiah will be used as an incentive to bring in foreign tourists to visit one of Indonesia’s 10 most popular destinations.

Restaurants and hotels will be exempted from some taxes paid to regional governments for six months, with the central government providing 3.3 trillion rupiah cover for the shortfall in regional budgets.

The government will also convert 147 billion rupiah of fiscal transfers that had not been earmarked to programmes to support tourism.

In addition, state energy company Pertamina and two state airport operators would be ordered to cut jet-fuel prices and airport charges for three months.