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Indonesia Launches Stimulus Package

 JAKARTA: The government launched four economic policy packages in response to the financial sector upheaval in recent days.


Coordinating Minister for Economic Affairs Hatta Rajasa delivered the speech about the policy packages in Presidential Palace, Friday (8/23/2013).


“The first one is related to the effort to improve current account deficit and maintain the exchange rate,” said Hatta.


He elaborated four points that are part of the first package to improve current account deficit and maintain the exchange rate.


First, stimulate exports by providing additional tax deduction for labor-intensive sectors that have export at least 30% of the total productions.


Second, reduce oil imports by increasing biodiesel usage portion in the diesel portion designated as mandatory that will reduce consumption of diesel from imports. “This policy will significantly reduce oil imports,” he said.


Third, set tax level on luxury goods that are imported, such as CBU cars and branded products, to 125% -150% from the current tax level of 75%.


Fourth, the government will take the necessary steps to improve mineral exports by providing relaxation of procedures related to quota.


The second package, Hatta said, is aimed to maintain economic growth and people’s purchasing power. The government will provide incentive by maintaining the fiscal deficit in the range of 2.38%.


According to him, if the deficit is maintained at this safe limit, the government can secure the revised 2013 State Budget funding.


Moreover, he added, the government will also provide additional deduction for labor-intensive industries, relaxation of bonded zone facility restriction for domestic products, removal of VAT book, and elimination of tax on luxury goods for basic products that are not classified as luxury goods.


The third package is associated with maintaining people’s purchasing power and inflation. In this case, Hatta said, the government will change the trade system to a mechanism that relies on price from the current mechanism of quota restrictions. “In order to curb inflation, the government will work together with Bank Indonesia,” he said.


Meanwhile, the fourth package is related to the acceleration of investment. The government will simplify the licensing by making one stop service function more effectively and simplify the types of investment related to licensing. (T06/tw)


[Last update: 2013-08-29 11:22:00]

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