E

conomic analysts have been underwhelmed by the government'€™s newly launched economic policy package, regarding it as lacking the fresh solutions needed to address the ongoing economic slowdown.

Bank Central Asia (BCA) economist David Sumual described the package as an anticlimax as many had expected it to be more innovative. '€œIt doesn'€™t really offer many new incentives or breakthrough policies. A lot of them are already in place or have been discussed before,'€ he said on Thursday.

David argued that most of the policies contained in the package '€” which was introduced by President Joko '€œJokowi'€ Widodo in a televised press conference on Wednesday '€” aimed at improving the business climate, such as by cutting red tape, would take time to yield results.

'€œWhat we need more now is prompt solutions to address the decline in people'€™s purchasing power. We must admit that we do have a problem there and that a deterioration is already taking place,'€ he said.

Central Statistics Agency (BPS) data showed a drop in consumer spending, which traditionally makes up about half of the gross domestic product (GDP). Consumer spending grew 4.99 percent by the end of the first half of the year, the lowest figure since 2011, as the country'€™s economy slowed to a six-year low level of 4.7 percent.

The government, according to the package, is planning to boost consumer spending by providing incentives to low-income people, especially villagers and fishermen.

Part of the move includes accelerating village funds disbursement through a cash-for-work program, providing more rice to the poor, strengthening the role of cooperatives such as village trading houses and providing liquefied petroleum gas (LPG) converter kits '€“ which is expected to help improve fishermen'€™s welfare by slashing their fuel costs.

David warned that the government must first provide training and assistance to villagers for the cash-for-work program and that could potentially delay the full realization.

The policy package contains amendments of 89 regulations across different sectors, such as liberalizing the tourist sector by relaxing foreign tourist visa requirements, opening up the property sector by allowing foreign ownership of apartments worth more than Rp 10 billion (US$689,400) and providing legal certainty for miners by allowing earlier application for contract extensions.

Economist Drajad Wibowo said the package was no head-turner, taking into account Thursday'€™s market reaction to the package.

The rupiah, the second-worst performing currency in the region, continued its losing streak, weakening 0.5 percent to end at 14,332 per US dollar from the previous day. Benchmark stock index the Jakarta Composite Index (JCI) closed weaker as well at 4,343.26, down 0.1 percent.

'€œThe package has not provided investors with a psychological boost, it has not made them stop and turn. It seems that they are still waiting for the whole package to be released, to see if the details are what they expect,'€ he said.

The second batch of the package will be announced later this month and the third next month.

Drajad, however, applauded the government'€™s efforts, saying that massive deregulation was needed. '€œThere is over-inspecting and over-supervising, [resulting in] regulations with multiple interpretations,'€ he added.

Bank Danamon economist Dian Ayu Yustina acknowledged that the package did not seem to pack a punch and that the contents appeared too general, including the simplification of export financing and the National Interest Account, as well as the plan to encourage industrial estates outside Java.

'€œThis is what happens when we have so many structural issues. They take time to resolve and we just have to be patient,'€ she said.

Coordinating Economic Minister Darmin Nasution defended the government'€™s policy, saying that there would be more packages to be issued. '€œSo don'€™t expect that one package will immediately change things,'€ he said.

The Indonesian Chamber of Commerce and Industry (Kadin) welcomed the economic policy package but demanded rigid action plans and full implementation of the policy. Kadin chairman Suryo Bambang Sulisto expected the government to provide more extensions for firms that failed to meet deadlines for debt payments owing to the economic slowdown to avoid more lay-offs.