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‘We're considering all options’: Government mulls income tax relaxation to counter virus impacts
The government is finalizing a second stimulus package dedicated to relaxing export and import regulations.
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Finance Minister Sri Mulyani Indrawati (center) gestures during a visit to the Gaikindo Indonesia International Auto Show (GIIAS) on July 24, 2019. (JP/Rachmadea Aisyah)
The government is putting together a second stimulus package to counter the negative impacts of the COVID-19 outbreak.
“We are considering all options,” said Finance Minister Sri Mulyani Indrawati in Jakarta on Thursday, adding that her side was also mulling the acceleration of tax return payments.
The government previously announced a stimulus package worth Rp 10.3 trillion (US$725 million) to strengthen spending and improve the tourist industry, which are expected to get hit by the spread of the pneumonia-like illness.
Read also: Airlines face $100 billion-plus virus hit, discounts 'wouldn't do any good'
Coordinating Economic Minister Airlangga Hartarto said recently that the government was finalizing a second stimulus package dedicated to relaxing export and import regulations, as the virus had started to disrupt supply chains. He said the second stimulus would be bigger than the first one. He projected the country's economic growth to slow to 4.7 percent in the first quarter.
Indonesia's economy grew 4.97 percent in 2019's fourth quarter, the slowest in three years.
“We are taking into account all sectors, especially those hit [by the outbreak], and the impact [of the virus spread] on their balance sheets and how we can help them: the companies as well as individuals,” Sri Mulyani said.
She said economic disruptions caused by the virus would be more complex than those during 2008 financial crisis and, thus, required certain policy responses.
Sri Mulyani previously said the government was open to expanding the current stimulus to match the one it provided during the 2008 global financial crisis, which was approximately seven times larger than the first coronavirus stimulus package.
Read also: Indonesia to launch second, ‘bigger’ stimulus to cushion virus impact
The government and financial services authority have ramped up efforts to anchor the country’s economy after President Joko “Jokowi” Widodo announced on Monday the first two confirmed COVID-19 cases in Indonesia as investors dumped Indonesian assets.
Bank Indonesia (BI) announced five measures to support the rupiah and Governor Perry Warjiyo later said the central bank saw ample room for both monetary and macroprudential policy easing, as the coronavirus was seen as dragging down economic growth in the first quarter.
The Financial Services Authority, meanwhile, has relaxed rules on credit restructuring for companies affected by the outbreak and opened up the possibility to provide further relaxation.
