The Jakarta Post
The government announced on Friday that it would allocate Rp 120 trillion (US$8.1 billion) from the state budget to stimulate the economy by providing tax incentives and subsidies for workers, businesses and families affected by the COVID-19 pandemic.
The government's second stimulus package, worth Rp 22.9 trillion, includes individual and corporate tax breaks as well as the relaxation of loan disbursement and restructuring requirements.
Finance Minister Sri Mulyani Indrawati said manufacturing workers with incomes below Rp 200 million per year would be exempted from paying income taxes for six months. The government has also cut the corporate income tax rate by 30 percent for six months and deferred import tax payments for six months for 19 manufacturing industries. It will also speed up repayments of overpaid tax without initial audits.
The government also unveiled a non-fiscal stimulus package that includes a reduction in the number of goods prohibited for import and the acceleration of export and import processing and licensing, especially for reputable traders.
In the financial sector, the Financial Services Authority (OJK) announced it would allow banks to issue new “policies to stimulate economic growth, especially for borrowers affected by the COVID-19 outbreak, including MSMEs [micro, small and medium enterprises]”. The policies include the relaxation of credit assessment and restructuring requirements.
“This will not be the last announcement, as the developments have been extremely dynamic. We will assess the situation to mitigate and minimize the impacts. We cannot eradicate the impacts but we can minimize them for corporations and the public,” Finance Minister Sri Mulyani Indrawati told a press briefing in Jakarta.
The announcement came as governments and central banks around the world announce fiscal stimulus and monetary easing policies, following the historic global financial market rout spurred by fears over the COVID-19 pandemic.
The new measures add to the first Rp 10.3 trillion stimulus package announced on Feb. 25 that provided mortgage subsidies for low-income families and fiscal incentives for travel-related industries. The government will also speed up the disbursement of social spending in the first quarter and subsidies for the pre-employment card program this month.
Key elements of the second stimulus package announced on March 13
Fiscal stimulus measures