T

he Industry Ministry is discussing the possibility of providing businesses with soft loans to enable them to pay Idul Fitri holiday bonuses (THR) as the economic downturn is forcing companies to withhold or cut the bonus payment.

The ministry is in discussion with the central bank and the Financial Services Authority (OJK) over the matter, Industry Minister Agus Gumiwang Kartasasmita told journalists during an online press briefing on Tuesday.

“We are preparing a soft loan scheme for hard-hit industries so they can pay THR to their employees in full,” Agus said.

The COVID-19 pandemic has disrupted business activity as consumers stay at home to curb the virus spread, resulting in weakening demand. Companies across the country, mainly those operating in the hospitality sector, have furloughed or laid-off employees.

Indonesia usually sees household spending, which accounts for more than half of economic activity, peak during Ramadan and Idul Fitri, as companies and the government pay bonuses to employees and civil servants, respectively.

While some companies have struck a deal with their workers or unions to pay their THR in installments, Agus said companies that could not come to an agreement with their workers could apply for the loans.

“During a dialogue with industrial company associations, the companies said they were willing to pay their workers’ THR even though they had to take loans out from banks,” the minister said said.

Previously, Coordinating Economic Minister Airlangga Hartarto reminded businesses that they were obligated to pay THR, despite the economic pressures brought about by the pandemic.

“President Joko ‘Jokowi’ Widodo has discussed the business sector’s readiness to pay THR and [we remind] the private sector that paying THR is mandatory,” Airlangga said during a virtual press briefing on April 2.

Airlangga said that the government had allocated Rp 405.1 trillion (US$ 25.1 billion) to fight COVID-19, as stipulated by Regulation in Lieu of Law (Perppu) No.1/2020 on state financial policy and financial system stability for handling COVID-19.

He added that the government would expand fiscal stimulus eligibility beyond the manufacturing sector.

“We will support more business sectors, not just manufacturing, but others that have been affected, such as tourism and transportation,” Airlangga said.

The Indonesian Employers Association (Apindo) has submitted on April 6 a proposal to the Office of the Coordinating Economic Minister and the Workers Social Security Agency (BPJS Ketenagakerjaan), asking to postpone the payment of THR for a year due to the COVID-19 crisis.

Meanwhile, the executive directors and commissioners of 110 state-owned enterprises (SOEs) will not get their THR for Idul Fitri holiday this year, the government has decided, in order to minimize the impacts of the coronavirus epidemic on the Indonesian economy.

The SOEs Ministry has instead encouraged the companies to donate the funds intended for the executives’ THRs to COVID-19 relief efforts.

The companies subject to the decision include power company PT Perusahaan Listrik Negara (PLN), Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) and Bank Tabungan Negara (BTN), as well as the State Logistics Agency (Bulog) and forestry firm Perhutani.

“We encourage state-owned enterprises to apply cost allocation to channel the THR into activities or donations related to COVID-19 relief efforts,” the SOEs Ministry said in a letter signed by SOEs Minister Erick Thohir on April 17. The ministry also urged the SOEs to apply the same policy on their subsidiaries.

The letter also instructs SOEs directors to report the policy implementation to the deputy minister that oversees their company.

The SOEs minister’s aide Arya Sinulingga earlier said on April 7 that all employees of SOEs, excluding executives, would receive their THRs this year, as reported by kompas.com.

The policy is in keeping with the government’s decision to pay holiday bonuses to all civil servants at the echelon III level and below, but not high-ranking officials, Finance Minister Sri Mulyani Indrawati wrote on her Instagram page.

“As a form of concern regarding the COVID-19 pandemic, government officials from the President, Vice President and other [senior] officials, along with echelon I and II civil servants and other functional staff, will not receive their THR,” she posted.