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Yearender 2020: Govt takes extraordinary measures, passes jobs law as Indonesia falls into recession
“Extraordinary times require extraordinary policies and measures,” Finance Minister Sri Mulyani Indrawati said on April 1 as the government scrambled to rescue the economy and handle the pandemic.
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A worker walks past a skyscraper construction project in Jakarta on April 3. (Antara/Dhemas Reviyanto)
T
he government has created out-of-the-box policies, such as a debt monetization scheme and huge stimulus rollout, as well as expedited passing the controversial Job Creation Law this year in an effort to revive Indonesia’s economy, which has fallen into its first recession in more than two decades because of the COVID-19 pandemic.
“Extraordinary times require extraordinary policies and measures,” Finance Minister Sri Mulyani Indrawati said on April 1 as the government scrambled to rescue the economy and handle the pandemic.
President Joko “Jokowi” Widodo signed on March 31 — weeks after Indonesia’s first two COVID-19 cases were announced — a government regulation in lieu of law (Perppu) that legitimizes a state budget deficit of above the 3 percent legal limit, government bond purchases at auctions by Bank Indonesia (BI), the implementation of a digital tax and corporate income tax cuts, among other policies. They were part of the country’s emergency response to cushion an economy battered by COVID-19.
The government and the House of Representatives also fast-tracked deliberations on the omnibus bill, hoping to cut bureaucratic red tape and jack up foreign investment to create jobs and accelerate economic growth. Policymakers expect the law to revive economic activity and boost growth prospects going forward, despite strong opposition from labor unions and environmentalists.
Read also: Govt expects omnibus bill to improve foreign investment, economic growth in 2021
Indonesia plunged into its first recession since the 1998 Asian financial crisis in the third quarter of this year as the pandemic caused millions to lose their jobs and weakened purchasing power.
