Two government regulations on the country’s financial policy were adopted to deal with the health crisis:
- The Government Regulation in Lieu of Law No 1 of 13 March 2020 (Perppu 01/2020) on “The State Financial Policy and Stability of Financial Systems for the Management of Corona Virus Disease 2019 (Covid-19) and/or Encounter the Threats to National Economy and/or Stability of Financial Systems”. The total budget for this huge financial program is around 405.1 trillion Rupiah or approximately 24.8 billion USD [1].
- The Presidential Regulation No 54 of 3 April 2020 (Perpres 54/2020) on “The Revision of Allocation and Details in the Income and Expenses of the State Budget 2020″. The spending will go to various policies designed in view to mitigate economic effects of the COVID-19 pandemic, including an allocation of 8.6 trillion Rupiah or approximately USD 526.6 million towards a previously announced 6-month exemption from income taxes for workers with an annual income of up to 200 million Rupiah or approximately 12,262 USD in the manufacturing industry sector. Moreover, budgets of several ministries have been reduced by 97.42 trillion Rupiah or approximately 5.98 billion USD, except the leading Ministry in this crisis, the Ministry of Health, that have their budget increased up to 76 trillion Rupiah or approximately 4.7 billion USD, and of the Ministry of Education and Culture, increased up to 70 trillion Rupiah or approximately 4.3 billion USD.
Several measures have been adopted in the economic, social and commercial sectors of the country to support the population addressing the crisis including:
- The simplification of the existing rules governing prohibitions and restrictions on imports and exports.
- Specific measures to help micro, small and medium-sized enterprises (MSMEs), including: (i) restructuring and acceleration of the credits program which will be oriented to a ceiling-free mechanism with a credit granting up to 10 billion Rupiah or approximately 613,121 USD; (ii) a new payment scheme more flexible and more accessible particularly for regions highly affected by the crisis, and that will be based on a long-term period; (iii) small enterprises and micro-enterprises will be included into the social assistance program so that they can receive additional aids such as the provision of staple food. The budget for these measures is estimated at 150 trillion Rupiah or approximately 9.2 billion USD.
- The adoption of a number of measures with the purpose to help the most deprived persons such as providing logistical aid and staple food 25 trillion Rupiah or approximately 1.5 billion USD.
- The exemption of electricity costs for 3 months for the 24 million customers with 450VA group, and a 50% payment reduction for the other 7 million customers of 900VA electricity.
- Additional benefits in the field of real estate sector for low-income people.
- In tax matters, certain taxes will be exempted, such as those relating to 19 specific sectors in the field of imports; other taxes will be substantially reduced by up to 30%. Companies heavily affected by the health crisis will be able to ask for the right to defer their interest payments. The total budget for tax measures is estimated to be 70.1 trillion Rupiah or approximately 4.3 billion USD.
- To further support Indonesia’s economy addressing the covid-19 crisis, the government issued three jumbo global bounds series with a total value of USD 4.3 billion. The main purpose of these bonds is to maintain financing and increase foreign exchange reserves for the Indonesian Central Bank or Bank Indonesia. As a result, Indonesia became the first country in Asia to issue sovereign bonds since the Covid-19 pandemic occurred.
- In the April 2020 edition of the World Economic Outlook report, the International Monetary Fund(IMF) estimates Indonesia’s economic growth this year is about 0.5 to 1% although Asia’s economic growth was deeply depressed since the beginning of the year due to the Covid-19 pandemic. But, according to IMF, Indonesia’s economic growth is projected to increase next year with an estimated 8.2%.
The Indonesian government has issued three regulations as part of a possible implementation of a large-scale lockdown in the country but on a regional basis (Pembatasan Sosial Berskala Besar or PSBB) aimed at reinforcing the effects of the social distancing policy already applied since 15 March 2020:
- The Government Regulation No 21 of 31 March 2020 (PP 21/2020) on “Social Distancing on a Large Scale (PSBB) in Order to Accelerate the Covid-19 Crisis Management”. Thus, lockdown on a local basis or large-scale social restrictions can be applied at the request of a local administration (governor or mayor) to the Ministry of Health.
- The Decree no 9 of 3 April 2020 of the Ministry of Health (Permenkes 9/2020) on “Guidelines for the implementation of Social Distancing on a Large Scale (PSBB) for the Acceleration of the Covid-19 Management”. According to the decree, PSBB implementation involves among others: the closure of schools and workplaces encouraging work from home; restrictions related to religious activities; limitation of activities in public areas; limitation of sociocultural activities; restrictions on modes of transport; restrictions on other activities related
to defence and security aspects. Following the adoption of these two regulations, the Indonesian Ministry of Health approved on 7 April, the request of the Governor of Jakarta to implement lockdown in Jakarta. Lockdown is being applied to the Indonesian capital for 14 days from 10 April 2020. Five other lockdown requests are currently being reviewed by the Ministry of Health. - The Presidential Decree No 12 of 13 April 2020 (Keppres 13/2020) on the “Determination of Non-Natural Disaster of the 2019 Virus Disease (Covid-19) Spread as a National Disaster” clearly states the non-natural disaster caused by the corona virus disease 2019 or Covid-19 as “a national disaster” and reiterates the important role of the Task Force Steering Council in handling the Covid-19 pandemic.
For more information, click Summary Government Measures amid the Pandemic
