Indonesian govt announces new measures to spur growth

28 Aug '13

2 min read

The Government of Indonesia has announced new measures to spur economic growth and stabilize the weakening rupiah.

The new economic stimulus measures, also aimed at the labour-intensive textile and footwear industries, include relaxation of investment licenses and tax breaks.

“We cannot control external impacts, but we can improve domestic weakening if there is any, so investors will see that the Government is aware and serious and there won’t be panic,” stated Minister of Finance M. Chatib Basri.

As part of the measures to boost exports, the Government will give an additional tax deduction to labour-intensive industries that export more than 30 percent of their total production.

In addition, the Government is also going to make other efforts to prevent termination of employment (PHK) by setting the Provincial Minimum Wage (UMP) in accordance with decent life and labourers’ productivity, the Minister said.

The Government is also going to reduce the consumption and oil and gas import by increasing the import tax of luxury goods by up to 150 percent and promoting biodiesel to reduce oil fuel consumption, he added.

According to Minister, the new policy package aims to maintain sustainable economic growth and suppress current account deficit, which makes rupiah depreciate and Jakarta Composite Index slump.

Mr. Basri further stated that for medium and long term policy, the Government would give incentives in the form of tax allowance and tax holiday to improve investment climate. In addition, the government will also ease the licensing and accelerate revision of Negative Investment List (DNI) as well as encourage investment realization.

The value of Indonesian currency rupiah has depreciated from about 9,700 rupiah to 1 US dollar in May this year to 11,363 rupiah for 1 US dollar on August 28, 2013.

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