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Indonesian businesses want Rp 625 trn additional stimulus

11
Jun '20
Pic: Shutterstock
Pic: Shutterstock
Indonesian businesses have demanded an additional government stimulus package of Rp 625.1 trillion ($44.6 billion) in working capital to help them cope with the COVID-19 crisis, according to the Indonesian Employers Association (Apindo), which recently said the textile industry has requested the largest amount--Rp 283.1 trillion—in assistance.

“We really hope working capital [will be supplied] for the industry. It is very important,” Apindo chairman Hariyadi Sukamdani said during a virtual discussion on June 5.

Despite the previous stimulus packages, Indonesia’s economy grew by just 2.97 per cent in the first quarter, the weakest in almost two decades. Meanwhile, large-scale social restrictions have also forced businesses and factories to shut operations, according to a report in an Indonesian newspaper.

Hariyadi said that due to economic pressures caused by the pandemic, textile companies had furloughed seven out of 10 workers. The association also demanded the stimulus be disbursed over the course of a year, and requested relaxation of electricity and gas payments to help cut operational costs.

Indonesia’s Purchasing Managers Index (PMI), a gauge of the nation’s manufacturing activities, hit 28.6 points in May, rebounding from 27.5 the previous month, but still far below the 50-point benchmark that indicates growth, according to market consultancy firm IHS Markit.

The government recently announced that the state budget to fight COVID-19 had been increased to Rp 677.2 trillion, up from the Rp 641.17 trillion allocation in May and the initial allocation of Rp 405.1 trillion.

About Rp 120.6 trillion will be allocated for tax incentives for larger entities, while Rp 44.57 trillion will be used to provide a stimulus for state-owned enterprises and labor-intensive businesses.

Fibre2Fashion News Desk (DS)


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