Why the Indonesian Government Delayed Release of 7th Stimulus Package?
Last week Indonesia delayed the release of the seventh economic stimulus package - a package that will focus on boosting the village economy - as the government still needs to implement several deregulations and debureaucratization in relation to its previous stimulus packages. Darmin Nasution, Indonesia's Chief Economics Minister, said it are the Ministry of Industry, the Ministry of Trade, and the Ministry of Energy and Mineral Resources that are still to implement deregulations before the seventh package can see daylight.
Nasution expects the three aforementioned ministries to have completed the legal framework related to the previous six packages within a week. As such, the Chief Economics Minister believes that the seventh package can be unveiled next week.
Previously it was reported that the government's seventh package will focus on two matters: (1) making the use of village funds - disbursed by the central government - more effective, and (2) improving logistics at the village level. Through this package people's purchasing power, especially at the village level, is strengthened.
Through the new package, central government funds are expected to be sent directly to the villages, instead of indirectly (through the 434 districts/cities) as is the case currently. Moreover, the villages will be encouraged to use the funds productively, for example by providing incentives to invest in local infrastructure.
Economic Stimulus Packages of the Indonesian Government:
| Package | Unveiled | Main Points |
| 1st | 9 September | • Boost industrial competitiveness through deregulation • Curtail red tape • Enhance law enforcement & business certainty |
| 2nd | 30 September | • Interest rate tax cuts for exporters • Speed up investment licensing for investment in industrial estates • Relaxation import taxes on capital goods in industrial estates & aviation |
| 3rd | 7 October | • Cut energy tariffs for labor-intensive industries |
| 4th | 15 October | • Fixed formula to determine increases in labor wages • Soft micro loans for >30 small & medium, export-oriented, labor-intensive businesses |
| 5th | 22 October | • Tax incentive for asset revaluation • Scrap double taxation on real estate investment trusts • Deregulation in Islamic banking |
| 6th | 5 November | • Tax incentives for investment in special economic zones |
| 7th | to be announced | • Speed up transfers of funds to the village level • Boost infrastructure development in the villages |