Update COVID-19 in Indonesia: 59,394 confirmed infections, 2,987 deaths (2 July 2020)
2 July 2020 (closed)
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The Investment Coordinating Board (BKPM), the investment service agency of the Indonesian government, claims it has prevented about 24,500 of layoffs through its special desk for footwear and textile industries. This special desk is an agency set up by the BKPM in early October 2015 to support local companies in the footwear and textile industries as these industries are considered most affected by the country's economic slowdown. BKPM Chairman Franky Sibarani said a total of 48 companies have requested support through this special desk.
Chairman Sibarani said that the following three steps are conducted to support local companies, hence averting possible layoffs: (1) short-term assistance; the government provides financial assistance to ensure normal operations are not disrupted at the local company. For example, when the local company has difficulty to pay its electricity bill, it can opt to pay through installments. (2) medium-term assistance; the help-desk combats illegal imports (which are often cheaper and thus make products manufactured by local companies less competitive). (3) long-term assistance; the Indonesian government is making efforts to enhance competitiveness of Indonesian export products on the global market by seeking free-trade agreements with the European Union and the USA.
The BKPM also proposes to offer tax incentives for investment in the garment and footwear industries located on Java. In case an investor invests at least IDR 50 billion (approx. USD $3.6 million) and absorbs at least 2,000 Indonesian workers, the investor should be granted a tax allowance.
Based on data from the BKPM, investment realization in Indonesia's textile and footwear industries stood at IDR 11.6 trillion in the first nine months of 2015. Investment in the textile industry rose 148 percent (y/y) to IDR 9.8 trillion, while investment realization in the country's footwear industry fell 35 percent (y/y) to IDR 1.6 trillion.