14 June 2022 (closed)
Jakarta Composite Index (7,049.88) +54.44 +0.78%
USD/IDR (14,146) -6.00 -0.04%
EUR/IDR (17,335) +57.05 +0.33%
On Wednesday evening (07/10), the Indonesian government unveiled the third (and last) installment of its economic policy package. This latest installment aims to boost the industrial sector by cutting the diesel price by IDR 200 to IDR 6,700 (USD $0.48) per liter and by giving a 30 percent discount on electricity tariffs for labor-intensive industries. Furthermore, ceramic and chemical producers will obtain cheaper gas per 1 January 2016. The package was unveiled by Darmin Nasution, Indonesia's Coordinating Minister for Economic Affairs.
Furthermore, it was announced that Indonesian street vendors and small businesses (that operate in designated areas) can obtain a leasehold certificate through which they can secure a cheap micro loan. Currently, most of these small businesses belong to the informal sector and due to the lack of assets they cannot secure a loan. With this certificate in hand they will be able to obtain a government-backed loan to expand their business.
Electricity tariffs (for industries) are to be cut by 30 percent between 11 pm and 8 am. Moreover, those companies that are in financial trouble will be allowed to delay the payment of up to 40 percent of its electricity bills until the next year, while discounts are offered in case the company agrees not to layoff employees.
Last month, the first two installments of the package were unveiled. Generally, the package aims to boost trade and investment in Indonesia, and to make the country more attractive for capital inflows. Indonesia's economic growth has slowed to a six-year low of 4.67 percent (y/y) in the second quarter of 2015. Moreover, the country was plagued by severe capital outflows in recent weeks as markets believed that the Federal Reserve was about to raise US interest rates (a situation that changed dramatically over the past three trading days).
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