Indonesia - Government’s measures on COVID-19 pandemic in Indonesia (KSBSI)

KSBSI update by Rekson Silaban, KSBSI International Secretariat

On 31 March 2020, Indonesia’s President, Joko Widodo, issued a Government Regulation in Lieu of Law (Perppu) that will boost state spending by up to Rp 405.1 trillion (US$24.6 billion) and widen the budget deficit to 5.07 per cent of GDP in the nation’s fight against COVID-19.

These measures will amount to 2.55 per cent of Indonesia’s GDP of Indonesia or 16 per cent of the country’s total annual state budget.

President Widodo said the Perppu would serve as a foundation for the government and banking and financial authorities to carry out ‘extraordinary measures to ensure people’s health, safeguard the national economy and the stability of the financial system’.

From this extra spending, the government will allocate Rp 75 trillion for healthcare spending, Rp 110 trillion for social protection and Rp 70.1 trillion for tax incentives and credit for enterprises.

The biggest chunk, Rp 150 trillion, will be set aside for economic recovery programmess including credit restructuring and financing for small and medium businesses.

This is a way to soften the pain both for households and informal workers, while they also encourage workers to stay at home and simultaneously to maintain the people’s purchasing power, especially the bottom 40 per cent.

In addition, President Widodo said that, starting April, the state-owned electricity company (PLN) will supply free electricity for 24 million households in the 450-volt ampere (VA) category – the lowest out of six categories listed under existing regulations.

PLN will also provide a 50 percent discount for seven million households in the 900 VA category – the second lowest

Staple food relief will provided for 4.8 million people (in addition to the existing programme that now reaches 20 million people).

Other policies are: freeze income tax for lower income people and other social safety nets programmes.