Gov’t Continues to Monitor Incentives for People Affected by COVID-19 Outbreak
Date 22 April 2020
In a bid to maintain the country’s financial system stability, the Government has renewed its commitment to monitor various policy measures taken to mitigate the impacts of COVID-19 outbreak.
“The total amount of State Budget for handling COVID-19 outbreak is up to Rp405 trillion,” Minister of Finance Sri Mulyani told reporters after attending a Limited Cabinet Meeting through a video conference, Wednesday (22/4).
According to Sri Mulyani, the total budget amounting to Rp70 trillion will be allocated for industries, including tax incentives for Micro, Small and Medium Enterprises (MSMEs) in which a portion of interest subsidies and various custom duties are borne by the Government, while MSMEs taxes are also borne by the Government.
“The Government will prioritize economic recovery programs worth Rp150 trillion. However, the post of the budget is below the line or may affect national income,” the Minister added.
The Minister added that the Government, together with central Bank Indonesia, is working on economic recovery programs, including various programs that will be carried out using financing post that affect liquidity needs due to delay in payment of principal and interest for six months by several banks.
“The economic recovery programs will be carefully guarded by the Financial Services Authority (OJK), Bank Indonesia, and Ministry of Finance. We are currently recounting the budget of Rp150 trillion that will be set aside for the program,” the Minister said, adding that the Government is also monitoring the incentives.
On the first incentives, the Minister continued, the Government is focused on tourism sector, while the second incentives have been provided for industries since the COVID-19 pandemic has also affected industries.
The Government will also provide additional incentives for 740 Indonesian Standard of Industrial Classification from 18 business sectors since economic impacts of the pandemic have been widespread, she added.
“This shows that the Government continues to follow closely to the COVID-19 situation. We will also continue to adjust the policy so that it can benefit the people,” the Minister said.
On that occasion, the Minister also said that the Government has provided wider social assistance, including direct cash aid program, village funds, the family hope program, staple-food card, and pre-employment card.
“We will continue to carry out monitoring the incentives provided in order to save business sectors and prevent lay-off of workers amid the coronavirus pandemic,” the Minister added.
The Minister further said that the Government would also make the guidelines if the prior incentives from the restructuring budget caused a higher bad debt.
“First, those who experienced difficulties to pay the debt due to COVID-19 impacts. Second, those who have a good debt track record so that they can comply with the credit agreement,” the Minister stated.
If bad debt happens, the Minister continued, we all understand that it is caused by the COVID-19 impacts.
“Ministry of Finance will cooperate with the Attorney General Office and the Development Finance Comptroller (BPKP) to prevent business sectors from bankruptcy. We will see the situation in as much detail as possible,” the Minister said, adding that the implementation will be very challenging since it involves millions of creditors from various financial institutions.
“We will be pleased if the communities can participate to support us to improve supervision on the issue,” the Minister added.
All social assistance, she added, is expected to reduce the number of people from returning to their hometowns to prevent widespread transmission of the coronavirus.
“The pandemic has both economic and social impacts so that we have increased Rp110 trillion of social assistance and relaxation for industries as well as spending in the health sector,” the Minister added.
The Government, she added, will also be careful to provide credit for working capital, considering that many companies do not need additional credit since they are still in financial consolidation due to COVID-19.
“We hope that additional incentives for 740 Indonesian Standard of Industrial Classification from 18 business sectors will cover the affected toll road companies in their cash flow and their revenues this year,” the Minister said.
Regarding the budget of Rp405 trillion, the Minister said that the Government will continue to monitor and encourage the country’s economic needs.
“All countries that implement stimulus packages carry out debt issuance. In this case, we will attempt to utilize the budget as effectively as possible,” the Minister concluded. (MAY / EN)
Translated by: Syarifah Aisyah
Reviewed by: M. Ersan Pamungkas