Indonesia to expand social aid, incentives for businesses

The Indonesian Government is planning to expand its social aid programme and incentives for micro, small and medium enterprises (MSMEs) in an effort to boost consumer spending and revive the economy in the second half of this year.

Finance Minister Sri Mulyani Indrawati said during a recent online press conference that the government will reallocate around 70.8 trillion Rp (4.85 billion USD) from existing ineffective stimulus packages to fund the social aid expansion and new incentives.

She noted the social aid program period will be extended to December to cushion the impact of the COVID-19 pandemic.

Under the plan, the government will allocate 4.6 trillion Rp to increase the amount of rice for the 10 million recipients of the Family Hope Program to 15 kilograms per month. It will also disburse 500,000 Rp to 10 million Staple Food Card recipients this month.

The Indonesian Government is also preparing aid for workers with salaries lower than 5 million Rp per month and allocating an estimated budget of 31.2 trillion Rp for such aid.

The aid, in the form of direct cash transfers, will be focused on 13.8 million workers registered on the Workers Social Security Agency database who are not civil servants or State-owned enterprises (SOEs) employees, according to SOEs Minister Erick Thohir.

Finance Minister Sri Mulyani also said the government will offer electricity and tax incentives for businesses and industries as well as productive aid for ultra-micro and micro businesses to support the supply side and help businesses to reduce their production costs.

It will also disburse aid to 12 million MSMEs with a total budget of 30 trillion Rp, she said, noting that the aid is meant for productive use and not in the form of loans.

Indonesia’s gross domestic product (GDP) shrunk 5.32 percent year-on-year in the second quarter as all components, except for net exports, fell annually as a result of the pandemic./.

VNA