JAKARTA: Indonesia is implementing an economic policy package to boost demand, which includes fare subsidies and cash and food assistance throughout June and July. This initiative will cost the government 24.44 trillion rupiah (approximately US$1.5 billion), according to the finance minister on Monday (June 2).
State-owned enterprises are set to bear about 850 billion rupiah of the expenses related to subsidizing highway tolls, while the remaining funds will be sourced from government resources, stated Sri Mulyani Indrawati.
Last month, on May 24, the Indonesian government announced a range of stimulus initiatives aimed at encouraging spending over the upcoming two months, with further details about costs revealed by the finance minister on Monday.
On May 27, the government declared the introduction of discounts on electricity bills and transportation, alongside financial and food aid for select households starting June 5.
As the school holidays approach from June 28 to July 12, there are additional plans to promote domestic tourism and consumption through discounts on train tickets and maritime transport services.
“Through these economic stimuli… we aim to maintain economic growth in the second quarter close to 5 percent, countering our previous forecast of a slowdown influenced by global circumstances,” Sri Mulyani commented on Monday.
As the largest economy in Southeast Asia, Indonesia’s economy grew by 4.87 percent year-on-year in the first quarter, marking its slowest growth in over three years, primarily due to a decline in household spending. The outlook for the remainder of the year remains uncertain because of a challenging global trade scenario.
Earlier, analysts informed CNA that these measures alone might not sufficiently revitalize sluggish domestic consumption or enhance economic growth, indicating that broader initiatives are essential to support the middle class and shield businesses from heightened U.S. tariffs.
Additionally, Sri Mulyani announced on Monday that a previously planned 50 percent reduction in certain electricity tariffs has been scrapped due to the lengthy budgeting process involved.
Instead, the budget that was supposed to facilitate these electricity discounts will now be redirected to the Wage Subsidy Assistance program for workers earning below 3.5 million rupiah a month, as reported by local news outlet Jakarta Globe.
