On 15 September 2024, Indonesia unveiled a new economic stimulus package worth 16.23 trillion rupiah (approximately US$989.33 million). This initiative aims to enhance economic growth while addressing public dissatisfaction following recent mass protests. Analysts suggest that this package is more than just a financial boost—it’s a political move to restore public confidence.
Key Features of the Stimulus Package
- Job Creation: The government plans to implement a cash-for-work scheme to provide temporary employment for over 600,000 individuals and an internship programme for 20,000 university graduates.
- Food Assistance: Each of the 18.3 million households will receive 10kg of rice, aimed at supporting those in need.
- Tax Relief: Personal income tax will be removed for certain workers in the tourism sector, easing the financial burden on low-income earners.
- Infrastructure Development: The cash-for-work schemes will also fund various infrastructure projects, enhancing community facilities.
Addressing Economic Challenges
The latest package represents the third stimulus this year, following larger initiatives launched in January and June. However, this is the smallest in scale, yet it focuses on long-term solutions to address socio-economic inequalities, a departure from prior measures that targeted immediate household needs.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, expressed hope that these measures would contribute to achieving the government’s economic growth target of 5.2 per cent for this year, despite signs of slowing growth.
Long-Term Goals
Key initiatives planned for the future include:
- Replanting Programme: By 2026, the government aims to replant 870,000 hectares of plantations across various commodities, with the potential to create 1.6 million jobs.
- Maintaining Tax Rates: The government has decided to keep the small business income tax rate at 0.5% until 2029 to encourage economic activity.
Concerns and Optimism
While the package aims to lift purchasing power among those in economic distress, questions remain regarding the execution and effectiveness of these measures. Analysts contend that without quality job creation and sustained economic improvements, simply increasing government spending might not suffice.
Finance Minister Purbaya Yudhi Sadewa has projected that the fiscal deficit will remain manageable with these new measures, maintaining the outlook at 2.78 per cent of GDP, which is crucial for sustaining Indonesia’s economic stability.
Ultimately, the success of this stimulus package will depend on effective implementation and support policies. As the government shifts its focus from reactive measures to sustainable growth, it aims not only to alleviate current public discontent but also to foster a more resilient economic environment in the long run.