Economy: The Covid-19 Policy Control and National Economic Recovery is established through a Government Regulation signed by President Joko Widodo today. As the name implies, this committee will coordinate the work of two task forces, namely the Task Force for the Covid-19 Acceleration Handling and the National Economic Recovery Task Force. The Coordinating Minister for the Economy serves as chair of the committee. Six other ministers serve as deputy chair: Coordinating Minister for Maritime and Investment; Coordinating Minister for Political, Legal and Security Affairs; Coordinating Minister for Human Development and Culture; Finance Minister, Health Minister; and the Minister of Interior.
The Minister of State-Owned Enterprises is appointed as the executive chair of the committee along with his team, which consists of the economic task force helmed by deputy minister and the Covid-19 mitigation task force. The committee will submit the programs this week to the Coordinating Minister for Economic Affairs and present the discussion results to President Jokowi next week. The program is expected to be able to boost people’s purchasing power in a bid to stimulate economic growth.
Fiscal: The government increased tax incentives for businesses in a move to try and limit the economic impact of the coronavirus pandemic. The tax office announced announced that tax relief, previously due to expire in September, have been extended until the end of the year. They include tax breaks for some manufacturing workers and small and medium-size enterprises, and a discount on corporate tax installments. The extension is stipulated in Finance Minister Regulation (PMK) 86/2020 which is a revision of the previous PMK 44/2020 which contains tax incentives for taxpayers affected by the Covid-19 pandemic.
In the minister regulation issued on July 16, 2020, the government extended the validity period of 5 types of tax incentives that had ended September 2020 to December 2020. Among them are income tax (PPh) Article 21 Borne by the Government (DTP), incentives for final PPh of Micro Small and Medium Enterprises, exemption from import tax article 22, reduction of income tax article 25 by 30 percent and accelerated value added tax (VAT) refunds. In addition to extending the validity period, the government also expands business sectors that are entitled to tax incentives. Where the income tax article 21 DTP incentives from 1,062 business field classifications (KLU) are expanded to 1,189 KLU.
Trade: The export of Indonesian furniture products to the US jumped significantly. Based on data from the Glocal Trade Atlas (2020), furniture exports from Indonesia to the US in the period from January to May 2020 valued at US$582.11 million. It increased by 51.3 percent compared with the same period of 2019 of US$384.82 million. According to the Los Angeles Indonesian Trade Promotion Center (ITPC LA), the US West Coast region was the largest contributor reaching 62.9 percent in the increase in furniture exports.
The increase in the value of furniture exports from Indonesia, especially for the US West Coast region, in January-May 2020 period reached US$366.21 million, a 72.15 percent hike compared with the same period of 2019. The US states that recorded the biggest surges of furniture import from Indonesia were Arkansas (456 percent), Montana (216 percent), and New Mexico (213 percent). Currently, the concentration of furniture exports from Indonesia is to California worth US$212.97 million, Georgia US$ 38.07 million, and Texas at US$37.04 million. Indonesia ranked as the eighth largest furniture exporter country to the US. Indonesia’s total furniture exports to the US in 2019 were US$1.04 billion, an increase of 29.16 percent from 2018. Total trade between Indonesia and the US over January to May 2020 was US$10.75 billion, with a surplus for Indonesia at USD 3.70 billion. In 2019, the total trade reached US$27.11 billion and surplus for Indonesia worth US$8.58 billion.
Energy: National Energy Council (DEN) revealed the government’s four priority sectors — transportation, electricity, households, and industry — as key targets for guaranteed access to energy supplies during the COVID-19 pandemic. The priority sectors are set to guarantee that access to energy supplies is maintained for meeting the transportation, electricity, and household requirements, such as energy needs for cooking purposes. The community should be able to avail all of those types of energy.
Since the Covid-19 pandemic, Indonesia had excess supply of energy. According to DEN, during the course of pandemic since March 2020, Indonesia have had abundant supply for almost six months. In fact, Indonesia have excess fuel supplies, to some extent because many people stay at home. The level of energy security in Indonesia has been increasing since supply and distribution were relatively not an issue. At the same time, the government continues to prioritize the development of energy infrastructure.