Indonesian government to launch massive stimulus plan

Special Report:Global Financial Crisis

JAKARTA, Jan. 28 (Chinese media) -- Indonesia unveiled its stimulus package worth 71.3 trillion rupiahs (about 6.31 billion U.S. dollars) or 1.4 percent of its GDP to boost economy amid the threat of global financial crisis, the Jakarta Post reported Wednesday.

Indonesian Financial Minister Sri Mulyani Indrawati said Tuesday at the House of Representatives' Commission that the package was aimed at increasing people's purchasing power, the competitiveness and sturdiness of businesses facing the economic downturn, and labor-intensive infrastructure spending.

The new stimulus includes tax savings worth 43 trillion rupiahs (about 3.8 billion dollars); waived taxes and import duties for businesses and certain households worth 13.3 trillion rupiahs (about 1.2 billion dollars); and subsidies and government spending businesses, worth 15 trillion rupiahs (about 1.3 billion dollars).

Of the waived taxes and import duties for businesses and certain households, 3.5 trillion rupiahs (about 0.3 billion dollars) are for value-added taxes on oil and gas exploration, andcooking oil; 2.5 trillion rupiahs (about 0.2 billion dollars) are for import duties on raw materials and capital goods; 6.5 trillionrupiahs (about 0.6 billion dollars) are for income taxes of employees; and 0.8 trillion rupiahs (about 70.7 million dollars) are for income taxes for geothermal.

Of the subsidies and government spending for businesses, 2.8 trillion rupiahs (about 0.2 billion dollars) are for diesel subsidy; 1.4 trillion rupiahs (about 0.1 billion dollars) are for electricity rate discount for industries; 10.2 trillion rupiahs (about 0.9 billion dollars) are for additional infrastructure spending:; and 0.6 trillion rupiahs (about 53 million dollars) are for expansion of development for people living in rural areas (PNPM).

The global downturn is affecting Indonesia's economy on all fronts. Indonesian President Susilo Bambang Yudhoyono said on Tuesday that the country's economic growth this year was predicted to drop drastically. Before that, the government forecasted the economy to grow between 4.5 and 5.5 percent this year, a drop from an estimated 6.2 percent in 2008.