Fiscal Stimulus Aims at Domestic Economy

VIVAnews - Fiscal stimulus policy that the government proposed to the House of Representatives (DPR) is believed to be able to minimize the impact of the global economic crisis over Indonesia.

According to Head of National Development Planning Agency, Paskah Suzetta, the policy will focus on three stimulus policies such as improvement of purchasing power, consumption monitoring and betterment of private sector's competition and endurance. 

"Most of the stimulus fund proposed to DPR amounting to Rp 71.3 trillion (US$5.9 billion) is disbursed to domestic economy," he said.

He cited tax incentives and increased tax-free income. The incentives total to Rp 43 trillion (US$3.5 billion) and remains in the public. "It means that since the government does not collect such a tax, the money remains in circulation and can be used for consumption," he said.

In addition to said fund, the government is proposing for additional stimulus fund to the 2009 State Budget valuing to Rp 15 trillion (US$1.2 billion). The fund will be allocated to subsidies and state budget for business community and employment. The proposal for the new stimulus fund is expected to add to domestic consumption. 

Suzetta expected that the House of Representatives (DPR) will view the policies as an attempt to block the impact of the global economic crisis.

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Translated by: Bonardo Maulana Wahono