Economy to get boost in March

 he government is preparing to unravel its stimulus package in March to kick-start the Indonesian economy amid the global downturn, officials say.

Anggito Abimanyu, head of fiscal policy at the Finance Ministry, said last week the ministry had signed several regulations including to waive import duties paid by businesses and income taxes paid by low- to mid-rank employees. Funds for infrastructure project were also increased.

These measures, among others, are part of the government’s Rp 73 trillion (approximately US$5.8 billion) stimulus package that was approved by the House of Representatives last week.

Anggito said the Finance Ministry had issued 11 regulations to waive import duties paid by businesses hit by the global crisis.

“They are aimed at providing import duty subsidies to sectors importing capital goods that require government support,” he said.

He also said the ministry had agreed to waive income taxes paid by employees whose monthly wage was under Rp 5 million. The tax office will make an official announcement of which sectors are applicable for the stimulus breaks early this week.

In Indonesia, most companies cover their workers’ income tax.

In terms of infrastructure projects, Anggito said the Finance Ministry had signed over Rp 12.2 trillion in additional funding to “rehabilitate and maintain” existing facilities.

“Ministries and government agencies will be responsible for infrastructure projects, although regions will be instructed to ensure the projects follow schedule,” said Anggito.

The House has ordered the government reduce the 2010 budget allocation for ministries, government agencies and regions if they fail to implement the stimulus measures as predicted.

The stimulus package is crucial for attaining 4.5 percent economic growth as the worsening global economy derails imports and investment.

In the fourth quarter last year, the economy plunged 5.2 percenct compared to the same quarter in 2007, although still managed to post a full-year growth of 6.1 percent, according to the Central Statistics Agency (BPS).

Bambang Susantono, the deputy to the coordinating minister for the economy, in charge of infrastructure, said the government would prioritize labor-intensive construction projects to absorb more workers amid massive layoffs conducted by companies.

“There will be a labor-based method for creating employment opportunties, but the quality [of the projects] should not decline, he said. (The Jakarta Post)