Indonesia’s Jokowi Orders Spending Spree to Head Off Coronavirus

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Indonesian President Joko Widodo has called for fiscal stimulus to be accelerated in a bid to shield Southeast Asia’s biggest economy from the coronavirus crisis.

“All ministries should start spending as early as possible,” Widodo said Tuesday, adding that the speed at which stimulus is rolled out will be crucial in supporting the economy. “As we know, the new global economy is unfriendly because of the coronavirus,” he told ministers gathered for a cabinet meeting, according to a statement released by his office.

While Indonesia is yet to record a single case of the deadly virus which has spread from Wuhan, China, to a string of other countries, officials have become increasingly worried about the economic impact. China is Indonesia’s biggest trading partner and its top export destination, with shipments last year -- mostly coal, nickel, palm oil, pulp and copper -- valued at $28 billion, Trade Ministry data shows.

Indonesia posted its slowest pace of growth in four years in 2019, figures released last week showed. The government is projecting growth of 5.3% this year, but officials say there are downside risks to the forecast because of the coronavirus. The Trade Ministry on Tuesday repeated a warning that the deepening impact of the virus on the Chinese economy may in turn hurt Indonesia’s overall export performance.

Indonesia is counting on several so-called omnibus laws -- one on job creation and another related to tax -- to help lift investment to counter global headwinds and support the economy. Indonesia’s Director-General of Tax Suryo Utomo said Tuesday that while corporate tax cuts that will start to come into effect next year would likely see the government lose about 87 trillion rupiah ($6.4 billion) in revenue, they would also boost economic activity.

“We expect the tax cuts will help businesses expand their activities,” Utomo said. “So this will benefit the economy.”

--With assistance from Yoga Rusmana and Eko Listiyorini.

To contact the reporters on this story: Rieka Rahadiana in Jakarta at rrahadiana@bloomberg.net;Tassia Sipahutar in Jakarta at ssipahutar@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Karlis Salna

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