Government of Indonesia Preparing 11th Economic Stimulus Package
The government of Indonesia is currently preparing the 11th economic policy package. Chief Economics Minister Darmin Nasution told reporters that this 11th package will focus on curtailing Indonesia's logistics costs, reducing dwelling time at Indonesian harbors, and improving the investment climate of Indonesia. He expects the 11th package to be unveiled next week. Since September 2015 the Indonesian government has unveiled ten economic stimulus packages. These packages aim to boost economic growth in Indonesia through deregulation, tax incentives and by opening room for foreign investment.
Although several of the previous packages also touch on the subject of logistics costs (for example in the tenth package the government opened room for foreign direct investment in the cold storage sector to the full 100 percent), the 11th edition will particularly focus on the dwelling time at Indonesian harbors. Indonesian President Joko Widodo previously stated that the high dwelling time at ports have caused losses worth IDR 740 trillion (approx. USD $55 billion) and drastically curb Indonesia's competitiveness due to high transportation and logistics costs. In January 2016 the dwelling time (loading and unloading) at Indonesian ports stood at 4.6 days, a significant improvement from the six days it took a year ago but still high compared to dwelling times in Singapore or Malaysia. The improvement mainly comes on the back of deregulation (curtailing bureaucracy). Minister Nasution said Indonesia's dwelling time is targeted to reach less than three days - as is the case in Singapore and Malaysia - in the foreseeable future.
Based on a report released by the World Bank ("State of Logistics Indonesia 2013"), Indonesia's logistics costs were estimated at 27 percent of the country's gross domestic product (GDP), far higher than its regional peers Singapore (8 percent), Malaysia (13 percent), Thailand (20 percent) and Vietnam (25 percent). This weak ranking is caused by Indonesia's inadequate infrastructure development, the prevalence of illegal charges and transaction fees (giving rise to the high cost economy), poor export/import processing lead time, inadequate service capacity and networks supporting national logistics as well as significant price disparity in border, remote and outer areas.
Economic Stimulus Packages of the Indonesian Government:
| Package | Unveiled | Main Points |
| 1st | 9 September 2015 |
• Boost industrial competitiveness through deregulation • Curtail red tape • Enhance law enforcement & business certainty |
| 2nd | 30 September 2015 |
• Interest rate tax cuts for exporters • Speed up investment licensing for investment in industrial estates • Relaxation import taxes on capital goods in industrial estates & aviation |
| 3rd | 7 October 2015 |
• Cut energy tariffs for labor-intensive industries |
| 4th | 15 October 2015 |
• Fixed formula to determine increases in labor wages • Soft micro loans for >30 small & medium, export-oriented, labor-intensive businesses |
| 5th | 22 October 2015 |
• Tax incentive for asset revaluation • Scrap double taxation on real estate investment trusts • Deregulation in Islamic banking |
| 6th | 5 November 2015 |
• Tax incentives for investment in special economic zones |
| 7th | 4 December 2015 |
• Waive income tax for workers in the nation's labor-intensive industries • Free leasehold certificates for street vendors operating in 34 state-owned designated areas |
| 8th | 21 December 2015 |
• Scrap income tax for 21 categories of airplane spare parts • Incentives for the development of oil refineries by the private sector • One-map policy to harmonize the utilization of land |
| 9th | 27 January 2016 |
• Single billing system for port services conducted by SOEs • Integrate National Single Window system with 'inaportnet' system • Mandatory use of Indonesian rupiah for payments related to transportation activities • Remove price difference between private commercial and state postal services |
| 10th | 11 February 2016 |
• Removing foreign ownership cap on 35 businesses • Protecting small & medium enterprises as well as cooperatives |
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