You are here

Jokowi urges Cabinet to step up spending to shield economy from virus


INDONESIAN President Joko Widodo has called for fiscal stimulus to be accelerated in a bid to shield South-east Asia's biggest economy from the coronavirus crisis.

"All ministries should start spending as early as possible," he said onTuesday, 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 novel coronavirus which has spread from Wuhan in 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 US$28 billion, Trade Ministry data shows.

Indonesia posted its slowest pace of growth in four years last year, figures released last week showed. The government is projecting growth of 5.3 per cent 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.

The country's director-general of tax Suryo Utomo said on Tuesday that while corporate tax cuts that will kick in next year would likely see the government lose about 87 trillion rupiah (S$8.8 billion) in revenue, they would also boost economic activity.

"We expect the tax cuts will help businesses expand their activities," he said. "So this will benefit the economy."

Meanwhile Indonesia says it is not hiding anything over the coronavirus, the health minister said on Tuesday, after some medical researchers expressed concern that cases may have gone undetected in the world's fourth most populous country.

While the virus has quickly spread from China throughout much of the rest of the region and beyond, the sprawling South-east Asian country of more than 260 million people has not recorded any cases so far.

Dozens of cases have been recorded in the region, including in Singapore, Malaysia, Thailand, Vietnam and the Philippines, where one person has died, raising suspicions on social media in particular over a potential lack of vigilance in Indonesia.

Researchers at the Harvard T. H. Chan School of Public Health in the United States said in a study last week that Indonesia should rapidly strengthen outbreak surveillance and control - given that it had direct flights from Wuhan, the epicentre of the virus.

The Harvard team said that Indonesia's lack of confirmed cases "may suggest the potential for undetected cases" as air travel may contribute to cases being exported from China.

The virus has killed over 1,000, with more than 42,000 confirmed cases in China; there are 319 cases in 24 other countries.

Many of the cases outside China have been in people who have a history of travel to the country.

Health Minister Terawan Agus Putranto, speaking after a Cabinet meeting at the Bogor presidential palace outside Jakarta, in response to the concerns, said: "We have the kits to check coronavirus and they're certified ... Nothing is concealed."

Indonesia has tested 64 samples from suspected coronavirus infections - 62 of which were declared negative. Two are still being tested, health ministry research and development agency head Siswanto said during a tour of its laboratory in Jakarta.

"Indonesia has taken concrete measures and the World Health Organization is quite confident that Indonesia is ready to be able to respond to this situation," said Navaratnasamy Paranietharan, WHO's Indonesia representative, in a conference on Tuesday.

Indonesia has barred entry to visitors who have been in China for 14 days and stopped all flights to and from there.

Vivi Setiawaty, another health ministry official, said it was unclear why Indonesia had not seen any cases, but said that the authorities were better prepared since facing the H5N1 avian influenza in 2005.

"We remain cautious," she told reporters. BLOOMBERG, REUTERS