The Indonesian economy is also inseparable from the pressure caused by COVID-19, which originates from turmoil that has never been experienced in the previous periods. Based on the 2020 Indonesian Economic Report compiled by Bank Indonesia, the Government is pursuing an expansionary fiscal policy to overcome the impact of the COVID-19 pandemic.
This expansionary fiscal policy is based on the stipulation of Act Number 2 of 2020, which is the basis for the Government to widen the fiscal deficit above 3% of GDP until 2022. Following up on this matter, the Government issued Presidential Regulation Number 54 of 2020, which was last revised into Presidential Regulation Number 72 of 2020, as the basis for the 2020 State Budget deficit to be 6.34% of GDP. This deficit resulted due to the state spending that has increased to IDR 2,739.2 trillion, with a special budget allocation for the National Economic Recovery (PEN) program of IDR 695.2 trillion. The PEN program includes Public Goods spending of Rp. 397.56 trillion for health, social protection, ministries and institutions, and regional governments, and non-Public goods spending of Rp. 297.64 trillion for business incentives, MSME support, and corporate financing.
The government has set a number of stimuli in the form of fiscal incentives, including:
a.Income Tax Article 22 (PPh pasal 22) Exemption
b. Additional Incentives for Bonded Zone & KITE Companies