INDONESIA FISCAL STIMULUSIN 2009

Directorate General of Budget – Ministry of Finance

Republic of IndonesiaFebruary 2010

Fiscal Stimulus: Aims

1.1. Increasing purchasing power:Increasing purchasing power:– Lowering personal income tax rate (PPh);Lowering personal income tax rate (PPh);– Increasing Increasing nnon-taxable amount of gross incomeon-taxable amount of gross income (PTKP);(PTKP);– Subsidy of generic medicine and free tax for cooking oil;Subsidy of generic medicine and free tax for cooking oil;– Increasing social expenditure and direct subsidy to poor families Increasing social expenditure and direct subsidy to poor families

2.2. Maintaining competitiveness & resilience :Maintaining competitiveness & resilience :– Lowering company income tax rate ; Lowering company income tax rate ; – Free import tax for import of goods & services used for public facilities/utilities;Free import tax for import of goods & services used for public facilities/utilities;– Discounted electricity rate for industrial usage;Discounted electricity rate for industrial usage;– Interest subsidy for clean-water companies;Interest subsidy for clean-water companies;– Decreasing diesel fuel price for industrial usage;Decreasing diesel fuel price for industrial usage;– Increasing government stake on two export insurance companies.Increasing government stake on two export insurance companies.

3.3. Increasing employment:Increasing employment:• labor intensive infrastructure development in sectors such as public work, transportations, labor intensive infrastructure development in sectors such as public work, transportations,

energy, people houses; energy, people houses; • additional allocation for community development projects (PNPM)additional allocation for community development projects (PNPM) ,,• training for unemployed labor force training for unemployed labor force

2

Instrument Stimulus Fiscal 2009

3

National Budget Laws 2009 (A+B) 56.300,0

A. Tax Payment Saving

1. Lowering Personal Income Tax Rate (35% to 30%) and increase tax bracket/layers

2. Increasing non-taxable amount of gross income (PTKP) to Rp. 15,8 million

3. Lowering Company Income Tax Tariff (30% to 28%), and for go public company 5% lower

B. Tax Subsidies

1. Value Added Tax on cooking oil

2. Value Added Tax on bio fuel

3. Import duties for material and capital goods

4. Value Added Tax on gas and oil exploration

5. Income tax for geothermal electricity producers

6. Personal/ Employee Income Tax

43.000,0

13.500,0

11.000,0

18.500,0

13.300,0

800,0

200,0

2.500,0

2.500,0

800,0

6.500,0

Additional 16.959,3

C. Non tax subsidies, state expenditure and financing on business and employment

1. Decreasing diesel fuel price for industrial usage (from Rp 4.500/litre to Rp. 3000/litre)

2. Discounted electricity rates for industrial usage

3. Community Development (PNPM)

4. Additional Stimulus

a. Interest subsidy for clean water company

b. Subsidy for generic medicine

c. Infrastructure stimulus expenditure

d. Government Stake (PMN) to export insurance companies (Jamkrindo & Askrindo)

e. Subsidy seeds

f. Subsidy fertilizer

16.959,3

2.779,9

1.337,9

601,5

12.200,0

150

350,0

10.945,0

500,0

295,0

95,0

Total Stimulus (A+B+C) 73.259,3

Stimulus for Increasing Purchasing Power, 2009 (in Billion Rupiah)

4

DESCRIPTION ALLOCATION

A. Tax RevenuesA. Tax Revenues

1. Lowering non-oil and gas income tax rate1. Lowering non-oil and gas income tax rate

- - lowering personal income tax (35% → 30%) and lowering personal income tax (35% → 30%) and widening tax bracketwidening tax bracket

2. Increasing non-taxable amount of gross income 2. Increasing non-taxable amount of gross income (PTKP)(PTKP)

B. Subsidy B. Subsidy

1. Tax Subsidy 1. Tax Subsidy

- Value Added Tax on Cooking Oil - Value Added Tax on Cooking Oil

- Value Added Tax on Bio Fuel - Value Added Tax on Bio Fuel

2. Non-Tax Subsidy2. Non-Tax Subsidy

- Generic medicine subsidy- Generic medicine subsidy

24.500,0

13.500,0

11.000,0

1.350,0

1.000,0

800,0

200,0

350,0

350,0

TOTAL STIMULUS 25.850

Stimulus for Maintaining Competitiveness & Resilience,

2009 (in Billion Rupiah)

5

DESCRIPTION ALLOCATION

A. A. Tax RevenuesTax Revenues

1. Lowering company income tax rate1. Lowering company income tax rate

– Lowering Lowering company income tax rate (30% → 28%), and for Go-Public company income tax rate (30% → 28%), and for Go-Public

Company → 5% lowerCompany → 5% lower tax rate tax rate

B. B. Subsidy Subsidy

1. Tax Subsidy 1. Tax Subsidy

- Customs for Industry- Customs for Industry

- Value Added Tax on oil and gas exploration - Value Added Tax on oil and gas exploration

- Income tax rate for geothermal power producers- Income tax rate for geothermal power producers

- Employee Income tax (PPh Pasal 21) - Employee Income tax (PPh Pasal 21)

2. Non-Tax Subsidy2. Non-Tax Subsidy

- Decreasing Diesel Fuel Price (Rp4500/ltr - Decreasing Diesel Fuel Price (Rp4500/ltr Rp. 3000/ltr) Rp. 3000/ltr)

- Discounted electricity rate for industrial usage - Discounted electricity rate for industrial usage

- Interest subsidy for clean water company - Interest subsidy for clean water company

- Fertilize - Fertilize

- Seeds - Seeds

C. C. FinancingFinancing– Government stake in export insurance companies (Askrindo and Government stake in export insurance companies (Askrindo and

Jamkrindo)Jamkrindo)

18.500,0

18.500,0

16.862,8

12.300,0

2.500,0

2.500,0

800,0

4.562,8

2.779,9

1.377,9

15,0

95,0

295,0

500,0

500,0

TOTAL STIMULUS 35.862,8

Realization of Tax Subsidy, 2009 (in Billion Rupiah)

6

DESCRIPTION Realization

(up to 31 Dec 2009)

1. Income Tax Subsidy1. Income Tax Subsidy

2. Value Added Tax Subsidy2. Value Added Tax Subsidy

3. Property Transfer tax subsidy3. Property Transfer tax subsidy

4. Import tax subsidy4. Import tax subsidy

2.836,3

26.295,6

495,14

7,19

TOTAL STIMULUS 29.634,22

Criteria for Programs/Activities eligible to be financed with Stimulus Fiscal Fund

1.1. Employ significant labors; Employ significant labors;

2.2. Can be finished in 2009; Can be finished in 2009;

3.3. Comply to President Instruction No. 5 Year 2008 on Comply to President Instruction No. 5 Year 2008 on Economy Program Focus 2008-2009; and consistent Economy Program Focus 2008-2009; and consistent with the government strategic plan;with the government strategic plan;

4.4. Complete the existing infrastructures, so the whole Complete the existing infrastructures, so the whole system can be more efficient;system can be more efficient;

5.5. Project design already prepared, or can be prepared Project design already prepared, or can be prepared immediately;immediately;

6.6. No land procurement problem; No land procurement problem;

7.7. Can absorb the fund in the 2009 (no carry over to Can absorb the fund in the 2009 (no carry over to 2010) 2010)

7

Realization of Stimulus Fiscal Expenditure FY 2009

2.29.2

16.4

28.1

37.0

51.7

91.9

0.31.1

2.0

3.4

4.5

6.3

11.2

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

JUNY JULY AUGUST SEPT OCT NOV DEC

% o

f ce

ilin

g

-

2.0

4.0

6.0

8.0

10.0

12.0

bil

ion

ru

pia

hs

REALIZATION % of ALLOCATION

Realization amount to Rp. 11,2 trillion (91,9 % of the allocation Rp. 12,2 trillion). It’s not 100% absorbed because of (1) operational efficiency;(2) land procurement problem; (3) force majeure condition (earthquake)

TABEL 1STIMULUS FISCAL REALIZATION

FISCAL YEAR 2009

(in billion rupiahs)

NO. BS State Ministry /Agency CEILINGREALIZATION

(UNTIL DEC 31ST 2009)% FROM CEILING

I.   State Ministry /Agency 10.945,0 10.328,8 94,37

1 018 Ministry of Agriculture 260,0 235,2 90,13

2 020 Ministry of Energy and Mineral Resources 500,0 491,7 98,31

3 022 Ministry of Transportation 2.198,8 2.078,2 94,48

4 024 Ministry of Health 150,0 149,8 99,86

5 026 Ministry of Manpower and Transmigration 300,0 254,2 80,04

6 032 Ministry of Marine Affairs and Fisheries 100,0 96,7 94,71

7 033 Ministry of Public Works 6.601,2 6.211,5 93,16

8 044 State Ministry of Cooperatives & SME 100,0 89.9 89,12

9 090 Ministry of Trade 335,0 323,5 96,48

10 091 Ministry of Public Housing 400,0 398,0 99,49

II.   Non State Ministry /Agency 1.255,0 886,4 70,63

11 999 State General Treasurer 1.255,0 886,4 70,63

    - Generic Drug Subsidy 350,0 0,0 0,00

    - Subsidy for Water Supply 15,0 0,0 0,00

- State Capital Investments to Jamkrindo Askrindo

500,0 500,0 100,00

- Subsidy for Seeds Excellent 295,0 291,4 98,76

    - Subsidy for fertilizer 95,0 95,0 99,99

T O T A L 12.200,0 11.215,2 91,93

SOURCE : DIT.AKLAP DJ OF TREASURYAs of January 19, 2010

THANK YOU

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