Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan acknowledged that Indonesia could not avoid the global economic downturn due to the impact of the Covid-19 pandemic.
“Indonesia’s economy is declining, but it is still doing better than other middle-income countries,” Luhut said at a video conference on Tuesday, August 25, 2020.
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To overcome the impact of Covid-19, Luhut said the government continues to improve tests and health protocols in society. Thus, the rise in health increases and mortality can fall significantly. “We pray that this will have a positive effect on economic development.”
To improve Indonesia’s economy going forward, Luhut said, the government is also focusing on attracting new investment. This is done, among other things, by ratifying the Omnibus Act, downstream industrialization policy and investing in the SME sector. “And we hope this can run well and will encourage more investment to Indonesia,” he said.
Regarding fiscal policy, Luhut said that the government still adheres to the defense principle, and that this principle has been implemented for several years. According to him, there are two important things in the government’s fiscal policy, namely to divert spending from subsidies to capital expenditure, and the Central Bank can also support the economy by buying government bonds.
“We are reducing dependence on fossil energy, one of which is using biodiesel or B30, and crude oil imports have declined. Therefore, we have room to increase the stimulus and temporarily increase the deficit. Bank Indonesia also supports the economy by buying government bonds, says Luhut.