Health Budget No Longer Focuses on Covid-19
Indonesia’s healthcare budget this year will mostly be allocated for non-Covid public health issues, including stunting, tuberculosis, cancer, and chronic malnutrition problems, Minister of Finance Sri Mulyani Indrawati said. The government will remain on guard, but will no longer set aside a specific budget for Covid-19 handling as the country is moving toward endemic status.
The Ministry of Finance has set Rp 178.7 trillion this year for national health priorities, such as widening the coverage of National Health Insurance (JKN), providing nutritional support for mothers, and tuberculosis prevention and handling. The programs will be streamlined through the Ministry of Health, the Food and Drug Supervisory Agency, and other health-related institutions.
Gov't Prepares EV Subsidies, VAT Reduction
The government is finalizing subsidy schemes for electric vehicles (EV), said Coordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan. While the subsidy on electric motorcycles has been set at Rp 7 million, the focus of the scheme for electric cars has been shifted to VAT reduction, with VAT on sales cut from 11 percent to 1 percent, said Luhut. The Ministry of Finance will announce full details next week.
Tax analysts say the VAT reduction scheme in the short term will cause an immediate loss of tax revenue of up to Rp 250 billion. However, if the scheme generates a significant increase in demand for electric cars, it might contribute to an increase in future tax income. The government aims for 10 percent of all motorcycles and car fleets on the road to be electric by 2024, which translates to around 600,000 electric motorcycles and 100,000 electric cars.
OJK to Help Police Financial Fraud
President Joko Widodo has given special authority to the Financial Services Authority (OJK) and the Indonesian National Police to conduct investigations into criminal acts in the financial services sector, though Government Regulation 5/2023 concerning Investigation of Criminal Acts in the Financial Services Sector.
As a derivative of the newly-signed omnibus Financial Sector Development and Strengthening Reform Law, the regulation is meant to lay legal foundations for better collaboration between the OJK and the National Police in handling financial fraud.
OJK has been given 15 investigative rights, starting from receiving complaints from the public, checking the accuracy of allegations, investigating the perpetrators, gathering proof, discouraging locals suspected of committing financial crimes, and reviewing findings, prior to communicating with the Indonesian National Police or other relevant authorities to apprehend the perpetrators. The OJK has also been given permission to conduct searches, block bank accounts, examine offenders, and publish the findings of investigations, all in coordination with the police.
Regional House of Representatives (DPD) Deputy Chair Sultan Najamudin welcomed the issuance of the regulation. He said that going forward, OJK will be more confident and vigilant while looking into alleged financial crime cases.
Global Recession Unlikely, Indonesia Shows Optimism
A recession is extremely unlikely, said former chief economist at the International Monetary Fund (IMF) Maurice Obstfeld during the Mandiri Investment Forum (MIF) 2023 on Feb 1. Economists are becoming more confident that 2023 may be the year of global recovery, as inflation pressure eases across the world. This optimism is also reflected in the IMF’s decision to increase its global GDP growth projection to 2.9 percent from the 2.7 percent prediction in October 2022.
Obstfeld said China's reopening was a major reason for the higher projection for global economic growth. He also said Indonesia's economy is in good shape to handle what may be coming ahead, but warned countries to remain vigilant as there is no guarantee economic recovery will happen this year.
At the event, President Joko Widodo said investment in the nation in 2022 could exceed the government's target of Rp 1,207 trillion. Investment realization has also been spread more evenly across the country, whereby 53 percent is outside Java and 47 percent inside Java. The government plans to increase the national investment target in 2023 to Rp 1,400 trillion, and is focused on distributing infrastructure equally in order to attract more investors.
AmCham IP Committee Meets USPTO
AmCham’s Intellectual Property Rights Committee and the US Embassy co-hosted an in-person meeting with Matthew Kohner, Intellectual Property Attaché for Southeast Asia at the United States Patent and Trademark Office (USPTO) on Jan 31, discussing broad intellectual property (IP) issues and enforcement in Indonesia.
The meeting began with an introduction from the USPTO on its scope and priorities on IP issues in the region, followed by a lively discussion on member companies’ specific concerns regarding IP implementation. The issues discussed included the revision of the Patent Law, patent protection in e-commerce platforms, the customs record system, and links between IP and local content requirements. The USPTO representatives and member companies also shared insights from their engagements with the government, best practices from other countries, and suggestions on future advocacy.
For inquiries about the committee, please contact Jennifer Reva Anton at [email protected].
Fed Raises Interest Rate, Rupiah Continues to Strengthen
The US Federal Reserve has raised its benchmark interest rate by a quarter point from 4.5 to 4.75 percent, its first hike of the year. Although the move marks a continued increase, up from almost zero in early 2022, it also shows a major slowdown in the pace of the increase. The disinflationary process has started, said Fed Chair Jerome Powell, but he also cautioned that a couple more rate increases might be needed to put price pressures under control in 2023.
In Indonesia, the smaller increase was perceived as a positive sign, prompting further strengthening of the rupiah against the US dollar to Rp 14,875 per dollar, its strongest level since September 2022. After depreciating in 2022, the rupiah has appreciated 4.4 percent in 2023. This trend is also reflected in the wider region, with most Asian currencies strengthening against the dollar.
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AmCham Update is AmCham's regular newsletter on developments related to the pandemic crisis and other issues in Indonesia. It is edited by AmCham Managing Director A Lin Neumann and written by the AmCham Staff. Paul L Goddard is the Managing Editor.