Page 15 - Indonesia Taxation Quarterly Report (Q1-2020)

Survey of Recent Developments

growth is -0.4%, ICP price amounts to tourism and manufacturing. In addition,
US$ 31/barrel, the rupiah exchange rate Saudi Arabia and Russia are increasing
of 20,000 rupiah/US dollar, and inflation oil production thus lowering gas prices.
by 5.1%. 4
On the other hand, the inflation rate
Further, The Ministry Further, The Ministry of Finance notes a in January, February was in the range
of Finance notes a possible 10% decline in state revenues of 2.68% and 2.76%, which was in the
possible 10% decline compared to the realization in 2019 due range of the BI target range of 2-4%.
in state revenues to the impact of the COVID-19 virus. The The monthly inflation rates in January,
compared to the decline in state revenues from both the February, and March stood at 0.39%,
realization in 2019 due oil and gas and non-oil and gas sectors 0.33%, and 0.10% respectively. For
to the impact of the is triggered by the provision of tax March, the calendar year inflation rate
COVID-19 virus. incentives through the fiscal stimulus (January-March) 2020 was 0.76% and
package part II. the yoy inflation rate for March was
2.96%. 5
In terms of the GDP components of
expenditure such as consumption January 2020 inflation was under the
of Non-profit Organizations serving influence of inflation in the group of
Households (Lembaga Nonprofit yang food, beverage, and tobacco, such as
melayani Rumah Tangga/LNPRT), Gross the rise in prices of various chillies, fresh
Fixed Capital Formation (Pembentukan fish, cooking oil, rice, and cigarettes.
Modal Tetap Bruto/PMTB), Exports and Deflation in the transportation group,
Imports, are predicted to experience however, resulted from lower air freight
negative growth in the worst-case rates (after the Christmas and New Year
scenario. Household and government Holidays) and the price of Pertamax
consumptions, however, are predicted to gasoline. Food inflation stood at 4.13%
see a downward trend in this scenario, (yoy) and core components at 2.88%
although not to the negative point. (yoy). The registered price component
increased to 0.64% (yoy), driven by
Compared to the same period last cigarette inflation in line with the
year, economic growth in terms of increase in excise and 2020 retail sale
production is supported by Other price (Harga Jual Eceran/HJE).
Services Business Sector at 10.55%. In
terms of expenditure, the highest growth February 2020 inflation was subjected to
is achieved by the LNPRT Consumption pressures from rising commodity prices
Expenditure Component of 10.62%. of food, gold, jewelry, and cigarettes.
Food inflation was under pressure from
Bank Indonesia Bank Indonesia estimates that rising inflation of garlic, chili peppers,
estimates that Indonesia’s growth in the first quarter rice, fresh fish, and some vegetables.
Indonesia’s growth of 2020 may already be lower than 5%, For March, inflation was contributed by
in the first quarter substantially below last year’s first- rising prices of fresh fish and gold.
of 2020 may already quarter economic growth of 5.07%. In
be lower than 5%, line with that, the World Bank also has In January-February, Indonesia’s foreign
substantially below also forecasted that Indonesia’s growth exchange reserves remained stable at
last year’s first-quarter in the first quarter of 2020 will be below USD131.7 billion and USD130.26. The
economic growth of 5%. position of foreign exchange reserves
5.07%. in the first 2 months was equivalent to
In reality, the economy during January- the average financing of 7.7 months
February 2020 was relatively stable of imports or 7.4 months of imports
due to the boost from exports of coal, and repayments of government foreign
CPO, and some manufactured products. debt and was above the international
However, there has been a considerable adequacy standard of about 3 months
decline in the export of services, in of imports. At the time of this report,
particular, the tourism sector, due to the further economic indicators in March
disrupted inter-country mobility caused was still not available.
by the coronavirus. The widespread
COVID-19 virus outbreak has hit Related to monetary policy, in order
Indonesia’s mainstay sectors, such as to strengthen stability and respond to

4 Ministry of Finance of the Republic of Indonesia, “Press Release: Strategies for Strengthening
Social and Economic Stimulary Protection”, 1 April 2020.
5 Data obtained from Central Bureau of Statistics Republic of Indonesia.

3