Indonesia cuts energy prices in 3rd batch of stimulus measures in a month

Indonesian Chief Economics Minister Darmin Nasution said the governmwnt is continously improving the business climate.
Indonesian Chief Economics Minister Darmin Nasution said the governmwnt is continously improving the business climate.PHOTO: AFP

JAKARTA (AFP) - Indonesia on Wednesday (Oct 7) unveiled its third batch of stimulus measures in the space of a month, including a cut to energy prices, as South-east Asia's biggest economy battles a slowdown.

The economy is growing at its slowest pace for six years and the rupiah is at a 17-year low, as the country is hit hard along with other emerging markets by signs of strengthening in the United States and turmoil in China.

In the third instalment of an economic policy package, the government announced a cut in a range of energy prices, including diesel, jet fuel, and liquefied petroleum gas, used by tens of millions across the country in cooking.

Other measures included the government offering to contribute towards insuring the country's millions of farmers against losses, and making it easier for startups to get funding.

"The government is continuously improving the business climate," Chief Economics Minister Darmin Nasution said, as he unveiled the steps in a televised address alongside other policymakers.

The decision to lower the price of diesel, from 6,900 rupiah (69 Singapore cents) a litre to 6,700 a litre, came after President Joko Widodo last week requested a cut in fuel prices to help industry.

Fuel prices were heavily subsidised for decades in Indonesia until Mr Joko last year scrapped the payouts entirely for petrol and reduced them substantially for diesel to free up money for other government programmes.

The two previous batches of stimulus measures announced in September included measures to cut red tape and attract foreign investment.

There has been some relief for policymakers this week as the rupiah, which has been falling steeply, rebounded strongly after disappointing US jobs data lowered expectations the Federal Reserve will cut interest rates soon.

The unit surged 3.4 per cent against the dollar Wednesday. The stock market has also made gains.