Indonesia approves 6.15 bln dlr stimulus package

Jakarta (ANTARA News) -  Indonesia`s parliament has approved a six-billion-dollar stimulus package to protect Southeast Asia`s largest economy from the worst of the global economic crisis, lawmakers said Wednesday. 

The parliamentary budget committee approved the plan worth 73.3 trillion rupiah (6.15 billion dollars) late Tuesday after weeks of debate, amid a rash of bad economic news from some of Asia`s major economies. 

"We approved the stimulus in accordance with the government`s efforts to overcome the effects of the global slump," committee deputy chairman Suharso Monoarfa said. 

"We hope that the stimulus can prevent rising unemployment, sustain consumer spending capability and strengthen businesses." 

Japan on Wednesday posted a record trade deficit and Hong Kong said its economy would shrink by up to three percent in 2009 but regional stock markets were generally higher as investors cheered a Wall Street rally. 

Indonesia`s economy has slowed due to falling commodity prices and plunging demand for its exports from major buyers such as Japan and the United States. 

Even so, the mainly Muslim country of 234 million people is still hoping to post growth of 4.5 percent in 2009, down from a previous forecast of 6.0 percent. 

The central bank has been tapping its foreign currency reserves to prop up the rupiah, which has sunk to around 11,500 to the dollar this year compared to an earlier forecast of 9,400. 

The stimulus which will take effect from March consists of 56.3 trillion rupiah of tax incentives and 17 trillion in additional government spending and subsidies designed to boost demand, production and jobs. 

Its success or failure could be crucial to the political fortunes of President Susilo Bambang Yudhoyono as he seeks re-election in July, after parliamentary polls in April. 

"The approval for the fiscal stimulus is important progress and hopefully will benefit the people," Finance Minister Sri Mulyani Indrawati was quoted by AFP as telling  reporters Wednesday. 

"We`ll finish working on all the documents within the next five days. We hope that the legal backing will be available in early March." 

Monoarfa said the government could withdraw 44.5 trillion rupiah of six billion dollars in standby loan arrangements it has secured to help fund the budget. 

The government earlier this year secured the standby loans with bilateral and multilateral lenders including the Asian Development Bank and the governments of Australia and Japan. 

Development Planning Minister Paskah Suzetta expected the spending and incentives plan to create millions of new jobs to boost the mainstay of the Indonesian economy -- domestic demand. 

The unemployment rate is estimated at 8.4 percent compared to 8.7 percent in 2008, according to International Labour Organisation, but this is expected to rise.

"It is estimated that (the stimulus) could absorb three million workers. Especially with the extra fiscal stimulus of two trillion rupiah," Suzette said.