Jakarta. Finance Minister Sri Mulyani Indrawati has unveiled an economic stimulus package worth Rp 265 trillion ($16.3 billion) to support low-income families and labor-intensive industries affected by the increase in value-added tax (VAT).

As part of the stimulus, rice assistance will be provided to 16 million beneficiaries for two months, with each recipient receiving 10 kilograms of rice per month, Sri Mulyani said during a press briefing at her office in Jakarta.

In addition, the government will offer a 50 percent discount on household electricity subscriptions for customers with a capacity of up to 2,200 volt-amperes, she added.

Wage subsidies, first introduced during the Covid-19 pandemic, will be reintroduced in the stimulus package. The initiative also includes income tax subsidies for individuals earning a monthly salary of up to Rp 10 million.

"Incentives for labor-intensive industries will include support for new machinery procurement, with the government covering 5 percent of the interest costs,” Sri Mulyani said.

The state insurance provider, BPJS, will also subsidize 50 percent of workers' insurance premiums in the labor-intensive sector, further easing the financial burden on employers and employees.

"There is an additional incentive for electric and hybrid vehicle purchases, as well as VAT relief for home purchases," she added.

Her announcement followed President Prabowo Subianto's confirmation that the VAT rate would increase from 11 percent to 12 percent, effective January 1.

The president underlined that the new VAT rate would apply only to luxury goods and services, ensuring minimal impact on essential items and services consumed by the general public.

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