Overcoming The Impact Of COVID-19, The Government Provides Industry Stimulus To Keep Moving

JAKARTA - The government is trying to reduce disruption to the production, distribution and supply chain processes in the domestic manufacturing sector due to the impact of the corona virus (COVID-19). The strategic steps taken include maintaining the availability of raw materials so that the manufacturing industry can continue to operate in a sustainable manner.

"Because it is known that 30 percent of the raw materials needed by the domestic industry come from China. Therefore, national industry players need to take corporate action to find alternative countries that can supply raw materials for their respective needs, ”said Industry Minister Agus Gumiwang Kartasasmita in Jakarta, Friday, March 13.

However, the Minister of Industry added, the government also understands the limited alternative sources of industrial raw materials, which causes prices to rise and is contested by industries from other countries that need them.

"Because it is not only industries in Indonesia that need raw materials, but other industries in the world are also experiencing the same problem," said the Minister of Industry.

Therefore, the government again issued an economic stimulus, which included fiscal and non-fiscal stimuli. The aim is to keep the industrial sector moving and to spur people's purchasing power in order to boost national economic performance.

The fiscal stimulus launched in the context of handling COVID-19 includes relaxation of Article 21 Income Tax (PPh 21). This tax relaxation is provided through a Government-borne (DTP) scheme of 100 percent of the income of workers up to IDR 200 million in the manufacturing sector (including Ease of Import for Export Purposes / KITE and Ease of Import for Export Destinations - Small and Medium Industries / KITE IKM).

The PPh 21 DTP is given for six months, starting from April to September 2020. The amount borne by the government is estimated at IDR 8.60 trillion. It is hoped that workers in the manufacturing sector will receive additional income to maintain their purchasing power.

Furthermore, the PPh 22 Import relaxation is given to 19 certain sectors, KITE taxpayers, and IKM KITE taxpayers. Article 22 Import Income Tax exemption is given for six months starting from April to September 2020 with a total estimated exemption of IDR 8.15 trillion.

This policy was adopted as an effort to provide cash flow space for the industry to compensate for switching costs (costs related to changes in the country of origin of imports).

Then, the PPh 25 relaxation is provided through a 30 percent reduction scheme for 19 certain sectors, KITE taxpayers, and KITE-IKM taxpayers for 6 months starting from April to September 2020 with a total estimated reduction of IDR 4.2 trillion.

As with the relaxation of Article 22 Import Income Tax, through this policy it is hoped that the industry will get cash flow space as compensation for switching costs (costs related to changes in the country of origin of imports and export destination countries). In addition, by changing the export destination country, it is hoped that there will be an increase in exports.

There are 19 sectors

Apart from that, it was also given relaxation of import duties for the industrial sector. Agus said, there are 19 industrial sectors that will be exempted from import duties so that it is easy to obtain raw materials. The amount is based on suggestions from business actors. That way there are 1,022 HS codes that enter into relaxation and have gone through the first stage of verification.

Meanwhile, those that need to be prioritized include 313 HS on the basis of the principle of accelerating production continuity. Going forward, the government will continue to evaluate and if new arrangements are needed, it will certainly be implemented.

The following is a list of 19 manufacturing sectors that have received relaxation for imports of raw materials, namely the chemical industry and goods made of chemicals, other transportation equipment industry, food industry, base metal industry, paper and paper goods industry, beverage industry, pharmaceutical industry, medicinal products. chemical and traditional medicine, as well as the motor vehicle industry, trailers and semitrailers.

Furthermore, the rubber industry, rubber goods and plastics, the non-metal mineral goods industry, the apparel industry, the electrical equipment industry, the textile industry, the YTDL machinery and equipment industry, the metal goods industry, not machines and their equipment, the printing and media reproduction industry. recording, the leather industry, leather goods and footwear, the furniture industry, as well as the computer industry, electronic goods and electricity.

The government has also relaxed Value Added Tax (PPN) refunds through accelerated VAT refunds (preliminary returns) for 19 certain sectors, WP KITE, and WP KITE-IKM. Accelerated VAT refunds are given for six months, starting from April to September 2020 with an estimated total refund amount of Rp1.97 trillion.

There is no limit to the value of VAT refunds specifically for exporters, while for non-exporters, the amount of VAT refunds is set at a maximum of IDR 5 billion. With the acceleration of restitution, taxpayers can more optimally maintain their liquidity.

Meanwhile, in order to complement the fiscal stimulus policy package, the government has also prepared four non-fiscal policy packages aimed at giving more impetus to export-import activities. First, simplification and reduction of the number of prohibitions and restrictions (Lartas) for export activities with the aim of increasing export smoothness and competitiveness.

Second, simplification and reduction of the number of Lartas for import activities, especially raw materials, with the aim of increasing the smoothness and availability of raw materials. Third, the acceleration of the export and import process for Reputable Traders, namely companies related to export-import activities that have a high level of compliance. And, fourth, improvement and acceleration of export-import process services, as well as supervision through the development of the National Logistics Ecosystem (NLE).

"With relaxation and exemption of import duty on industrial raw materials, it will not be allowed to interfere with products that have been produced by domestic industries. In addition, there should be no imported finished goods. In essence, the government does not want free riders, "said the Minister of Industry.