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Viewing cable 09JAKARTA556, INDONESIA'S STIMULUS PACKAGE - LITTLE FOCUS ON

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Reference ID Created Released Classification Origin
09JAKARTA556 2009-03-27 09:42 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Jakarta
VZCZCXYZ0001
PP RUEHWEB

DE RUEHJA #0556 0860942
ZNR UUUUU ZZH
P 270942Z MAR 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 1970
INFO RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS JAKARTA 000556 
 
SENSITIVE 
SIPDIS 
 
FOR EAP/MTS, OES/EGC FOR B.DEROSA-JOYNT AND E.FENDLEY, EEB 
DOE FOR PI-32 CUTLER 
 
E.O. 12958: N/A 
TAGS: EFIN ENRG SENV ID
SUBJECT: INDONESIA'S STIMULUS PACKAGE - LITTLE FOCUS ON 
GREEN INVESTMENT 
 
REF: SECSTATE 26022 
 
1. (SBU) Indonesia's fiscal stimulus has little focus on 
green investment.  The package, equal to IDR 73.3 trillion 
(about USD 6.3 billion at current exchange rate of IDR 
11,500/USD) or about 1.4 percent of GDP, relies primarily on 
tax measures with approximately IDR 17.1 trillion in new 
spending.  Most of the new spending (IDR 12.2 trillion) is 
focused on infrastructure (roads, bridges, rails, ports, 
flood control, irrigation, energy and housing). 
 
2. (U) Implementation of the fiscal stimulus package, 
approved by the legislature on February 24, is just 
beginning.  While some ministry-level implementation details 
have not yet been finalized, Finance Ministry briefing 
materials on the stimulus package identify the following 
"green" measures: 
 
- VAT subsidies for biofuels (IDR 200 billion) aimed at 
ensuring availability of biofuels at lower prices competitive 
with non-renewable oil-based fossil fuels.  The subsidy is 
aimed at supporting future increases in biofuel production 
and reducing dependence on fossil fuels; 
 
-  income tax relief (IDR 800 billion) for geothermal 
production; and 
 
- extension of a VAT incentive for geothermal energy to 
promote power generation from geothermal sources (unspecified 
portion of wider VAT subsidy). 
 
3. (U) The package also contained the following measures: 
 
- subsidies for automotive diesel (IDR 2.8 trillion); 
 
- reduced peak electricity tariffs for industrial users (IDR 
1.3 trillion); and 
 
- power plant and transmission line construction (IDR 425 
billion). 
 
HUME