On April 23, 2020, the Indonesian government, through the Ministry of Transportation, issued Regulation of the Minister of Transportation No. 25 of 2020 on Transportation Control During Annual Home-Coming Tradition (“Mudik”) of Eid al-Fitr in the context of Preventing the Spread of COVID-19 (“Regulation 25/2020”). The transportation control for the mudik period of Eid al-Fitr 1441 Hijriah is carried out through a temporary ban on the use of transportation facilities. This regulation was implemented on April 24, 2020 and will be enforceable until May 31, 2020. The regulation further stipulates that the duration of this temporary ban can be extended as determined by the Minister of Transportation, if further efforts to prevent the spread of COVID-19 are needed. Regulation 25/2020 addresses a temporary ban on the use of the following transportation facilities: Land Transportation This temporary ban applies to land transportation facilities for the purpose of going out and/or entering the area of: Large-Scale Social Restrictions (“PSBB”); red zone of COVID-19 transmission; and agglomeration that has been designated as a PSBB zone. Types of Land Transportation The following are the land transportation facilities included in this temporary ban: public motor vehicles (i.e. bus and passenger car types); individual motor vehicles (i.e. passenger cars, bus, and motorcycles); ferry crossings; and river and lake transport vessels. The Organizers of Land Transportation Facility must return the full or 100% (one hundred percent) ticket costs to prospective passengers who have purchased tickets for travel on the dates within the temporary ban period. Exceptions A temporary ban on the use of motor vehicles as mentioned above in letter a and letter b is exempt for: vehicles of high government institutions of the Republic of Indonesia; operational service vehicles with Vehicle Number services of the Indonesian National Army and the Indonesian National Police; toll road officer operational vehicles; fire engines, ambulances and hearses; and freight cars with no passengers. Meanwhile, a temporary ban on the use of crossing transportation facilities as referred to in letter c and letter d is excluded for: logistical transport vehicles or staple goods; medicine and medical devices transport vehicles; transport vehicles for government operational officers and officers handling the prevention of the spread of COVID-19; and fire engines, ambulances and hearses. In addition, the temporary ban on the use of land transportation facilities is excluded for land transportation facilities that are within 1 (one) agglomeration area. Sanctions Vehicles leaving and/or entering the regions, as stated above in the area criteria, within April 24, 2020 until May 7, 2020, will be directed to return to the location of origin of the trip. Further, vehicles leaving and/or entering the regions, as listed above in the area criteria, within May 8, 2020 until May 31, 2020, will be directed to return to the location of origin of the trip and may be subject to sanctions in accordance with the prevailing regulations. Inspection The inspection is carried out in the form of coordination posts as check points at the following locations: main access exits and/or entries on toll roads and non-toll roads; passenger transport terminals; crossing ports; and harbor rivers and lakes. For public motor vehicles and individual motor vehicles, the supervision is carried out by the Indonesian National Police with the assistance of the Indonesian National Army. Meanwhile, for ferry crossing and river and lake transportation vessels, the inspection will be carried out by the Land Transportation Management Office or Port Operator Unit. Rail Transportation Inter-city Train Travel A temporary ban on inter-city train travel is implemented in the form of cancellation of inter-city train travel for passenger transport. The Organizers of Railway Facility must return the ticket fee in full or 100% (one hundred percent) to the prospective passenger who has purchased a ticket for a canceled inter-city train trip. However, the prohibition of inter-city train travel is excluded for inter-city trains for goods transportation. Urban Train Travel A temporary ban on urban train travel is carried out with the following provisions: cancellation of urban train travel for passenger transportation that enters or leaves the area of Jakarta, Bogor, Depok, Tangerang and Bekasi; urban train travel for passenger transportation other than the areas as referred to in letter a is still in operation under the implementation of PSBB arrangements; urban train travel for passenger transportation by the Electric Train which serves the area of Jakarta, Bogor, Depok, Tangerang and Bekasi (“KRL Commuterline”) is still in operation under the implementation of PSBB arrangements. Extraordinary Train Travel During the temporary ban on the use of rail transportation, the Organizers of Railway Facility may operate extraordinary train travel under the following conditions: to have officers handling the prevention of the spread of COVID-19 carry a letter from the COVID-19 Task Force; preparation of trains for the northern and southern cross operations; The passenger arrangements at the station and inside the train follow the applicable regulations in relation to the prevention of the spread of COVID-19. Sanctions The Organizers of Railway Facility violating the provisions as referred to inter-city train travel and urban train travel will be subject to administrative sanctions based on the prevailing regulations. Sea Transportation Type of Sea Transportation The temporary ban on the use of sea transportation applies to passenger ships, which includes: passenger ships operating in the area of provinces, districts or sub-districts that implement PSBB; and sailing between provinces, districts or sub-districts (origin port, transit or destination area) that implement large-scale social restrictions. Exceptions The temporary ban on the use of sea transportation is exempt for passenger ships under the following provisions: passenger ships serving the repatriation of Indonesian workers, Indonesian migrant workers, and/or Indonesian citizens; passenger ships serving the repatriation of Indonesian citizens who work on foreign commercial/cruise ships as crews (“ABK”); passenger ships serving non-mudik routine transportation for limited sailing locations within an agglomeration of provinces, districts and sub-districts under the condition that the area is not determined as a PSBB zone or red zone of COVID-19 transmission; passenger ships serving special inter-island transportation for the Indonesian National Army, the Indonesian National Police, government employees, and medical personnel carrying out their duties; and passenger ships may be permitted to operate in order to transport logistic goods which includes staple goods, medicines and medical equipment, and other essential goods needed by the region in the event that the number of cargo ships is insufficient. Inspection The inspection is carried out by the Syahbandar Office and the COVID-19 Task Force in the form of coordination posts as check points located at the main access exits and/or entries of the passenger terminals at the ports. Sea Transportation Companies Sea transportation companies must return the ticket fee in full or 100% (one hundred percent) to prospective passengers, who have purchased tickets for travel within the temporary ban period, using the following methods: 100% ticket fee refund in cash; or re-scheduling for prospective passengers, who already have a ticket, without being charged extra fees; or changing the sailing route (re-route) for prospective passengers, who already have a ticket, without charging extra fees in the event that the route displayed on the ticket does not aim at exiting and/or entering the areas as stated above in the area criteria of the land transportation section. Rescheduling and changes to sailing routes are valid for 1 (one) year for 1 (one) time re-order. Sanctions Sea transportation companies violating this provision on: April 24, 2020 until May 7, 2020 will be given a warning letter; and May 8, 2020 until May 31, 2020 will be subject to administrative sanctions in the form of not being provided services at the port until the revocation of the SIUPAL permit in accordance with the prevailing regulations. Air Transportation Type of Air Transportation The temporary ban on the use of air transportation applies to every citizen, traveling domestically through airports from and to areas designated as PSBB zones or red zones of COVID-19 transmission, either using public or private air transportation. Exceptions This temporary ban is exempt for air transportation used for: high government officials of the Indonesian government institutions and state guests; operation of embassies, consulates general, and foreign consulates as well as representatives of international organizations in Indonesia; special flight operations for repatriation of Indonesian citizens and foreign nationals; law enforcement and emergency services; cargo transport operations; and other operations based on the permission of the Director-General of Civil Aviation. Cargo Transportation Cargo transportation activities as mentioned above in letter e must still refer to the health protocol. Flights for cargo transportation activities can be carried out by air transportation companies, that operate airplanes with passenger configuration, and are required to have flight approval. Flights for special cargo transportation activities by air transportation companies operating cargo-specific airplanes in accordance with their approval route, and in the case of operating flights outside their approval route, with required flight approval. Airplane crews carrying out cargo transportation activities must have a health certificate issued by a doctor of a health facility or the Port Health Office (KKP) at the Airport. Airplanes with passenger configuration can be used to transport cargo inside the passenger cabin for transporting medical, health, sanitation, and food items. Air Transportation Companies Air transportation companies must return the ticket fee in full or 100% (one hundred percent) to prospective passengers, who have purchased tickets for travel within the temporary ban period, by the following methods: re-scheduling for prospective passengers, who already have a ticket, without charging extra fees; or changing sailing routes (re-route) for prospective passengers, who already have a ticket, without charging extra fees in the event that the routes displayed on the ticket are not aimed at exiting and/or entering the areas as stated above in the area criteria of land transportation section. compensating the value of the tickets through points in the membership with air transportation companies so that it can be used for purchasing products offered; providing ticket vouchers in the value of the tickets, purchased by passengers, so that it can be used to buy back tickets for other flights, valid for at least 1 (one) year and extendable 1 (one) time. Sanctions Air transportation companies violating this provision will be subject to administrative sanctions in the form of revocation of the routes permits. With the enactment of Regulation 25/2020, the provisions regarding the transportation control for mudik 2020 as originally stipulated in Chapter IV of the Regulation of the Minister of Transportation No. 18 of 2020 on Transportation Control in the context of Preventing the Spread of COVID-19 (“Regulation 18/2020”), are revoked.
One of President Joko Widodo’s main goal for his term is to expand Indonesia’s manufacturing capabilities. To that effect, he has pushed for investments in the manufacturing sector, promoted Industry 4.0, relaxed Indonesia’s negative investment list, implemented tax holidays and introduced an omnibus bill as an effort to reform the labor law. Therefore, as the COVID-19 pandemic continues to reveal its impact on Indonesia’s economic growth, the government has made the sustainability of the manufacturing sector a priority. Under President Widodo’s Large-Scale Social Restriction (Pembatasan Sosial Berskala Besar or PSBB) decree, some factories would be allowed to continue operations under certain conditions. Factory Operational Requirements during the COVID-19 Pandemic In this regard, the Minister of Industry issued Circular of the Minister of Industry No. 4 of 2020 on the Implementation of Factory Operations during the Period of Public Health Emergency of Coronavirus Disease 2019 (“Circular 4/2020”). Issued on April 7, 2020, the circular is intended as a guideline for Industry Associations, Industrial Companies and Industrial-Areas Companies in carrying out their activities during the COVID-19 outbreak in Indonesia. Under Circular 4/2020, Industrial Companies and Industrial-Areas Companies may be granted industrial activity permits to continue carrying out their business activities under the condition that they fulfill the following requirements: Implement early screenings to all workers by measuring their body temperature and conduct detections of employees with respiratory symptoms, including coughs/flu/shortness of breath, when entering factory areas and during shift changes; Prohibit sick workers from participating in any company activity and recommend them to immediately check with their company’s or government health facilities; Ensure sick workers and workers with travel history from any country or zone/city with known COVID-19 local transmission during the last 14 days are prohibited from entering factory areas. This is to be informed about through a notification in the entrance area. Information on the list of countries with local transmissions of COVID-19 can be accessed at www.covid19.kemkes.go.id; Ensure that working areas have proper air circulation and have adequate hand-washing facilities; Ensure the availability of soap and running water or alcohol-based sanitizers for hand-washing, as well as masks, gloves and clothing that ensure the safety of workers and company products; Increase routine cleaning frequency with disinfectant fluids within commonly used areas such as bathrooms, registration and payment counters, dining areas; Limit the number of workers allowed in public facilities such as mosques, canteens, and toilets; Provide multivitamins and nutritional foods for all workers; Prepare guidelines for workers from arrival at factories until they return to their residences; and Participate in and promulgate a clean and healthy lifestyle, as well as inform about COVID-19, through the installation of banners/ infographics at strategic locations throughout factory areas. Further, workers of Industrial Companies and Industrial-Areas Companies are required to comply with the following provisions: If there are any sick workers in factory areas, stop any activity in the factory and immediately go to the company or government health facilities; Workers returning from any country or zone/city with known COVID-19 local transmissions during the last 14 (fourteen) days must inform the company. Wearing masks since leaving home and also gloves once arrived in factory areas; Maintain a minimum distance of 1 (one) meter (physical distancing) and avoid crowds during break time; All workers must implement a clean and healthy lifestyle such as washing hands regularly using water and soap or alcohol-based sanitizers for hand-washing and avoid touching unnecessary areas of the face; and Ban any handshake with fellow workers or individuals and consider adopting alternative forms of greeting. Industrial Activity Permits during the COVID-19 Pandemic In regards to industrial activity permits as referred to in Circular 4/2020, the Minister of Industry has issued Circular No. 7 of 2020 on Guidelines for the Submission of Applications for Industrial Activity Implementation Permits during the Period of Public Health Emergency of Coronavirus Disease 2019 (COVID-19) (“Circular 7/2020”), which came into force on April 9, 2020. Circular 7/2020 stipulates that Industrial Companies and/or Industrial-Areas Companies may continue their business activities by obtaining operational and mobility permits in the form of certificate for industrial activities, either for factory operational activities, office administration, or industrial activities mobility related to raw materials, auxiliary materials, finished goods, and/or workers. In order to obtain said certificate, Industrial Companies and/or Industrial-Areas Companies shall submit an application electronically through SIINas portal (siinas.kemenperin.go.id) by complying to the following procedure: log in to the SIINas (siinas.kemenperin.go.id) account; select the “e-services” option; select “Izin Operasional dan Mobilitas”; fill in the form, continue with selecting “Simpan”; and after an application has been validated via the system, the relevant business may print out the certificate by selecting the “Cetak” option. The certificate shall be valid during the public health emergency of Corona Virus Disease (COVID-19) period and it features a QR Code which can be scanned to prove the validity. Industrial Companies and/or Industrial-Areas Companies encountering technical difficulties during the submission of an application can complain to SIINas Helpdesk. It should be noted that the Ministry of Industry may revoke the issued certificate, if any discrepancy between the data submitted and the actual conditions is found.
The COVID-19 pandemic is bringing the world economy, if not already brought, closer to a recession. The IMF is already projecting a worldwide GDP contraction of 3% for a short-lived outbreak. The Indonesian government’s baseline scenario in this regard is for Indonesia’s economic growth to drop to 2.3%, the lowest in 21 years, with a worst-case scenario of an economic contraction of 0.4%. In order to avoid that worse-case scenario, the Indonesian government has issued several tax incentives to help businesses stay afloat and to help workers to survive the pandemic with their jobs intact. Through Minister of Finance Regulation No. 23/PMK.03/2020 on Taxation Incentives for Taxpayers Affected by the Coronavirus Pandemic (PMK 23/2020), which came into force on April 1, 2020, the government will bear income taxes, import tax and value-added tax in order to stimulate the economy. Relaxation of Article 21 Income Tax (PPh 21) With the issuance of this regulation, the Indonesian government will cover Article 21 Income Tax from employees which were originally cut from the employees’ income. This incentive applies to all employees that fall under the following criteria: Employees who receive income from employers: Companies with the business field classifications (KBLI) code listed in appendix A of PMK 23/2020; and/or Companies determined as Export-Oriented Import Facilities (KITE) companies based on the Decree of the Minister of Finance. Have a Taxpayer Identification Number (NPWP); and Receive or obtain annual gross income which does not exceed IDR 200 million in the related tax year. Article 21 Income Tax borne by the government must be paid in cash by the employers at the time of payment of income to the employees and it will not be calculated as taxable income. Furthermore, this incentive will be granted from the Tax Period of April 2020 to September 2020. These are the procedures to implement Article 21 Income Tax incentive: Employers must submit written notifications using the format as stipulated in appendix C of PMK 23/2020 to the Head of Tax Service Office (KPP) where the employers are registered. For KITE companies, said notifications must be submitted by employers and shall attach their Decree of the Minister of Finance concerning the determination as KITE companies. It should be noted that employers must submit reports on the realization of Article 21 Income Tax borne by the government to the Head of KPP where the employers are registered, along with the Tax Payment Slips or Billing Codes, no later than: July 20, 2020, for the Tax Period of April 2020 until June 2020; and October 20, 2020, for the Tax Period of July 2020 until September 2020. Relaxation of Article 22 Income Tax on Import (PPh 22 Impor) Article 22 Income Tax on import is levied by the Foreign Exchange Bank or the Directorate General of Customs and Excise on taxpayers importing goods. These are the criteria for taxpayers to be exempt, as stipulated by Article 22 Income Tax on import: Companies with KBLI code listed in appendix F of PMK 23/2020; and/or KITE companies. In order to obtain this incentive, the taxpayers must submit written applications for the Certificate of Exemption of Article 22 Income Tax on import to the Head of KPP where the taxpayers are registered by using the form under appendix G of PMK 23/2020. The incentive period is valid from the date of issuance of the Certificate of Exemption until September 30, 2020. On a per three-month basis, the taxpayers are required to submit realization reports concerning the exemption of Article 22 Income Tax on import using the form as set out in appendix J of PMK 23/2020 to the Head of KPP where the taxpayers are registered by no later than: July 20, 2020, for the Tax Period of April 2020 until June 2020; and October 20, 2020, for the Tax Period of July 2020 until September 2020. Relaxation of Article 25 Income Tax (PPh Pasal 25) Taxpayers who fulfill the criteria as mentioned in the incentive of Article 22 Income Tax on Import may also be granted a 30% deduction of Article 25 Income Tax installments. The notification for deduction of Article 25 Income Tax installment must be submitted by the taxpayers in writing using the format as stipulated in appendix C of PMK 23/2020 to the Head of KPP where the taxpayer is registered. Furthermore, the taxpayers are obliged to submit realization reports on the deduction of Article 25 Income Tax installments every three months to the Head of the KPP where the taxpayers are registered, in which said reports must use the form under appendix L of PMK 23/2020, and no later than: July 20, 2020, for the Tax Period of April 2020 until June 2020; and October 20, 2020, for the Tax Period of July 2020 until September 2020. Relaxation of Restitutions of Value Added Tax (PPN) The Value Added Tax (VAT) incentive in the form of preliminary returns of tax overpayments for low-risk Corporate Taxpayers (PKP) will be granted by the government according to the following criteria of taxpayers: Satisfying the criteria as referred to in the incentive of Article 22 Income Tax on Import and Article 25 Income Tax; and Those who have submitted a Periodic Tax Return (SPT) of VAT for overpaid restitution with a maximum overpayment amount of IDR 5,000,000,000.00 (five billion rupiah). The low-risk PKP will be granted a preliminary return under the following conditions: PKP are not required to submit any applications for determination as low-risk PKP; The Director-General of Tax will not issue any Decree on determination as low-risk PKP; and PKP is listed in the KBLI code listed in appendix F of PMK 23/2020, or the KITE facilities provided to PKP are still valid at the time of submission of the notification of overpayment for restitution. PMK 23/2020 stipulates that the period for the provision of VAT incentives runs for the Tax Period of April 2020 until September 2020, submissions to be no later than October 31, 2020. The tax incentives mentioned above is one of the ways the Indonesian government is implementing to support businesses and workers who are affected by the highly contagious novel coronavirus 2019. While the economic impact of the COVID-19 pandemic is still ongoing, the stimulus should at least provide some reprieve for Indonesia’s move towards a speedy public health and economic recovery.
The Rupiah is gaining ground after weeks of devaluation amidst the COVID-19 pandemic. On March 23, 2020, the Rupiah dropped to its lowest point this year to Rp 16,575 per US dollar. By April 9, the currency rose 2.3% to close at Rp 15,880 against the dollar, the biggest gain since October 2015. The appreciation is in part due to aggressive intervention by the Indonesian government. Just last month, the country spent $9.4 billion of its Foreign Reserves as Bank Indonesia stepped up market intervention to stabilize the rupiah exchange rate amid heavy capital outflows. On top of that, Bank Indonesia also struck a $60 billion repo facility deal with the US Fed - nearly half of the Indonesia’s total reserves. BI Governor Perry Warjiyo said the deal was a show of confidence in Indonesia’s economic prospect. “The Fed only works with a few emerging countries, including Indonesia, on such deals,” Mr. Warjiyo said in a recent teleconferenced meeting following announcement of the deal with the Fed Aside from the Fed, Indonesia also has a $30 billion bilateral swap agreement with China, $22.7 billion with Japan, around $7 billion with Singapore and an undisclosed amount with Australia and other central banks, as well as a $2.5 billion repo line agreement with the Bank of International Settlements and another $3 billion with the Monetary Authority of Singapore, according to data from the Central Bank. “This will be the second line of defense other than bilateral currency swaps in case we need dollar liquidity,” Mr. Warjiyo said as quoted by the Jakarta Post, adding that the current forex reserves level was “adequate” for further market interventions. Currently, the country’s financial system remains relatively safe. Data from the Central Bank shows that, as of February 2020, Indonesia’s banks retain a high CAR (Capital Adequacy Ratio) of 22.27% as well as a relatively low NPL (Non-Performing Loan) of 2.79% (gross) and 1.04% (nett). Mr. Warjiyo expressed confidence that the Rupiah will continue its climb to Rp 15,000 per dollar, adding that the Central Bank was ready to take the necessary measures to safeguard the currency.