Indonesia Cuts Energy Prices, Helps Farmers In Third Round Of Economic Stimulus

Indonesia said it is cutting fuel and electricity prices, providing farmers a safety net and making wage increases more predictable in a third round of measures to boost an economy hit by China's slowdown and falling commodity prices.

Indonesia is the largest economy in Southeast Asia, making it a lynchpin for a region that is cutting trade, investment and other barriers to make the countries more globally competitive and lift more of the area's 600 million people out of poverty. However, confidence in the country's economy has slumped in recent months and led to concerns about the administration led by President Joko Widodo.

The government said Monday that it is lowering natural gas prices by reducing its revenue share, and lowering the price of diesel, which is used by transport companies and miners, the Wall Street Journal reported. And a state-owned power producer will offer 30 percent discounts for night-time use.

Meanwhile, the government will start paying 80 percent of the premiums for crop-failure insurance, the Journal said, encouraging small farmers to plant while saving them from deeper poverty in the event of a failure. And salaried workers and their spouses will be able to get loans to start small businesses.

The government also said minimum wage increases will in the future be plotted in five-year time frames, addressing investor complaints about sudden hikes, which helped raise them 42 percent in 2013 and 11 percent last year, the Journal reported.

According to the Journal, the series of measures announced over the past month are small compared with the bigger investor concerns about the rule of law and regulatory clarity, though they may bolster investor confidence, which has slumped from highs recorded when Widodo was elected last year. One possible example of these concerns: flip-flopping on a high-speed train project last month, which finally went to China, leaving Japan smarting.

Bloomberg reported at least one observer saying that the latest measures will at least give "a more immediate boost" to the economy compared with the first two rounds, which included streamlining various regulations and procedures.