Indonesia announced a new economic stimulus package to support the rupiah and stimulate growth. The package, which follows moves made since 2015 to make it easier for investors to do business in the country, also complements the one introduced in August last year with a goal to boost more foreign investment.

The package comprises of expansion of the tax holiday, the adjustment to the negative investment list and the provision of tax incentives for the mandatory saving of export earnings.

The package includes tax cuts from next year for exporters of commodities in the mining, plantation, forestry and fishery sectors. Mulyani Indrawati, the Finance Minister, in a press conference at the presidential palace, said that a reduction of income tax will apply to the interest of time-deposits both in local and foreign currencies deriving from export revenues. However, exporters who do not keep their export earnings domestically may be barred from moving their goods overseas.

For agriculture-based manufacturing and digital industry, the stimulus package will provide for a tax holiday and will allow for a reduction of the country's Negative Investment List for priority sectors such as textile printing, said Industry Minister Airlangga Hartarto at the same press conference.

The foreign ownership in 54 business sectors, including the steel, chemical, and petrochemical industries can now be 100 percent, up from the present 30 percent to 67 percent. The central bank expects the economy will expand by 5.1 percent this year, compared to last year's 5.07 percent.   

The rupiah has been on an upward trend since early November on the back better than expected growth in the third quarter. It traded at 14,611 rupiah per US dollar at the foreign exchange spot market on Friday's closing session versus 14,665 a day earlier, according to data by Bloomberg.