Indonesian Chamber of Commerce and Industry (Kadin) chairman Rosan P. Roeslani has suggested that the government temporarily relax certain taxes to encourage people to spend.

“Why doesn’t the government give an incentive to spend by temporarily cutting value-added taxes (PPN) or luxury tax (PPnBM) for one or two weeks?” said Rosan in Jakarta on Monday.

“This is about how to raise consumer confidence,” he noted.

Data from the Central Statistics Agency (BPS) reveals that household consumption, which accounts for more than half of Indonesia’s Gross Domestic Product (GDP), grew 4.95 percent year on year (yoy) in the second quarter this year.

The figure is a minimal increase from the 4.94 percent yoy growth recorded in the first quarter.

Indonesia saw economic stagnation of 5.01 percent in the first half of this year, compared to 5.06 percent in the same period last year.

Rosan said the decline in consumer spending was a result of a lack of consumer confidence, rather than a weakening of people’s purchasing power.

He said the lack of consumer confidence was caused by several factors, including rising political tensions that were reflected on social media, and a lack of inter-ministerial coordination to maintain a stable investment and business climate. (mrc/bbn)