Indonesia Launches 26.34 Trillion Rupiah Stimulus with Zero Tariffs on LPG and Plastic to Defend Currency

The Quick Take

• Indonesia unveiled a 26.34 trillion rupiah stimulus package to offset external economic shocks and arrest the rupiah's slide
• The package features 0% import tariffs on LPG and plastic raw materials as a central trade and industry support measure
• The stimulus signals Jakarta's urgency to protect domestic industry from currency depreciation and global trade headwinds

Indonesia announced a 26.34 trillion rupiah stimulus package designed to cushion its economy against external shocks and arrest the ongoing depreciation of the Indonesian rupiah. A central feature of the package is trade and industry support through the imposition of 0% import tariffs on LPG and plastic raw materials, directly reducing input costs for Indonesian manufacturers dependent on these commodities. The scale of the stimulus — approximately $1.6 billion USD at current exchange rates — reflects Jakarta's assessment that the external environment, including dollar strength and global trade uncertainty, poses a meaningful threat to Indonesia's growth trajectory and currency stability.

The stimulus carries direct implications for Indonesia's industrial sector and its ASEAN trading partners. Zero import tariffs on LPG benefit Indonesian households and businesses dependent on gas cooking and heating, reducing energy input costs during a period when currency depreciation has inflated imported goods prices. The plastic raw materials tariff reduction specifically targets Indonesia's manufacturing sector, which uses plastic inputs extensively in packaging, consumer goods, and electronics assembly. Singapore, which serves as a key regional trading hub for ASEAN commodity flows, could see changes in Indonesian trade routing as input cost structures adjust to reflect the new tariff regime.

Watch Indonesia's central bank (Bank Indonesia) communications alongside this fiscal stimulus for signs of coordinated monetary response — currency interventions combined with fiscal support typically produce more durable exchange rate stabilization than either tool alone. Track the rupiah's trajectory against the dollar in the weeks following this announcement, as the effectiveness of the stimulus in arresting the slide will determine whether additional packages or rate adjustments are required. The macro variable is the Federal Reserve's rate path: sustained US rate hikes that strengthen the dollar create continuous outward pressure on the rupiah and may require Indonesia to deploy increasingly larger interventions to maintain currency stability.

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