JAKARTA -- Indonesia extended its COVID-19 restrictions by a week to Aug. 2 on Sunday to try to curb infections, after the government said it would add more intensive care units amid a rise in deaths.

Indonesia has become Asia's COVID-19 epicentre with hospitals deluged, particularly on the densely populated island of Java and on Bali, where oxygen supplies are running thin.

"I'd like to thank all Indonesians for their understanding and support for the curbs that have been effective for 23 days," President Joko Widodo, known as Jokowi, said, adding that COVID infections and hospital bed occupancies had declined, without specifying by how much.

Considerably looser than the previous curbs, Jokowi said the government would gradually adjust some restrictions, while allowing traditional markets and restaurants with outdoor areas to open, with some limitations, such as giving customers 20 minutes to finish their meals.

Some businesses, from salons to vehicle repair shops, are now allowed to open.

Senior minister Luhut Pandjaitan, who oversees the COVID response on Java and Bali, said the curbs would apply in 140 regions across Indonesia, including the capital Jakarta.

Fewer curbs would be imposed in areas deemed safer, including allowing malls to reopen at 25% capacity and factories to operate, with limitations, Luhut said.

Indonesia will allow free value-added tax for mall tenants, who have been badly hit by the curbs, for their June to August rent, said chief economic minister Airlangga Hartarto.

Faisal Rachman, an economist with Bank Mandiri, said the extension had been expected. Should the restrictions remain throughout August, annual economic growth could be seen at 3.69%, slightly below the government's forecast of 3.7%-4.5%

Indonesia last week reported record-high deaths on four separate days, the last of which was 1,566 deaths on Friday, bringing cumulative deaths to more than 83,000.

Total infections have climbed to more than 3.1 million, though health experts say both deaths and case numbers have been undercounted.

"On principle, it's a good intention from the government to prolong the restrictions. But the same good intention could be applied to counting the real number of infections," Tri Yunis Miko Wahyono, a University of Indonesia epidemiologist, said.

The average number of COVID-19 deaths reported each day in Indonesia has been increasing for 10 days straight, a Reuters tracker shows.

Luhut said on Saturday that full hospitals and patients dying in self-isolation had resulted in higher death tolls, adding that ICUs would be added in areas which have reported the highest number of deaths.

Fewer than 7% of Indonesia's population of 270 million has been fully vaccinated, with Southeast Asia's largest country primarily reliant on shots produced by China's Sinovac Biotech .

(Reporting by Stanley Widianto and Tabita Diela; Additional reporting by Bernadette Christina; Editing by Edwina Gibbs and Nick Macfie)