Coordinating Minister for the Economy, Airlangga Hartarto, has pledged to accelerate government spending of at least 25 percent of the state budget, or Rp694 trillion (US$44.77 billion) in an effort to boost consumption and stabilize the economy amid ongoing unrest and rising unemployment.
Speaking at the Indonesia Stock Exchange on Monday, September 1, 2025, Airlangga said ministries and agencies had been instructed to speed up disbursements and roll out programs to stimulate public demand.
Measures include national events, transport ticket discounts for trains, ships, and toll roads, housing subsidies for 41,000 households, and the expansion of Free Nutritious Meals (MBG) program to 75 million recipients starting November.
“The government will also launch reskilling programs to address layoffs, while fiscal stimulus such as full VAT exemptions for housing purchases will be provided,” Airlangga said.
He added that President Prabowo Subianto had reaffirmed his administration’s commitment to prioritizing the welfare of ordinary citizens.
However, three economic think tanks Core Indonesia, the Institute for Development of Economics and Finance (Indef), and The Prakarsa criticized the fiscal strategy, calling it misaligned with public needs. In a joint statement, they said that last week’s mass protests reflected deeper failures in economic governance.
The groups highlighted a Rp50 trillion cut in regional transfers in the 2025 state budget and a planned Rp270 trillion reduction in 2026, which they said had fueled property tax hikes across regions. At the same time, they noted, lawmakers continue to receive generous housing allowances while police spending outpaces the Ministry of Health budget.
They also warned that the MBG program risked diverting funds away from education and research, undermining long-term development goals. On labor issues, they flagged Indonesia’s 5.2 percent unemployment rate the highest in ASEAN with 59.4 percent of workers still in the informal sector and wages stagnating at Rp3.09 million per month.
Between January and July, the Manpower Ministry recorded 43,503 layoffs, up from 42,863 in the same period last year. Meanwhile, 4.6 million digital platform workers, mostly online drivers, earn around Rp2.5 million monthly with only 12 percent covered by social security.
The three think tanks urged the government to enact five reforms: a fairer tax system including a wealth tax;budget reallocation from defense and bureaucracy to social sectors; stronger labor protections including for gig workers; green and sustainable investment; and tighter fiscal accountability.
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