By: David Dwira
Fiscal policy is an important instrument in ensuring that national economic welfare can be felt evenly, especially by grassroots communities. Currently, Indonesia’s fiscal policy is increasingly showing a pro-people character. By prioritizing productive sectors such as Micro, Small, and Medium Enterprises (MSMEs) and strengthening regional economic bases, the government seeks to ensure that national economic growth is not only concentrated in major cities but also reaches remote areas.
Finance Minister Purbaya Yudhi Sadewa has become a central figure in strengthening pro-people fiscal policy. His focus on empowering MSMEs is clear evidence that the state is actively accelerating equitable economic development. Purbaya’s two main pillars—providing tax incentives for MSMEs and enforcing laws against misuse of such facilities—demonstrate a balance between support and firmness.
The extension of the 0.5% Final Income Tax (PPh) policy for MSME taxpayers until 2029 is a progressive step that provides business certainty and space for small entrepreneurs to grow. With this policy, the government gives millions of MSME actors a long breath to transform from survival-oriented businesses into growth-oriented enterprises. In the long term, this incentive is expected not only to strengthen the competitiveness of MSMEs in the domestic market but also to open opportunities for them to enter export markets.
However, pro-MSME policies are not without oversight. Purbaya highlighted the phenomenon of “business splitting” conducted by some large entrepreneurs to enjoy low tax rates by dividing their business entities to still qualify as MSMEs. Such actions undermine the principle of fiscal fairness and harm small entrepreneurs who genuinely need support. Therefore, the government actively tracks and takes strict action against such fraudulent practices as part of efforts to maintain the integrity of the national taxation system.
Beyond taxation, serious attention is also given to protecting MSMEs from unfair trade practices, particularly regarding the widespread illegal import of goods such as second-hand clothing. The government sees these practices as suppressing domestic production and harming the local textile industry. Actions against illegal import mafias and corrupt officials involved demonstrate the state’s seriousness in protecting economic sovereignty. This step also opens up opportunities for creating new jobs in small and medium industries, which have long been the backbone of the people’s economy.
On the other hand, promoting fiscal fairness at the regional level is an equally important issue. The Chairman of the Association of All Indonesian Regency Governments (APKASI), Bursah Zarnubi, emphasized that fiscal justice must be the soul of every national policy. According to him, fair fiscal policy is not merely about numbers in the state budget but about how these policies can revive regional autonomy and provide room for regency governments to develop local potential.
Bursah believes that fiscal policy so far has tended to be re-centralized, which ultimately limits regional initiatives in formulating development policies. He calls on the central government to see regions as equal partners in development, not as a fiscal burden. A decentralized approach is believed to strengthen economic equity and create more jobs in regions.
In this context, the synergy between national fiscal policies that favor MSMEs and the principle of regional fiscal fairness is a key factor for equitable prosperity. Tax incentives provided by the central government must be balanced with regional policies that facilitate ease of doing business, accelerate licensing, and provide adequate infrastructure support for the growth of productive sectors.
Furthermore, the ongoing pro-people fiscal policy also has a chain effect on creating new jobs. When MSMEs grow, the demand for local labor increases. This not only helps reduce unemployment but also strengthens the purchasing power of lower-income communities, ultimately accelerating the regional economic cycle.
The government’s efforts to extend fiscal incentives for MSMEs and strengthen regional fiscal justice represent a comprehensive strategy demonstrating the state’s seriousness in empowering the people’s economy. These policies are not solely aimed at increasing state revenue but also promote economic equity and regional independence.
The government appears to recognize that Indonesia’s economic strength does not lie solely in large conglomerates but in millions of MSME actors spread across the country. By providing a healthy fiscal space, pro-people policies, and strict law enforcement against misuse, the vision of an inclusive and fair national economy can be realized.
Ultimately, the success of pro-people fiscal policy is measured not only by macroeconomic stability but also by the extent to which it directly impacts community welfare. Incentives for MSMEs, protection of local industries, and fair fiscal distribution to regions will become a solid foundation for a resilient, independent, and socially just economy. With fiscal policies that favor the people, Indonesia is on the path to true economic independence, where growth is no longer the privilege of a few but shared prosperity for all citizens across the regions.
( The author is an Economic Observer)*
