Economic Stimulus Program: A Strategic Move by the Government to Safeguard Public Purchasing Power
By: Gavin Asadit
The Indonesian government officially launched an economic stimulus program with a total budget of IDR 24.44 trillion in early June 2025. This policy was announced by Minister of Finance Sri Mulyani Indrawati as a strategic response to the slowdown in national economic growth in the first quarter of the year.
Chairman of the Gerindra Party Faction, Budisatrio Djiwandono, also stated that the stimulus was a measured effort to boost public purchasing power, strengthen domestic consumption, and promote equitable regional economic development.
Previously, Member of Commission XI of the House of Representatives from the National Awakening Party (PKB) Faction, Bertu Merlas, emphasized that the government should take advantage of every momentum to boost purchasing power—especially during the school holiday season.
“The government has prepared an economic stimulus package. We will oversee its implementation on the ground to ensure it effectively boosts national economic growth. The school holiday period usually coincides with a significant increase in public spending,” he explained.
The stimulus program is primarily aimed at increasing public consumption and mobility ahead of and during the June–July 2025 school holiday period. One of its key components is providing discounts in public transportation. The government offers a 30 percent discount on economy class train tickets for around 2.8 million passengers. For air transportation, the government covers 6 percent of the Value Added Tax (VAT) on economy class flight tickets, targeting six million passengers. Meanwhile, for sea transportation, a 50 percent fare discount is provided to at least 500,000 passengers. The total budget allocated for the transportation package is approximately IDR 940 billion.
Additionally, a 20 percent toll road discount will be granted by Toll Road Business Entities (BUJT) under a non-state budget (non-APBN) funding scheme. This discount applies during the 14-day period before and after the school holidays and is expected to benefit over 110 million vehicles. This initiative is expected to reduce inter-regional travel costs and support the distribution of goods and services during the peak consumption period.
On the other hand, the government is also strengthening social protection programs to enhance the purchasing power of vulnerable groups. Additional direct assistance in the form of a top-up of IDR 200,000 per month on the Basic Food Card (Kartu Sembako) will be provided for two months to over 18 million beneficiary families. The government will also continue the rice aid program, delivering 10 kilograms of rice per family per month for two months. These two forms of aid will require a total budget of IDR 11.93 trillion. This approach is considered effective as it directly targets groups with a high consumption tendency toward cash and in-kind assistance.
The Wage Subsidy Assistance (BSU) program is another key instrument targeting workers earning below IDR 3.5 million per month. Around 17.3 million formal workers will receive BSU of IDR 600,000 over two months, or IDR 300,000 per month. Similar assistance will also be provided to over 565,000 honorary teachers. The total budget allocated for the wage subsidy program is IDR 10.72 trillion. Its implementation will rely on data from the Workers Social Security Agency (BPJS Ketenagakerjaan), ensuring ease, efficiency, and rapid disbursement.
In addition, a stimulus will be provided through an extension of a 50 percent discount on Work Accident Insurance (JKK) premiums for 2.7 million workers in labor-intensive sectors. The discount will be valid for six months, from August 2025 to January 2026. This particular stimulus will not use state budget funds, but instead comes from collaboration with employment insurance agencies. Although the government had considered offering household electricity subsidies, it ultimately redirected the funds to wage subsidies, which are seen as more effective in immediately driving household consumption. The budget originally intended for electricity discounts has been fully reallocated to the wage subsidy program to ensure more direct and impactful support.
This economic stimulus package is fully funded through a combination of IDR 23.59 trillion from the state budget and IDR 850 billion from non-APBN contributions. The government has ensured that this policy will not breach fiscal discipline, keeping the state budget deficit below the 2.8 percent cap of Gross Domestic Product (GDP). The distribution of this program will use existing mechanisms such as the Integrated Social Welfare Data (DTKS), BPJS Ketenagakerjaan, and the State Logistics Agency (Perum Bulog).
Several economists view this stimulus as a swift and positive move, highlighting the importance of accurate targeting and timely implementation to maximize its positive impact. Economist Fakhrul Fulvian of Trimegah Sekuritas remarked that this is merely the initial step and must be supported by accelerated government spending to yield real results in boosting second-quarter economic growth. BSI economist Banjaran Indrastomo emphasized the need for clear government communication to ensure the public understands the benefits of the program, as well as the need for swift disbursement to avoid delayed impact.
Overall, the launch of the June 2025 economic stimulus program reflects the government’s seriousness in maintaining purchasing power and economic stability amid global uncertainty and declining domestic consumption. The program’s effectiveness will largely depend on timely disbursement, cross-agency coordination, and accurate identification of beneficiaries. In the long run, for such policies to truly form a foundation for sustainable economic recovery, the government needs to formulate follow-up strategies that combine fiscal, labor, and real sector productivity approaches in a more integrated manner.
The author is a Social and Community Issues Observer.
