By: Gavin Asadit )*
Social assistance (bansos) is no longer seen as a burden on the state budget, but has become a strategic instrument for driving inclusive economic growth. This statement was affirmed by Arief Anshory Yusuf, a member of the National Economic Council (DEN), in a public discussion at the end of June 2025.
Arief explained that social assistance should be understood as a form of social investment capable of generating long-term economic growth. He believes that through appropriate and measured distribution of assistance, poor and vulnerable communities can be lifted out of poverty, ultimately boosting household consumption, expanding the domestic market, and increasing national productivity.
In the 2025 State Budget (APBN), which reached IDR 3,621.3 trillion, the government allocated around IDR 503.2 trillion, or 13.9 percent, for social protection, including social assistance programs such as the Family Hope Program (PKH), Non-Cash Food Assistance (BPNT), and direct cash assistance.
In addition, the health budget received a portion of Rp 218.5 trillion, or approximately 6 percent of total state spending. The government also issued a stimulus package in the second quarter of this year totaling Rp 24.4 trillion. Of that amount, Rp 11.93 trillion was allocated specifically for increasing social assistance, Rp 10.72 trillion for wage subsidies, Rp 0.94 trillion for transportation discounts, and Rp 0.65 trillion for toll road subsidies. The government hopes that these measures will maintain public purchasing power and maintain household consumption growth amidst global economic pressures.
However, several economists caution that increasing the social assistance budget will not necessarily have a direct impact on economic growth unless accompanied by structural reforms and program effectiveness. They believe that social assistance must be well-targeted and synergize with other economic empowerment programs to prevent dependency and instead serve as a pathway to independence for the poor. In this regard, the use of accurate data and the digitalization of social assistance distribution are crucial aspects that must be strengthened.
As of July 9, 2025, the Ministry of Finance recorded that the distribution of basic food assistance had reached IDR 20.26 trillion for 18.2 million beneficiary families (KPM), or approximately 97.22 percent of the national target of 18.8 million KPM. Each KPM receives IDR 200,000 in cash assistance per month, intended to support the fulfillment of basic food needs.
Finance Minister Sri Mulyani emphasized that social assistance is not only a welfare instrument, but also an economic protection that stimulates domestic consumption, a key driver of national growth. As of the end of May 2025, total social assistance spending had reached IDR 48.8 trillion, or approximately 32.6 percent of the annual target. Although slower than last year’s 46.3 percent growth in the same period, the government has ensured that acceleration will be implemented in the second semester to close the gap.
From June to July 2025, the government increased the value of social assistance. Recipients now receive IDR 1 million for two months, up from the previous IDR 600,000. This policy is part of a strategy to stimulate the people’s economy and reduce the impact of inflation on the poor. The Minister of Social Affairs stated that social assistance recipients come from deciles 1 to 4 in the Integrated Social Welfare Data (DTKS). The data update system allows for automatic adjustments to the recipient list, including the removal of names deemed to have improved welfare. Those who believe they are eligible but are not registered still have the right to file a complaint and re-verify through official channels.
The government is also continuing to develop the digitalization of social assistance as an effort to strengthen accountability and efficiency of distribution. In early July 2025, the Chairman of the National Economic Council, Luhut Binsar Pandjaitan, directly reviewed the implementation of a pilot project for digitalization of social assistance in Banyuwangi. This program involves the use of digital identity and biometric systems, as well as data integration through a public digital infrastructure called the “Perlinsos Portal.” This system enables synergy between agencies in distributing the Family Hope Program (PKH), the Non-Cash Food Assistance Program (BPNT), and other assistance, while minimizing duplication and budget leakage. This pilot project is expected to become a national model that will be widely replicated across all regions in the coming months.
Digitalization also opens up opportunities for more transparent monitoring and real-time data-driven evaluation. This is crucial because for years, weaknesses in the manual social assistance distribution system led to inaccurate targeting and potential misuse of funds. Through a digital approach, every aid item is systematically recorded, verified, and monitored, thereby increasing public trust in government social assistance programs.
Besides serving as a social security measure, social assistance also stimulates the local economy, particularly in rural areas. President Prabowo Subianto, along with regional heads, launched the Red and White Village Cooperative (KDMP) initiative in mid-July 2025. This initiative aims to strengthen the people’s economy from the grassroots level through village-based cooperatives integrated with social protection programs and micro-enterprise assistance.
The government has recorded that all villages in East Java and North Maluku have active, legally registered cooperatives. These cooperatives not only absorb social assistance funds as revolving capital but also facilitate business training, local product development, and market access. The President described village cooperatives as the “lifeblood of the people’s economy” that must be continuously strengthened to ensure equitable economic growth, even in remote areas.
The Coordinating Ministry for Economic Affairs also added that this village-to-city approach is the foundation for building an inclusive national economy. Social assistance is not only intended to boost purchasing power momentarily, but also to create a microeconomic transformation towards higher productivity. The government hopes this program will encourage sustainable increases in rural incomes and strengthen the national economic structure from the bottom up.
Despite this, various challenges remain. In addition to budget constraints and targeting issues, social assistance policies also face the challenge of ensuring that aid does not create long-term dependency. Therefore, cross-sector synergy and policy consistency are needed to ensure that social assistance programs truly serve as a bridge to economic independence. Regular evaluation, strengthening village institutional capacity, and active involvement of civil society in the monitoring and implementation process are crucial steps.
Based on the latest developments as of July 2025, social assistance has played a crucial role in boosting people’s purchasing power, protecting vulnerable households, and driving the village economy. If managed with good governance, transparency, and adaptability to change, social assistance provides more than just temporary relief, but also serves as the foundation for a more resilient, equitable, and comprehensive economy.
)* The author is an observer of social and community issues
