Strategies to Increase Purchasing Power: Government Efforts to Strengthen the National Economy
By: Jodi Mahendra
The government continues to strive to maintain the momentum of economic growth amidst global pressures and uncertain geopolitical dynamics. As Indonesia enters the second quarter of 2025, the main focus is on increasing public purchasing power as one of the foundations for national economic recovery and strengthening. This step aligns with the ambitious targets outlined in the National Medium-Term Development Plan (RPJMN) 2025-2029, which aims for an annual economic growth rate of 8%.
One concrete strategy implemented by the government is the provision of fiscal stimulus to encourage domestic consumption. In early 2025, the government rolled out a series of policies, such as optimizing social assistance and early disbursement of the Religious Holiday Allowance (THR) for Civil Servants (ASN), which was distributed earlier, in March 2025. This stimulus is expected to stimulate household consumption, particularly during significant events like Ramadan and Idul Fitri.
In addition, the government launched the Free Nutritious Meals (MBG) program, which began in January 2025. This program targets vulnerable groups and students as part of an effort to strengthen human resources while stimulating the local economy through the food sector.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated that these strategies are designed as part of an orchestrated fiscal and monetary policy that is pro-growth. Furthermore, accelerating government spending, including social assistance, THR, and food price subsidies, is also a priority to ensure that public consumption does not decline due to inflationary pressures.
He further stressed the importance of maintaining the purchasing power of the middle class, which is the main driver of Indonesia’s economy. The government also continues to expand access to education and healthcare for the public through programs such as the Indonesia Smart Card (Kartu Indonesia Pintar) and the National Health Insurance (Jaminan Kesehatan Nasional).
Previously, the Indonesian government set an economic growth target of 8% for 2025. To support this target, the government’s strategy focuses on strengthening public purchasing power, bolstering the real sector, and creating a more productive and efficient business climate. In the second quarter of 2025, the government continued the fiscal stimulus policies that began earlier in the year, particularly through accelerating state spending, social assistance programs, and support for public consumption. This stimulus aims to ensure that purchasing power remains stable despite global challenges and economic uncertainty.
One of the main focuses is the acceleration of ministry and agency spending, especially those directly impacting the public and productive activities. The government is also maximizing social protection programs, such as food assistance, energy subsidies, and educational support. Additionally, to maintain consumption momentum post-Eid, various trade promotion programs and fiscal relaxations will remain in place. The government is also pushing the distribution of People’s Business Credit (KUR) and ultra-micro financing as tangible support for MSMEs, which are the backbone of the national economy.
Industrialization and downstreaming are also key pillars for medium-term economic growth. Key natural resources such as nickel, copper, palm oil, and seaweed are becoming the focus of development through industrial zones and Special Economic Zones (KEK). By increasing the added value domestically, the government hopes to strengthen the competitiveness of Indonesian products in international markets and create new job opportunities.
Another strategic step is regulatory reform. The government launched Government Regulation (PP) No. 8 of 2025 on Export Proceeds in Foreign Exchange (DHE), which requires exporters to keep 100% of their export earnings in the country for at least 12 months. This policy aims to maintain exchange rate stability and strengthen foreign exchange reserves.
Not only focused on domestic matters, the government is also strengthening international cooperation. Indonesia is finalizing a free trade agreement negotiation with the European Union (EU-CEPA) and is strengthening its position in international forums such as BRICS and the OECD. This step demonstrates Indonesia’s seriousness in expanding export markets, attracting foreign investment, and adopting global governance standards.
Overall, the strategy to increase purchasing power implemented by the government is not an isolated effort. This strategy is part of a holistic approach to strengthening the national economy through consumption, investment, exports, and sustainable structural transformation. External challenges, such as the weakening of China’s economy, geopolitical tensions, and climate change, remain a concern. With adaptive policy instruments and strong leadership, Indonesia is increasingly optimistic about maintaining its growth momentum.
Senior economist and Executive Director of CORE Indonesia, Mohammad Faisal, assessed that the combination of fiscal stimulus, industrial downstreaming, and deregulation reflects the right policy direction because of consistent implementation and strengthened inter-agency coordination. He also mentioned that purchasing power is indeed the key to maintaining short-term growth.
With the various steps that have been and are being taken, 2025 is a crucial moment for Indonesia to prove its economic resilience and adaptability. Increasing purchasing power is not just about consumption but about sustaining inclusive and equitable growth. The government now bears the great responsibility of ensuring that every policy rupiah truly reaches the people and has a real impact on national economic recovery.
