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Economic growth

Indonesia Unveils Comprehensive Policy Package to Stimulate Economic Growth and Foster Job Creation

Strategic Insights

— 2 min read

Under the leadership of President Prabowo Subianto, the Indonesian government has launched a new set of incentives and programs aimed at driving economic growth, reducing unemployment, and promoting a more favorable investment climate despite global uncertainty. The policy package, unveiled at the Presidential Palace in Jakarta, focuses on broader public welfare and community empowerment, moving beyond direct aid. The initiatives, which build upon the mid-year stimulus that mobilized Rp24.44 trillion (approximately US$1.5 billion) for similar measures, target various sectors, including workforce empowerment, tourism, hospitality, and labor-intensive industries.

Key Takeaways:

  • The policy package allocates Rp198 billion (US$11 million) to provide monthly stipends of Rp3.3 million (US$195) for six months to at least 20,000 college graduates through an internship program.
  • Article 21 income tax exemptions will be expanded beyond labor-intensive sectors to target 552,000 tourism and hospitality workers for the final quarter of the 2025 tax year, supported by Rp120 billion in funding.
  • Food assistance worth Rp7 trillion will be distributed as 10 kilograms of rice per household during October-November 2025, with a December evaluation to determine continuation.
  • A 50 percent discount on work accident and death insurance contributions will be offered to 731,361 non-wage workers, including freelancers, for six months.
  • The government has reduced housing loan interest rates for BPJS Ketenagakerjaan subscribers from five to three percentage points above Bank Indonesia's benchmark, with a budget of Rp150 billion (US$8.8 million) to support 1,000 housing units this year.
  • A cash-for-work scheme in labor-intensive sectors, targeting 609,465 citizens, will be implemented with a combined budget of Rp5.3 trillion (US$320 million).
  • The government will accelerate deregulation under Government Regulation (PP) No. 28 on risk-based business licensing by integrating related systems into the Online Single Submission (OSS) platform, aiming to cover 50 regions in 2025 and expanding to 300 regions in 2026.
  • Improvements to housing quality and expansion of space for micro, small, and medium enterprises (MSMEs) and gig economy workers will be implemented through pilot projects in Jakarta and other major cities.
  • The 0.5 percent final income tax scheme for MSMEs will be extended until 2029, applying to 542,000 registered taxpayers with a budget allocation of Rp2 trillion.
  • The Article 21 income tax exemption for tourism and hospitality workers will continue into 2026, covering those earning less than Rp10 million per month, backed by Rp480 billion (US$29 million).

Statistics:

  • Rp198 billion (US$11 million) allocated for internship program stipends.
  • 552,000 tourism and hospitality workers to benefit from Article 21 income tax exemptions in 2025.
  • Rp7 trillion allocated for food assistance to be distributed in October-November 2025.
  • 731,361 non-wage workers to receive a 50 percent discount on work accident and death insurance contributions.
  • Rp150 billion (US$8.8 million) budget for reducing housing loan interest rates for BPJS Ketenagakerjaan subscribers.
  • Rp5.3 trillion (US$320 million) combined budget for the cash-for-work scheme in labor-intensive sectors.
  • 50 regions in 2025 and 300 regions in 2026 target for deregulation under Government Regulation (PP) No. 28.
  • Rp2 trillion budget allocation for the 0.5 percent final income tax scheme for MSMEs until 2029.
  • Rp480 billion (US$29 million) allocated for the continuation of Article 21 income tax exemptions for tourism and hospitality workers in 2026.

Sources:

  • Airlangga Hartarto, Coordinating Minister for Economic Affairs, at the Presidential Palace in Jakarta on September 15.
  • President Prabowo Subianto's goal of providing three million new homes to address Indonesia's housing backlog.
  • Rp24.44 trillion (approximately US$1.5 billion) budget mobilized in May for similar stimulus measures.
  • Government Regulation (PP) No. 28 on risk-based business licensing.
  • Online Single Submission (OSS) platform.
  • HT Digital Content Services with permission from Antara News.

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