Title: Indonesia Braces for Global Economic Pressures in 2025
Article:
Indonesia’s Minister of Finance, Sri Mulyani Indrawati, has warned that the country is likely to face significant economic pressures in 2025, which could directly impact its economy. Despite these challenges, the government is committed to maintaining a stable economic climate and preserving the purchasing power of its citizens.
Sri Mulyani, speaking at a press conference for the 2024 State Budget (APBN) in Jakarta, acknowledged the unprecedented global economic pressures, but assured that the government is taking various measures to protect citizens and their purchasing power. Some of the pressures she cited include ongoing political issues and conflicts, the El Niño phenomenon, geopolitical tensions, Federal Funds Rate policies, and the slowdown in China’s economy, which is one of Indonesia’s largest trading partners.
"Policy and global conditions remain dynamic, and this will continue into 2025," she stated.
While there is some optimism about China’s efforts to stimulate its economy, the United States‘ upcoming political landscape is a concern. President Donald Trump’s re-election could lead to policies that negatively impact global trade and financial markets. Additionally, Europe’s three major economies—France, Germany, and the UK—are grappling with political and economic challenges that could further impact global markets.
To help mitigate these pressures, the Indonesian government has implemented a series of economic policies for the start of 2025. These include:
- Rice Subsidy: Providing 10kg of rice per month for two months (January and February) to low-income households (around 16 million beneficiaries).
- Electricity Discount: Offering a 50% discount to households with power consumption up to 2200VA for two months, benefiting approximately 81.42 million customers and covering 9.1 TWh/ month, or 35% of national electricity consumption.
- Property PPN DTP: A 100% discount (January-June 2025) and 50% discount (July-December 2025) on Value-Added Tax (PPN) for property purchases up to Rp5 billion.
- Electric Vehicle Incentives: Tax breaks for Electric Vehicle (EV) imports and local production, as well as a 3% reduction in Import Value-Added Tax (PPh) for hybrid vehicles.
- Wage Income Tax: A tax exemption for workers earning less than Rp10 million per month in sectors like textiles, ready-made clothing, footwear, and furniture.
- Job Loss Insurance: Expanded benefits and training opportunities for workers experiencing layoffs.
- JKK Iuran Discount: A 50% discount on Jaminan Kecelakaan Kerja (JKK) premiums for six months for workers in labor-intensive sectors (around 3.76 million beneficiaries).
- PPh Final Revision: Extended tax benefits for small businesses and an exemption for those with annual turnover below Rp500 million.
- Industry Revitalization: Subsidized loan programs to upgrade machinery and improve productivity in labor-intensive sectors.
As the global economic landscape becomes increasingly complex, Indonesia continues to make strategic efforts to protect its citizens and maintain stability. While the challenges ahead are significant, the government’s proactive approach provides a solid foundation for navigating the economic uncertainties of 2025.
Article by Arjuna Machmud and Mia ingin Julianti
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