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Investor Daily - Mengoptimalkan sumber pertumbuhan ekonomi
25 April 2025
By Arnoldus Kristianus
Jakarta, ID — The government remains optimistic that Indonesia's economic growth will reach 5% by optimising various domestic economic growth sources amidst global uncertainties. In this regard, the government is encouraging household consumption, government spending, and boosting investment.
The International Monetary Fund (IMF) has cut its projection for Indonesia's economic growth to 4.7% this year, down from its previous projection of 5.1%. This projection is also below the 2025 State Budget (APBN) target of 5.2%.
"Economic growth in Indonesia in 2025 is still expected to reach around 5%," said Finance Minister Sri Mulyani Indrawati during a press conference on the results of the second periodic meeting of the Financial System Stability Committee (KSSK) in 2025 on Thursday (24/4/2025).
She noted that the IMF's projection for Indonesia is still higher than for the Philippines, which was cut by 0.6%, and Vietnam, which was reduced by 0.9%. Even the projection for Thailand was lowered by 1.1%. These differences are due to the role of exports and imports in the economies of these countries. "This correction is lower compared to corrections for other countries, where their exposure to international trade and their economic ties to the United States are greater," said Sri Mulyani.
The Finance Minister stated that Indonesia's economic growth in the first quarter of 2025 is expected to remain positive amidst increasing global uncertainties. Household consumption in the first quarter of 2025 remains stable. As of 31 March 2025, state expenditure reached Rp620.3 trillion or 17.1% of the budget. This figure includes central government expenditure of Rp413.2 trillion and transfers to regions amounting to Rp207.1 trillion. State expenditure increased by Rp272.2 trillion from February 2025, which was Rp348.1 trillion. Government spending also supports economic growth, particularly through the realisation of holiday allowances (THR), social spending, and other incentives provided in the first three months of 2025 and ahead of Eid al-Fitr.
"This shows that the role of the APBN as a shock absorber can function optimally to mitigate economic turmoil, maintain economic stability, and preserve people's purchasing power through THR payments, subsidies, and social protection," said Sri Mulyani.
At the same time, the development of national strategic projects and increased private property construction performance will drive investment. Private investment continues to run optimally, supported by producer confidence seen in Indonesia's manufacturing activities, which remain in the expansion zone. "Investment, especially non-building investment, continues to support economic growth, as reflected in the increase in imports of capital goods, particularly heavy equipment imports," explained Sri Mulyani.
She also noted that export performance is doing well, supported by increased non-oil and gas exports in March 2025, particularly palm oil, iron and steel, and machinery and electrical equipment. The government consistently explores the potential for expanding exports of superior products in the ASEAN plus 3, BRICS, and European markets amidst reciprocal tariff policies implemented by the United States.
She said President Prabowo Subianto has instructed the government to implement deregulation to enhance Indonesia's potential to boost investment, leading to increased economic growth. "These steps are continuously formulated and will certainly be monitored and implemented, so that confidence in the domestic economy and economic actors can be maintained and even strengthened," explained Sri Mulyani.
Policy mix
On the same occasion, Bank Indonesia (BI) Governor Perry Warjiyo said that BI continues to strengthen its policy mix response, including monetary, macroprudential, and payment system policies, to maintain stability and support sustainable economic growth. "Meanwhile, macroprudential and payment system policies continue to be optimised to support sustainable economic growth," he said.
Separately, public policy expert from UPN Veteran Jakarta, Achmad Nur Hidayat, said that the downward revision of Indonesia's 2025 economic growth projection is not solely due to external factors but also due to the government's weak ability to adapt strategic and swift economic policies.
According to him, President Donald Trump's tariff policies are not the sole cause. Conventional fiscal responses, broad but ineffective subsidies, and reliance on the APBN without strengthening the real economic base are internal factors that exacerbate the situation. "If the government does not immediately change its approach and accelerate policy adaptation with a combination of industrial incentives, export diversification, and targeted protection for vulnerable groups, the risk of a broader economic crisis cannot be avoided," explained Achmad.
He said Indonesia needs a new, bolder, and more adaptive economic strategy. First, protection for domestic industries must be intelligently increased. "The government needs to target import substitution for strategic products and create an innovative ecosystem based on domestic technology," said Achmad.
Second, the fiscal approach must be more progressive and selective. Instead of expanding conventional subsidies, the government should encourage productivity-based spending such as vocational education, strengthening small and medium enterprises (SMEs), and incentives for high-value-added manufacturing sectors. Third, the government must take bold steps to support the middle class. This class is the engine of consumption and economic stability. "By providing income tax incentives, affordable education financing, and accessible housing, domestic consumption can be sustainably boosted," explained Achmad.
Fourth, the government must start restructuring long-term debt and re-evaluating unproductive infrastructure projects. The focus should be shifted to projects based on public needs, such as public transportation, sanitation, and renewable energy.
Fifth, Indonesia needs to redesign investment incentives with clear targets, focusing on investments that create quality jobs and technology transfer. At the same time, oversight of speculative investments must be tightened. "In facing increasingly complex global challenges, Indonesia can no longer rely on old strategies," concluded Achmad.
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