Indonesia Launches $1.5 Billion Stimulus Package to Address Energy Crisis and Rupiah Depreciation
Alina Collins
Indonesia unveiled a $1.48 billion stimulus package for the second half of 2026, covering rice handouts, tariff cuts, and job training — but at just 0.12% of GDP, economists warn it falls short of the 5.4% growth target.
Where does the money go?
The largest slice — IDR 18.04 trillion — funds 10 kg rice packages for 33.24 million households, roughly 11.5% of the population.
IDR 6.26 trillion goes to internships and vocational schools; IDR 2.04 trillion covers transport subsidies during school holidays and year-end.
This means → over 70% of the package flows to food and travel, propping up baseline consumption rather than driving investment.
What changes on tariffs and taxes?
Import duties on LPG and plastic raw materials drop to zero; aircraft-parts tariffs are cut.
In plain terms = zero-tariff plastic feedstock lowers food-packaging costs across the board — nearly all food packaging uses plastic — making this an upstream inflation brake.
Royalty income tax for domestic authors falls from up to 35% to 1.5%, budgeted at IDR 500 billion; officials estimate the measures will deliver IDR 2.25 trillion in cost savings and multiplier effects.
How do the soybean and transport subsidies work?
Imported soybeans receive a subsidy of IDR 2,000 per kilogram on a quota of 250,000 metric tonnes, directly benefiting tofu and tempeh — a traditional Indonesian fermented soybean staple — producers.
This reflects a structural vulnerability: Indonesia needs roughly 2.5 million tonnes of soybeans a year for tofu and tempeh, all imported, so soybean prices feed straight into basic meal costs.
Train tickets and state-ferry fares get up to a 30% discount during holidays; VAT on domestic economy-class flights remains fully subsidised in the same periods.
Why is the EV subsidy missing?
Electric-vehicle subsidies — widely expected by July at the latest — were left out of this package; officials said they are "under review."
The earlier plan included IDR 5 million (≈$280) per electric motorbike and a 40%–100% VAT subsidy on electric cars.
This means → fiscal space is already tight, and the government has chosen livelihoods over industrial transition — at least for now.
Is this package big enough?
Economists note that IDR 26.34 trillion equals just 0.11%–0.13% of nominal GDP — useful as a downside buffer, but nowhere near enough to lift growth to 5.4%.
Airlangga University economist Rachma Gafmi warned: "If bank liquidity stays tight and credit growth slows, the fiscal boost could be offset by private-sector weakness."
This reflects the broader bind: the rupiah has hit record lows this year, equities are down 30%, and the central bank has hiked rates three times in five weeks to defend the currency — whether this stimulus can restore investor confidence is the decisive variable.
Content is for reference only, not financial advice.