Southeast Asia's largest economy unveils economic stimulus package worth almost $1B

The stimulus measures will be implemented in the fourth quarter of 2025, the country's chief economic minister Airlangga Hartarto told reporters, adding that some measures would be extended to 2026.

Southeast Asia's largest economy grew 5.12% annually in the second quarter, its best growth rate in two years, but some policymakers said there were signs it was slowing in the subsequent quarter.

"With this stimulus package, we hope we could still reach the 5.2% economic growth target this year," Airlangga told reporters after holding a meeting with the president.

The government will give 18.3 million households 10 kg of rice in the fourth quarter, remove personal income tax for workers in the tourism sector and allocate 5.3 trillion rupiah for a "cash for work" scheme for more than 600,000 people in the September to December period, Airlangga said.

"Cash for work" schemes usually involve providing daily wages to employ people, mostly from rural communities, to work on infrastructure projects like roads and bridges.

The stimulus package also included a paid internship program for 20,000 university graduates and a 50% discount to policy payments for state-provided work injury insurance for ride-hailing motorcycle taxi drivers and truck drivers, Airlangga said.

The removal of personal income tax for certain sectors and the insurance scheme will be extended to 2026, he added.

Income tax on small businesses was supposed to rise to 1% of turnover in 2026, from 0.5% now, but Airlangga said the government has decided to maintain the current rate until 2029.

The government will also launch a replanting program on 870,000 ha of plantations for commodities such as sugar cane, cocoa, coffee, cashew, nutmeg and coconut in 2026, a program that could create 1.6 million new jobs, Airlangga said.

Jakarta will also introduce discounts on airfares for year-end holiday trips, he added, without providing more details.

Finance Minister Purbaya Yudhi Sadewa expected no impact on the forecast for the 2025 budget deficit from the new measures. The latest deficit forecast was 2.78% of gross domestic product.

Housing Minister Maruarar Sirait also said the government, through state banks, will disburse 130 trillion rupiah worth of construction loans for certain property developers and small businesses to scale up their stores.

Maruarar added the government will cover 5% of the annual interest cost of the loans, which are part of efforts by the Prabowo administration to provide three million affordable homes annually and create more jobs.