Bappenas has confirmed plans to revise the national poverty line calculation method, which has remained unchanged since 1997 despite significant shifts in Indonesia’s socioeconomic landscape. According to Bappenas Deputy Maliki, changes in consumption patterns and Indonesia’s current status as an upper-middle-income country are key drivers for the update.
The revision is mandated under the 2025–2029 National Medium-Term Development Plan (RPJMN), and is being developed in collaboration with Statistics Indonesia (BPS) and various experts. This effort has been in preparation for five years. The update also aligns with the World Bank’s latest standard, which now applies the 2021 PPP (Purchasing Power Parity) benchmark, raising the poverty line for upper-middle-income countries from US$6.85 to US$8.30 per day.
Maliki emphasized the urgency for Indonesia to adopt the new standard, following in the steps of around 60% of countries that have already updated their national poverty lines.
— Bisnis, 12 June 2025
EU CEPA to Be Implemented Soon: Indonesia’s Key Export Products to Enjoy 0% Tariffs in EU Market by 2027
The Indonesian government has confirmed that key export products—such as textiles, fishery products, footwear, and palm oil will benefit from zero percent tariffs in the European Union under the Indonesia–European Union Comprehensive Economic Partnership Agreement (IEU CEPA). Approximately 99% of Indonesia’s exports to the EU will gradually receive zero tariffs. In return, Indonesia will reduce tariffs on 97.75% of its national tariff lines for EU products.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated that the legal draft of the IEU CEPA is 90% complete, with the finalization targeted for September 2025. Full implementation is expected to begin in the first quarter of 2027, following ratification by all EU member states.
— Republika, 13 June 2025
BI Survey May 2025: Consumer Expectations Weaken, Spending Declines While Savings Increase
Bank Indonesia’s May 2025 Consumer Survey recorded a decline in the Consumer Expectation Index (IEK), falling to 129.0 from 129.8 in April. This indicates weakening consumer optimism about the economic outlook over the next six months. The decline was driven by lower expectations regarding job availability and business activity, although income expectations remained relatively strong. Geographically, optimism declined in major cities such as Jakarta, Medan, and Surabaya.
Additionally, consumers reduced their consumption share from 74.8% to 74.3%, while the proportion allocated to savings remained stable at 14.9%. This shift was most evident among expenditure groups earning Rp1–2 million and Rp4.1–5 million, reflecting a more cautious stance amid rising economic uncertainty.
— Kontan, 12 June 2025
Several Regional Governments Begin Establishing Local Funding Institutions
Regional governments such as DKI Jakarta and West Nusa Tenggara (NTB) have started forming local funding entities like the Jakarta Collaboration Fund and NTB Capital to boost regional investment. Nailul Huda, Director of Digital Economy at Celios, welcomed the initiative but emphasized the importance of directing investments toward strategic projects aligned with each region’s vision and local economic characteristics.
The main challenge, he noted, lies in securing initial capital particularly for regions with limited regional budgets (APBD). Jakarta holds a comparative advantage due to its sizable APBD and easier access to investors.
— Kontan, 10 June 2025
Prabowo Confirms Giant Sea Wall Construction to Begin Soon, Special Authority to Be Established
President Prabowo Subianto has confirmed that the long-delayed Giant Sea Wall project along Java’s northern coast will commence without further delay. First proposed in 1995, this strategic infrastructure will stretch 500 kilometers from Banten to East Java, requiring an estimated investment of US$80 billion and a construction timeline of up to 20 years.
Prabowo has instructed the formation of a special authority and a team to begin public outreach. The sea wall is designed not only to combat coastal erosion and tidal flooding but also to serve as a clean water reservoir for drought-prone coastal regions. The government views the project as a long-term solution to climate change and land subsidence challenges.
-Bisnis, 12 June 2025
3 Million Housing Program Requires Rp300 Trillion Annually, Government Prepares Incentives for Private Sector
Deputy Minister of Public Works and Housing, Fahri Hamzah, stated that President Prabowo’s 3 Million Housing Program will require up to Rp300 trillion annually, with Rp240 trillion expected from private investment and Rp70 trillion from the state budget (APBN). To attract private participation, the government plans to offer incentives such as land cost exemptions for vertical housing projects.
Fahri explained that the APBN allocation will fund housing subsidy programs like FLPP and BSPS, and a full budget proposal will be included in the 2026 state budget. Currently, the Ministry’s budget remains limited—at just Rp3.44 trillion—under the 2025 APBN formulated during President Jokowi’s term. As a result, this year’s efforts will focus on continuing existing housing schemes.
— Bisnis, 12 June 2025
Rosan Roeslani: Indonesia’s Infrastructure Investment Potential Reaches US$644 Billion
Investment Minister and BKPM Head Rosan Roeslani stated that Indonesia’s infrastructure investment potential stands at US$644 billion, with funding expected to be sourced from the government (40%), the private sector (30%), and state-owned enterprises (30%).
Speaking at the ICI 2025 forum, he highlighted several priority sectors:
- Renewable Energy, with a potential of 3,007 GW, though only 15 GW has been installed so far.
- Geothermal Energy, with vast reserves in Java and Sumatra.
- Industrial Downstreaming, involving commodities such as nickel, coconut, and seaweed to enhance value-added production and support local farmers.
- Digital Economy, projected to grow from US$130 billion to US$360 billion by 2030, including the development of data centers (currently only 600 MW out of a 3.7 GW potential).
To support investment, the government is accelerating licensing reform by integrating six ministries into the Online Single Submission (OSS) system, with plans to include 12 more ministries.
— Kontan, 13 June 2025
Life Insurance Investment Plunges in Q1 2025
The Indonesian Life Insurance Association (AAJI) reported that the life insurance industry’s investment returns dropped sharply to just Rp340 billion in Q1 2025, a significant decline from Rp12.32 trillion in the same period last year. This downturn was driven by an 8% year-to-date fall in the Jakarta Composite Index (IHSG), amid global uncertainties and U.S. protectionist policies.
Despite the decline, diversification and risk management strategies have helped maintain positive returns. Most investment portfolios remain allocated to government securities (SBN) at Rp214.23 trillion, while equity holdings—the second-largest component fell 19% to Rp119.79 trillion. The industry remains optimistic about long-term recovery in the stock market.
— Bisnis, 10 June 2025