Indonesia to Cut Transport and Power Prices to Spur Consumption
(Bloomberg) -- Indonesia will cut transport and power costs and deliver other stimulus in June and July in an effort to boost household spending and rekindle economic growth.
The government will provide discounts on train, plane and ferry tickets during the school holiday period, as well as toll road fee reductions targeting about 110 million drivers, the Coordinating Economic Affairs Ministry said in a statement Saturday.
It will also slash electricity bills by 50% for 79.3 million households and increase the allocation of staple food assistance for 18.3 million families. There will be salary top-ups for workers earning less than 3.5 million rupiah ($215) per month as well as for contract teachers.
“This stimulus is expected to boost economic growth in the second quarter,” Minister Airlangga Hartarto said. The timing is important because seasonal festivities that might have boosted consumption have already passed, he added.
President Prabowo Subianto’s 8% economic growth target is being challenged by a slowdown in activity. Household consumption, which accounts for more than half of Indonesia’s gross domestic product, grew just 4.89% in the first three months of the year, the slowest pace since the end of 2023.
The ministry said the incentives are being finalized and will begin June 5. It estimates the combined incentives could lift second-quarter economic growth to about 5%.
The government also plans to extend a premium discount for a work accident social security program as part of its efforts.
©2025 Bloomberg L.P.
