Indonesia’s Fiscal Resilience: Driving Growth Amid Regional and Global Uncertainty
By Teguh Anantawikrama,
Vice Chairman of the Indonesian Chamber of Commerce (KADIN)/Head of MSMEs at HIPPI
INVESTORTRUST.ID - As of April 2025, the performance of Indonesia’s State Budget (APBN) confirms its essential role as both a stabilizer and a driver of economic transformation. The realization of state revenue reached Rp868.98 trillion (31.3% of the target), while state expenditures stood at Rp888.55 trillion (26.2% of the ceiling), demonstrating an adaptive and responsive fiscal policy.
Tax revenues amounted to Rp717.45 trillion (30.8%), with non-tax state revenues (PNBP) at Rp151.38 trillion (34.3%). Despite pressures from declining global commodity prices and slower export activity, Indonesia has maintained positive growth in state income.
On the spending side, the government focused on supporting people’s purchasing power, infrastructure development, and key social programs.
2025 State Budget Realization – Q1. Infographic: Compiled by Investortrust Research.
Across Southeast Asia, early 2025 has been marked by slower growth and increased economic headwinds:
• Vietnam is growing at 5.8%, supported by domestic consumption, but challenged by weaker manufacturing exports.
• Thailand is expected to expand around 3.0%, mainly driven by tourism, while domestic demand remains tepid.
• Malaysia faces slowing revenues from oil and palm oil, keeping growth at around 4.0%.
• The Philippines sees a relatively stronger 5.6% growth, supported by remittances and fiscal spending.
• Singapore is experiencing a slowdown to 2.1%, due to a decline in tech exports and financial services.
Compared to its neighbors, Indonesia stands out for its balanced fiscal management and proactive economic measures. The country’s ability to maintain steady tax collection, prudent debt management, and efficient spending has placed it in a strong position to navigate regional uncertainty.
Why Indonesia Remains Optimistic
Indonesia’s economic optimism is rooted in several structural strengths:
1. Large Domestic Market – With over 280 million people, Indonesia’s consumption base provides a reliable engine for growth even when exports weaken.
2. Strategic Position in Global Supply Chains – As companies diversify away from China, Indonesia is becoming an increasingly attractive manufacturing and logistics hub.
3. Steady Investment Inflows – Despite global volatility, foreign direct investment continues to flow, particularly into mining, infrastructure, and digital sectors.
4. Commitment to Fiscal Reform – The government has remained committed to improving tax compliance, optimizing spending, and maintaining debt sustainability.
5. Strong External Buffers – With adequate foreign exchange reserves and a manageable current account deficit, Indonesia is less vulnerable to external shocks.
Danantara: A Strategic Investment Engine
A pivotal development reinforcing Indonesia’s economic resilience is the establishment of Danantara Indonesia, the nation’s new sovereign wealth fund launched in February 2025. With an initial capital of $20 billion, Danantara is set to manage assets exceeding $900 billion, consolidating major state-owned enterprises (SOEs) under a unified investment strategy .
Danantara aims to channel investments into high-impact sectors such as metal processing, artificial intelligence, renewable energy, and downstream industries. Notably, it has secured a $4 billion joint investment with the Qatar Investment Authority, marking a significant vote of confidence from international partners .
The fund’s governance structure includes esteemed global advisors like Ray Dalio, founder of Bridgewater Associates, and economist Jeffrey Sachs, ensuring transparency and adherence to international best practices .
The APBN and Danantara: Synergizing for National Growth
The synergy between the State Budget and Danantara is poised to accelerate Indonesia’s economic transformation. While the APBN continues to fund essential public services and infrastructure, Danantara provides a platform for strategic investments that drive industrialization, technological advancement, and sustainable development.
This dual approach enables Indonesia to:
• Enhance Economic Diversification: By investing in emerging sectors, reducing reliance on traditional commodities.
• Attract Foreign Investment: Through transparent and strategic investment vehicles.
• Promote Inclusive Growth: By supporting MSMEs and regional development initiatives.
In the face of global economic uncertainties, Indonesia’s proactive fiscal policies and strategic initiatives like Danantara underscore its commitment to sustainable and inclusive growth. By leveraging its domestic strengths and fostering international partnerships, Indonesia is well-positioned to navigate challenges and seize emerging opportunities.***
