In an economic and political context, the term "Dark Indonesia" can be interpreted as a condition filled with uncertainty, instability, or even decline in economic and governmental management. This term describes a situation in which various aspects of national life experience stagnation or decline due to internal and external factors.

To objectively understand Indonesia's current economic condition, data-driven analysis is required, examining several key indicators. These indicators reflect a country's economic health and can provide insight into whether the economy is experiencing stable growth or facing serious challenges. Some indicators worth considering include economic growth, inflation, exchange rate stability, unemployment, and global competitiveness.

Table: Indonesia's Economic Performance (2020-2024)

In 2024, the Indonesian economy recorded growth of 5.03%, slightly lower than in 2023.

Inflation stood at 1.84%, reflecting price stability, despite ongoing pressure from rising food and energy prices in some periods.

The open unemployment rate fell to 4.91%, indicating improvements in the labor market, but challenges related to the availability of quality jobs and skills gaps remain a concern.

Indonesia's global competitiveness rose seven places in 2024, its highest level in six years. The Institute for Management Development (IMD) World Competitiveness Ranking (WCR) 2024 research found Indonesia ranked 27th out of 67 countries, up from 34th in 2023. Within Southeast Asia, Indonesia's competitiveness has risen to the top three, after Singapore and Thailand.

Realization of the State Budget (APBN) until February 2025

Latest Tax Revenue Realization

Data as of the end of February 2025 shows that tax revenue realization reached IDR 187.8 trillion, or 8.6% of the target set in the 2025 State Budget. This realization experienced a decrease of 30.19% compared to the same period the previous year, where tax revenue reached IDR 269.02 trillion. This decrease was caused by several factors, including the global economic slowdown that affected export and import performance, as well as exchange rate adjustments that affected people's purchasing power. The government responded to this situation by emphasizing the importance of budget efficiency and strengthening the domestic tax base to maintain fiscal stability.

Market Data and Trends

Historically, the Jakarta Composite Index (JCI) reached an All-Time High (ATH) of 7,910.56 in September 2024, reflecting high market optimism at the time. However, entering 2025, the JCI's performance faced significant pressure. This culminated in a 30-minute trading halt on Tuesday, March 18, 2025, at 11:19:31 a.m. Jakarta Automated Trading System (JATS) time. This halt was triggered by a 5.02% drop in the JCI to 6,146.91. This marked the first trading halt since the COVID-19 pandemic.

Interestingly, the significant decline in the JCI, reaching 7% in the second trading session, occurred while other Asian and global stock markets were showing relatively stable or even strengthening performance. By the close of trading on March 21, 2025, the JCI had corrected 11.61%, or a decline of 822 points compared to the start of the year.

This decline was triggered by various factors, including global economic uncertainty and the fiscal and monetary policies under President Prabowo Subianto, which triggered negative sentiment among both domestic and foreign investors. Additional pressure also came from fluctuations in the rupiah exchange rate, interest rate dynamics, and the potential for a slowdown in national economic growth. These conditions reflect increased caution in the capital market, with market participants tending to sell and reduce exposure to risky assets.

Key Factors Triggering a Trading Halt on March 18, 2025

1. Economic Concerns — Falling Consumer Spending: Recent data shows rare annual deflation and a decline in consumer confidence. This reflects the pressure on Indonesia's middle class due to a lack of formal employment and a contraction in the manufacturing sector. (Source: Financial Times)

2. Fiscal Policy — Burden of Social Programs: The Rp28 trillion per month Free Nutritional Meals (MBG) program promoted by President Prabowo Subianto's administration has raised concerns about fiscal sustainability. The program has the potential to burden state finances, requiring budget cuts for several infrastructure projects.

3. Political Uncertainty — The issue of the resignation of the Minister of Finance and the press conference held by the Deputy Speaker of the Indonesian House of Representatives, Sufmi Dasco Ahmad, along with the leadership of Commission I and representatives of eight factions on Monday, March 17, 2025 regarding the TNI Bill are suspected to be one of the triggers for the decline in the index.

4. Rupiah Weakening — Since the beginning of 2025, the rupiah has weakened by around 2% against the US dollar, further exacerbating investor concerns about Indonesia's economic stability. (Source: Reuters)

5. Morgan Stanley's February 2025 downgrade of Indonesia's stock rating from 'equal weight' to 'underweight' was followed by a downgrade from 'overweight' to 'market weight' or 'neutral' by Goldman Sachs in mid-March 2025.

6. The Organisation for Economic Co-operation and Development (OECD) has lowered its projection for Indonesia's economic growth for 2025 from 5.0% to 4.9%, with an estimated growth of 5.0% in 2026. Source: Economic Outlook Interim Report, March 2025. Response from the Government and Stock Exchange Authority

• Effective March 18, 2025, for the next six months, the Financial Services Authority (OJK) will allow issuers to conduct share buybacks without shareholder approval to stabilize the market. In an official statement on Wednesday (March 19), the Chief Executive of the Capital Market, Financial Derivatives, and Carbon Exchange Supervisory Agency of OJK, Inarno Djajadi, stated that this new regulation aims to strengthen investor confidence and reduce volatility in the capital market. He added that the policy is expected to increase market confidence and help reduce pressure on stock prices.

• Bank Indonesia (BI) decided to maintain its benchmark interest rate at 5.75% in its latest board of governors meeting on March 18-19, 2025. This decision was taken amid market volatility caused by concerns about the government's fiscal policy and global economic conditions.

• Coordinating Minister for Economic Affairs Airlangga Hartarto and Finance Minister Sri Mulyani Indrawati met with President Prabowo to discuss the latest economic conditions, including developments in Special Economic Zones (SEZs) and other fiscal issues. (detikfinance 19/3)

Free Nutritional Meal Program (MBG) & 8% Economic Growth Target

The MBG program can be a key driver in achieving the 8% economic growth target by involving MSMEs, cooperatives, and Village-Owned Enterprises (BUMDes). Here are some key points on how this program can contribute:

1. Improving Human Resource Productivity and Competitiveness

• Adequate nutritional intake improves people's health and concentration, especially for children and productive workers.

• Reducing stunting and malnutrition rates which can have long-term impacts on workforce productivity.

2. Driving Local Supply Chains

• Raw materials are sourced from food MSMEs, farmer cooperatives, and BUMDes, thus strengthening the local economic ecosystem.

• Empowering farmers, livestock breeders, and fishermen as food suppliers with a fairer pricing scheme.

3. Creating New Jobs

• The involvement of culinary MSMEs as providers of ready-to-eat food opens up new business opportunities.

• Job opportunities for logistics, distribution and cooking staff in various regions.

• The Head of the National Nutrition Agency (BGN), Dadan Hindayana, revealed that there are currently 1,000 Nutrition Fulfillment Service Units (SPPG) tasked with implementing the free nutritious meal program (MBG). "Currently, SPPG services have reached around 3 million beneficiaries, and the target is to reach 82.9 million by the end of the year," Dadan said while attending the launch of the National Police SPPG in South Jakarta on Monday (March 17, 2025).

4. Strengthening Cooperatives and Village-Owned Enterprises as Drivers of the Regional Economy

• Cooperatives and BUMDes can play a role in managing community kitchens and distributing food.

• Increasing the institutional capacity of village economic communities in the food industry ecosystem.

5. Multiplier Effect on Economic Growth

• With the increase in people's purchasing power due to reduced spending on nutritious food, consumption in other sectors can be encouraged.

• The circulation of money in the real sector increases, which ultimately drives national economic growth.

If managed with a good and sustainable system, this program will not only be a social safety net, but also a tool to accelerate the economy based on the people's economy.

Conclusion

President Prabowo Subianto's leadership has been marked by economic transformation efforts through Prabowonomics, which aims to increase sustainable economic growth and national productivity. However, challenges such as declining tax revenues until March 2025 have forced the government to increase spending efficiency and strengthen the domestic tax base to maintain fiscal stability. Externally, the Fed maintained interest rates at 4.5% for the second consecutive year after three cuts since September 2024. This decision reflects the US central bank's caution in the face of slowing economic growth and rising core inflation, partly driven by the US's new tariff policy and potential retaliation from its trading partners. The impact of this policy is particularly pronounced in emerging markets, including Indonesia, as it strengthens the US dollar and increases capital outflows.

As a result, Indonesia's financial markets experienced increasing pressure, reflected in the weakening of the Jakarta Composite Index (JCI) throughout the first quarter of 2025. The banking, retail, commodities, property, and technology sectors experienced significant corrections due to a combination of external and domestic factors. The property and retail markets were hit by weakening purchasing power, while the banking sector faced tighter liquidity pressures. Meanwhile, prices of key commodities such as coal and crude palm oil (CPO) fluctuated due to global uncertainty, impacting Indonesia's export revenues.

Amid these conditions, Bank Indonesia (BI) maintained its benchmark interest rate in response to global market uncertainty and the need to stabilize the rupiah exchange rate. However, this measure also limited the scope for credit expansion in the real sector, potentially slowing economic recovery. In such a situation, the role of fiscal stimulus is crucial to supporting the domestic economy, including tax incentives for strategic industries, more efficiently targeted social assistance programs, and accelerated infrastructure spending.

With the right combination of policies—monetary stability, more aggressive fiscal stimulus, and accelerated structural reforms—Indonesia has the potential to experience economic recovery in 2025–2026. The government must optimize strategic infrastructure spending, investment incentives, and tax reforms to strengthen domestic economic competitiveness and reduce dependence on foreign funds.

If Indonesia successfully navigates this economic turbulence, factors such as domestic market resilience, the acceleration of the digital economy, and its natural resource advantage could be key catalysts for long-term prosperity. However, failure to act swiftly on policy reforms—particularly those related to job creation, exchange rate stabilization, and increasing industrial productivity—could prolong market instability and slow future economic growth.

On the other hand, the rupiah depreciated to Rp15,840 per USD, influenced by a combination of external and domestic factors. Global economic uncertainty and commodity price volatility added additional pressure. Domestically, a trade deficit in several periods and high demand for raw material imports also contributed to the rupiah's weakening.

Source: Emiten News

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