Prabowo Shifts Growth Engine to Danantara and Private Sector, Tapers State Budget Role
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JAKARTA, Investortrust.id — President Prabowo Subianto has emphasized that Indonesia will rely more on its sovereign investment authority, Danantara, and the private sector to fuel economic growth, job creation, and capital inflow — a shift designed to ease dependence on the state budget, or APBN.
He delivered the remarks on Friday, Aug. 15, 2025, during the government’s address on the 2026 State Budget Bill and Financial Note before a joint session of the national legislature in Jakarta.
“For high-value, commercially viable economic activities, Danantara will take the lead, working in synergy with both national and global private sectors,” said President Prabowo.
Danantara to Anchor Long-Term Investment Strategy
The President said the APBN would serve as a catalyst, while Danantara and private capital would become the main executors of productive investment.
He described Danantara — formally the Daya Anagata Nusantara Investment Management Agency (BPI Danantara) — as a professional and transparent sovereign investment agency that manages state-owned assets, attracts foreign capital, and channels funds into strategic sectors such as minerals, energy, infrastructure, food security, and housing.
“Professionalism, competence, and integrity will be our foundation, backed by transparent and accountable governance. This is Indonesia’s opportunity to become a global economic force,” he said.
Sri Mulyani: Fiscal Reforms Already Underway
Finance Minister Sri Mulyani Indrawati confirmed that starting in 2025, dividends from state-owned enterprises would no longer be recorded as APBN revenue. Instead, they will be received and managed by Danantara.
She said this shift had already been factored into fiscal planning. The 2025 state revenue is estimated at Rp 2,865.5 trillion, or 95.4% of the target. Of this, tax revenues are projected at Rp 2,076.9 trillion, while customs and excise are expected to reach Rp 310.4 trillion.
On the spending side, the state budget is forecast to reach Rp 3,527.5 trillion, or 97.4% of the annual target. The central government spending is projected at Rp 2,663.4 trillion, with Rp 864.1 trillion allocated to transfers to local governments. The resulting deficit is expected to be Rp 662 trillion, equivalent to 2.78% of GDP.
Path to 8% Growth Lies in Investment, Not Just Spending
To meet Indonesia’s long-term growth target of 8%, the government must move beyond its traditional reliance on household consumption and public spending. Sri Mulyani said that productive investments — both domestic and foreign — would be essential to expand production capacity, enhance exports through downstreaming, and strengthen the country’s global competitiveness.
“We hope that in the second half of this year, Danantara will already start showing a significant impact on investment growth,” she told media leaders during a Thursday briefing.
She pointed to China’s economic trajectory, where investment contributes more than 40% to GDP. By comparison, Indonesia's investment contribution currently stands between 28–32%, and was only 27.8% in the second quarter of 2025.
Smarter Budget Allocation with Social Emphasis
President Prabowo reiterated that public funds would be prioritized for core services and poverty reduction, while commercially feasible projects would be handled by Danantara and private capital.
The government projects a lower deficit of 2.48% of GDP in 2026 as Danantara absorbs more responsibility for strategic investment. With less fiscal burden, the APBN can allocate more toward sectors like education, health, social assistance, and food security.
The 2026 economic assumptions include a growth target of 5.4%, inflation capped at 2.5%, a government bond yield of around 6.9%, and an exchange rate of Rp 16,500 per US dollar.
In terms of socio-economic targets, the government aims to bring down open unemployment to between 4.44% and 4.96%, reduce poverty to 6.5–7.5%, and improve income equality with a Gini coefficient of 0.377 to 0.380. The Human Capital Index is projected to rise to 0.57.
The government also expects improvements in the Farmers’ Welfare Index and a significant increase in formal job creation. Subsidies and local government transfers will be better integrated and guided by the National Socio-Economic Unified Data (DTSEN), a single national socioeconomic database.
DTSE is a comprehensive dataset containing individual-level social and economic information for the entire Indonesian population, often linked to the National Identity Number (NIK). This data is used for various purposes, including social assistance program planning and evaluation, and monitoring the achievement of Sustainable Development Goals.
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