Indonesia doubles wage subsidies, cancels electricity discount in stimulus shake-up
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The skyline of the Jakarta business district in the background of homes. The Indonesian government has cancelled an electricity discount but doubled wage subsidies.
PHOTO: AFP
JAKARTA - In last-minute changes to a planned consumer stimulus package for June and July, the Indonesian government has cancelled an electricity discount but doubled wage subsidies.
Finance Minister Sri Mulyani Indrawati revealed in a press conference on June 2 that the wage subsidies for low-income earners would double from 150,000 rupiah (S$12) a month per individual to 300,000 rupiah.
Eligible beneficiaries include around 17.3 million workers earning up to 3.5 million rupiah a month and some 565,000 “honorary teachers”, a term commonly used for honorarium-based contract teachers.
Dr Mulyani explained that the subsidies would ultimately be financed by social security fund BPJS Ketenagakerjaan but that the government would set aside 10.72 trillion rupiah from the state coffers to “temporarily” fund the programme.
The wage subsidies are part of a series of measures aimed at boosting consumer spending.
When it was announced in May, the package was to cover six areas, one being transport discounts for trains, airplanes and ships. Another included discounts on road tolls for some 110 million eligible drivers. Two more areas were social aid for 18.3 million beneficiaries and a discount on work accident insurance for employees in labour-intensive industries.
The package originally also included a 50 per cent electricity discount for June and July, similar to what the government had granted in January and February.
But following a meeting at the State Palace and prior to June 2’s press conference, Dr Mulyani announced that the discount was not doable. “We have held a meeting with other ministers, and, for the implementation of the electricity discount, the budgeting process turned out to be a lot slower, so if we wanted it for June and July, we have determined that it could not be executed,” she said.
She explained the decision to double wage subsidies with the cancelled electricity discount.
The Energy and Mineral Resources Ministry issued a press statement on June 2 saying it had not been involved in the formulation of the stimulus initiative helmed by Coordinating Minister for Economic Affairs Airlangga Hartarto.
“(The ministry) was never part of a team or any forum that talked about the electricity discount for June and July 2025,” said the ministry’s spokesperson Dwi Anggia in the statement.
Earlier, Energy and Mineral Resources Minister Bahlil Lahadalia said he was unaware of the initiative just days ahead of the implementation.
“I don’t know whether there’s already (a discussion) on the technical (level) or not; I don’t know yet. One thing is for sure, I still haven’t received the report until today,” Mr Bahlil said on May 26, before the policy’s planned implementation.
Such a policy should require “communication” with the energy ministry and the Finance Ministry, Mr Bahlil said, adding that he could only formally instruct state-owned electricity company PLN to execute it after that.
He proceeded to verify the planned policy with PLN president director Darmawan Prasodjo, who happened to be standing next to the minister.
“I’m sure PLN still hasn’t received (any instruction). Have you received any letters from the energy ministry? You haven’t, have you? Because, as far as I’m concerned, I must sign the letters and I haven’t done that,” Mr Bahlil said to Dr Darmawan. “Not yet,” the PLN director briefly replied.
In total, the consumer spending stimulus required some 24.4 trillion rupiah, according to figures presented by Dr Mulyani. THE JAKARTA POST/ASIA NEWS NETWORK
