Indonesia\u2019s economic week was framed by two natural events that\ntested the resilience of state institutions and private enterprise\nalike, even as fiscal policymakers pressed ahead with an ambitious\nagenda of financial inclusion, energy transition and structural reform.\nThe eruption of Mount Anak Krakatau, which began its most intense phase\non 4 September, disrupted nearly 3,000 flights and affected an estimated\n341,000 passengers, forcing the closure of eight airports including\nJakarta\u2019s Soekarno-Hatta hub for roughly 46.5 hours. By Tuesday, most\nairports including Halim Perdanakusuma and Bandung\u2019s Husein Sastranegara\nhad reopened following negative ash tests, though Wunopito Airport in\nEast Nusa Tenggara remained shuttered owing to a separate eruption at\nMount Lewotolok. The Indonesia National Air Carriers Association\nestimated airline losses of up to Rp19 billion per day, while PT Kereta\nApi Indonesia stepped in with additional long-distance trains from Solo,\nYogyakarta and Surabaya to absorb stranded travellers. Tourism Minister\nWidiyanti Putri Wardhana struck an optimistic note, pointing to a 5.23\nper cent rise in foreign arrivals between January and July, but the\nKadin Indonesia Institute warned that repeated disruptions, compounded\nby widespread forest fires that Copernicus data suggest have pushed\nIndonesia\u2019s wildfire emissions to the world\u2019s highest levels, demand a\nNational Business Continuity Framework treating disaster resilience as a\ncompetitiveness issue rather than an afterthought.<\/p>\n
On the fiscal front, Finance Minister Purbaya Yudhi Sadewa marked\nroughly a year in office by defending his brand of public optimism,\ninvoking the \u201cself-fulfilling prophecy\u201d theory from his own 1993\nacademic work to argue that confidence itself drives growth. He reported\nthe budget deficit at a controlled 0.91 per cent of GDP as of July, tax\nrevenue growth of 23.7 per cent without new levies, and a Consumer\nConfidence Index that climbed to 118.5 in August from 116.8 in July. Yet\neconomists including CORE Indonesia\u2019s Yusuf Rendy Manilet cautioned that\nthis rebound reflects a recovery from a low base rather than a durable\nturnaround, with Kadin similarly noting that improved sentiment has not\nyet translated into stronger purchasing power. Purbaya also confirmed\nthat global oil prices breaching US$100 a barrel, driven by the\nescalating US-Iran conflict and Houthi attacks in the Bab al-Mandab\nStrait and on Saudi energy infrastructure, would not derail the state\nbudget, as the average price paid by Indonesia remains below the US$90\nthreshold assumed in planning. The 2027 draft budget deficit was set at\n2.4 per cent of GDP, with spending raised by Rp9.1 trillion to Rp4,106.3\ntrillion, according to DBS Group Research\u2019s Radhika Rao, who\ncharacterised the figure as a sign of fiscal consolidation\ndiscipline.<\/p>\n
The government\u2019s flagship financial inclusion drive, the mass bank\naccount opening programme targeting more than 200 million citizens with\nan initial Rp50,000 deposit, dominated headlines throughout the week,\nthough its budget remained a moving target. Coordinating Minister\nAirlangga Hartarto initially floated Rp11 trillion, but Purbaya\nrepeatedly stressed the figure was not yet finalised and unlikely to\nreach that ceiling, while confirming Bank Syariah Indonesia would\nservice Aceh and Bank Rakyat Indonesia the rest of the country, a scheme\ndetailed further by Danantara chief Rosan Roeslani. Economists Fakhrul\nFulvian of Trimegah Sekuritas warned that success must be measured by\nactive usage rather than mere account numbers if the initiative is to\ngenuinely strengthen monetary sovereignty in the digital era.<\/p>\n
Energy policy saw significant momentum. Indonesia\u2019s B50 biodiesel\nmandate, the world\u2019s first 50 per cent palm oil blend, reached 94 per\ncent of the roughly 6,050 participating Pertamina stations, with the\nMinistry of Energy and Mineral Resources projecting Rp170 trillion in\nforeign exchange savings from halted diesel imports and job creation for\n2.1 million people. The achievement has drawn interest from Japan,\nMalaysia and European nations seeking to replicate Indonesia\u2019s technical\nand regulatory framework, even as Commission XII of the DPR pressed\nPertamina Patra Niaga to guard against logistical bottlenecks and\nunified FAME pricing disputes. Meanwhile, the long-running debate over\nthe Oil and Gas Bill intensified, with the House designating the\nrevision a parliamentary initiative aimed at concluding discussions by\nOctober. The central sticking point remains where a proposed Special\nBusiness Entity (BUK Migas) replacing SKK Migas should sit: under the\nPresident, the Ministry of Energy, or Pertamina, a decision with\nfar-reaching implications for upstream investment governance.<\/p>\n
Mining and downstreaming continued to generate strong non-tax revenue\ndespite falling volumes, with nickel PNBP reaching Rp21 trillion by late\nAugust, roughly double the previous year, and total mineral and coal\nPNBP hitting Rp108 trillion. Vale Indonesia advanced its Rp19.29\ntrillion 2027 capex plan and confirmed its Morowali and Pomalaa HPAL\nplants remain on track for late-2026 operation, while Antam accelerated\npermitting for its Buli HPAL project in East Halmahera. Coal production\nstood at 423.71 million tonnes through July, below 2025 levels as the\ngovernment pursues an \u201coptimum production\u201d strategy, though PTBA still\ntargets 50 million tonnes for the year on the back of a 218 per cent\nsurge in net profit. The newly inaugurated Sarjito, heading the OJK\u2019s\nMineral and Strategic Commodities Exchange (BMKS), set out ambitions to\ntransform Indonesia from a price-taker into a price-maker for nickel,\ncoal and other strategic commodities when the new Icomex exchange\nlaunches on 1 January 2027.<\/p>\n
Infrastructure and connectivity projects advanced on multiple fronts.\nJakarta\u2019s LRT Phase 1B between Manggarai and Velodrome began trial\noperations, alongside successful test runs on the Kelapa\nGading-Manggarai extension recording a 28-minute journey time, while\nGovernor Pramono Anung reaffirmed his five-year target to bury 6,500\nkilometres of the capital\u2019s tangled overhead cables through the SJUT\nprogramme, backed by an initial Rp90 billion allocation. Disaster\nrecovery efforts continued in North Sumatra, where Tito Karnavian\u2019s\nPost-Disaster Rehabilitation and Reconstruction Task Force pushed for\naccelerated sabo dam and permanent housing construction in Central\nTapanuli, and in East Manggarai, where earthquake damage left numerous\ngovernment offices and health facilities in the \u201cred zone.\u201d<\/p>\n
Looking ahead, Indonesia enters the final quarter of 2026 navigating\na delicate balance: robust commodity-linked revenue and an ambitious\nbiofuel and financial inclusion agenda set against volcanic disruption,\nforest fires, and a combustible Middle East that keeps oil prices and\nshipping risk elevated. With the 2027 budget taking shape, the Oil and\nGas Bill nearing a decisive vote, and consumer confidence still fragile,\nthe coming months will test whether Purbaya\u2019s self-fulfilling optimism\ncan be matched by tangible improvements in purchasing power,\nproductivity, and the structural reforms needed to escape the\nmiddle-income trap that the Asian Development Bank Institute warns\nremains firmly within reach only through sustained institutional\nchange.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/this-week-in-the-indonesian-economy-4-10-sep-2026-1789124516", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }