Government Readies Rp26.34 Trillion Stimulus to Counter Deindustrialisation

The government has prepared a stimulus package worth Rp26.34 trillion for the second half of the year to strengthen the manufacturing sector and address symptoms of premature deindustrialisation in the country. “There is a stimulus of Rp26.34 trillion in the second semester, of which Rp2 trillion is focused on transport and production intervention,” said Fithra Faisal Hastiadi, an expert staff member at the Government Communication Agency (Bakom) RI, in Jakarta on Wednesday. Fithra explained that the Rp2 trillion portion of the budget would also be focused on exempting import tariffs for plastics, aircraft components, and LPG. This measure is being taken by the government as a short-term solution to restore economic space for the middle class, whose numbers have fallen from 57.3 million people in 2019 to 46.7 million in 2025. According to him, this decline in the middle class occurred due to deindustrialisation, which has caused a scarcity of formal employment opportunities in productive sectors. “The contribution of the manufacturing sector to GDP is almost 30 percent. What is happening to us is deindustrialisation,” Fithra stated. He added that if extractive industries such as mining are excluded from the calculation, the contribution drops even further to just 12 percent. Fithra described this phenomenon as premature deindustrialisation. To address this structural issue, the government is committed to promoting a reindustrialisation programme through the implementation of the fifth Asta Cita mission, accompanied by increased investment in human resources. Fithra stressed that building national human resource capacity is key to ensuring the local workforce is ready to collaborate with incoming foreign investment, so that national economic growth can proceed more inclusively.