By: Eko B. Supriyanto, Chairman of Infobank Institute
DATA does not lie. The country’s economic pulse is weakening, but the rulers are still dancing on the stage of illusion. They hide behind a well-worn rhetoric of optimism, as if sweet words can bury the fact that Indonesia is “shivering” with fever.
Perhaps it is not just blood lethargy that we are facing, but a long “coma” – a hereditary catastrophe that will be the cruelest legacy for our children and grandchildren. The government may pretend to be deaf, but history will record them as the “executioners” of Indonesia Emas.
In the midst of the Indonesian economy is not doing well. However, these days we are preoccupied with the uproar over genuine certificates and fake certificates. In fact, it would be better to restore public and market confidence from the inherent stamp that is often called omon-omonomic. Prabowo’s government has great capital, even though his aides find it difficult to implement the big programs initiated – because most of the ministers are “apprentice” class.
Data from the Central Statistics Agency (BPS) shows that economic growth in the first quarter of 2025 was only 4.87 percent (yoy), lower than the same period the previous year. More worryingly, the economy actually contracted by 0.98 percent compared to the fourth quarter of 2024. This is not just a slowdown, but a signal of a recession that is starting to peek.
The polarization of consumption is increasingly evident. Honestly. The upper classes are still holding on, while the purchasing power of the lower classes continues to decline. The Consumer Confidence Index (CCI) has continued to plummet since November 2024, signaling deepening pessimism. In fact, the decline in revenue of companies such as Telkomsel and the consumption of Indofood Instant Noodles are clear evidence of weakening purchasing power. Data on deposits at the Deposit Insurance Corporation (LPS) shows that small group savings are increasingly deflated – and this shows that this group is “steadily” – aka eating savings. In fact, in everyday jokes, because money is so difficult, even tuyul has complained that finding money is also difficult.
In line with that, the labor sector, formal is falling, and informal is expanding – without job security. Unemployment is creeping up, especially in the manufacturing sector, which experienced its deepest contraction since August 2021. Even more concerning, the formal sector continues to shrink, while the informal sector – with low wages and minimal protection – swells.
The agricultural sector has again become the largest “reservoir” of labor, not because of progress, but because of the failure of industry to create decent jobs. In fact, job training programs (BLK) are no longer considered relevant to the needs of the industry. Many factories have closed. The workers returned to the village to fight for the meager inheritance of land. And, those without inheritance are forced to work at anything. Honestly, this is a time bomb of social problems, and because of this, it is also fertile for “thugs”.
Meanwhile, the government often makes inconsistent policies. This has an impact on the market. In fact, the government is often trapped in optimistic rhetoric, while reality speaks otherwise. For example: government spending cuts hit the hospitality and tourism sector. Followed by its derivatives, the restaurant sector and MSMEs, which have been the foundation of the economy.
Not only that, the Job Creation Law, which was expected to attract investment, was instead followed by a decline in foreign investor interest. In fact, at the beginning of the government, inconsistent fiscal policies, such as the push and pull of the VAT increase, have eroded credibility in the eyes of the market. It could be a relief to the public. However, in terms of policy credibility, it can be undone overnight.
But recently there have been two rare events. TNI Commander General Agus Subiyanto canceled the mutation of seven high-ranking officers. The change is certainly surprising, because it is not common in the TNI. Generally, decisions in the TNI have gone through very careful consideration, and therefore it has never been heard of a decision of the TNI Commander being annulled in a short time.
Second, there is the matter of Hasan Nasbi, who has resigned, but still participated in the Cabinet Meeting because he was invited. Now he is working again. This is like a confusing saying. “Already but not yet,” already resigned but still in office. These two things are noted by the public as policy inconsistencies. And, will distort public and market confidence.
Not to mention the problem of online gambling which is “allowed” to run rampant, drain money out of the country and weaken the domestic economy. People are given entertainment and dreams with online gambling. In the last five years, the turnover of online gambling according to the Financial Transaction Reports and Analysis Center (PPATK) has exceeded Rp1,000 trillion.
In line with that, the World Bank said that 60 percent of Indonesia’s population is vulnerable to poverty. The BPS version of the poverty line is also considered too low, obscuring the reality of people’s suffering. The middle class, which should be the backbone of the economy, is shrinking and shifting to the vulnerable poor. This vulnerable group may be a time bomb.
However – that doesn’t mean the government is shut out. The government still has opportunities in the midst of the storm. Despite the gloom, some gaps are still open, such as the downstreaming of natural resources, such as nickel, which can support exports. In fact, the global trade war can be utilized for import substitution and new exports.
The three million house program, at least, will create demand so that it can drive demand. But in the midst of conditions like this, the most important thing is to encourage job creation. Or, restore the state budget to encourage increased public consumption. At present, many existing home ownership loans (KPR) are in default, let alone building houses, demand is dragging.
Meanwhile, the financial sector is relatively stable compared to the 1998 crisis, although this is not a guarantee. For this reason, it is time for the government to pay more attention to the financial sector. The capital market is indeed a place for people who have money. But the capital market is as important as the “muddy” market. It is time for the government to give a good signal to the financial market that is struggling to deepen the financial sector (financial deepening) so that it is stronger, and not fragile.
Another thing – the Merah Putih Village Cooperative program should not damage Himbara banks. The idea of the Merah Putih Village Cooperative is to create demand. However, operations and governance need to be well prepared with managers who have integrity. Do not let the presence of this cooperative be a gift from the government that won the election.
The data speaks clearly: the Indonesian economy is sick. The government must stop hiding behind a narrative of optimism and immediately take concrete steps. Otherwise, what happens is not just a slowdown, but a prolonged crisis that will burden future generations.
Clearly, the economic figures remind us all. Perhaps if there is no policy change, Indonesia could be trapped in a prolonged middle-income trap. The solution is not just populist programs like free nutritious meals, but structural reforms. Also, cleaning up thugs to improve the investment climate, and of course streamlining the bureaucracy and handling corruption more firmly. The law should no longer be a commodity that is sold cheaply at the court.
It is time for trust to be rebuilt. Regaining trust is more urgent than fussing over fake diplomas. Proving whether a diploma is real or fake will not make the community full, but instead, it is currently causing a commotion that does not answer the economic problems that are not good. Mr. President, Indonesia’s economy is currently in the shadow of a crisis. Let there be no more “twin” suns holding each other hostage.
