Ilona Estherina, Jakarta – Three economic and public policy research institutions, or Think Tanks, released a statement following the outbreak of demonstrations in several regions. They are Indef, Core Indonesia, and The Prakarsa. The economists believe that the recent turmoil reflects the government's failure to manage a fair economy.
Director of the Center of Reform on Economics (Core) Indonesia, Mohammad Faisal, stated that the current chaos and looting are an accumulation of disappointment, anger, and frustration among the community, especially among the lower middle class. 'Regardless of any political motives behind it,' he said during a public discussion held by the three institutions online on Monday, September 1, 2025.
According to Faisal, there are fundamental issues regarding welfare and justice that have not been properly addressed. 'This has become a smoldering ember that can easily ignite the public's emotions.'
The economists believe that the fiscal priorities in the draft of the state revenue and expenditure budget (RAPBN) for 2026 are not in favor of the people. For example, the reduction in regional transfer funds (TKD) has led to a spike in tax increases. On the other hand, the House of Representatives (DPR) has approved a housing allowance of Rp 50 million per month.
In addition, the budget for the Indonesian National Police (Polri) next year is allocated Rp 145.6 trillion, exceeding the Rp 114 trillion for the Ministry of Health. The same goes for the free nutritious school meal (MBG) program, which takes a significant portion of the education budget.
The three institutions also highlighted the widening economic inequality and the worsening unemployment crisis exacerbated by widespread layoffs. 'Violence by the authorities only worsens the government's image, showing its failure to understand the structural economic root of the problem,' stated the release from Indef, Core Indonesia, and The Prakarsa.
Here are 5 demands presented by the economists to the government and the House of Representatives.
1. Fiscal justice and budget transparency
- Moratorium on additional tax burdens such as VAT and property tax amid weakening purchasing power, especially among the lower middle class.
- Immediate implementation of wealth tax for super-wealthy individuals as a form of redistribution and reduction of social economic disparity.
- Revision of the regional transfer fund (TKD) policy that triggers tax and regional levies hikes.
- Implementation of participatory budgeting involving the community, including vulnerable groups, in the budget planning process.
2. Rebalancing state expenditure priorities
- Reallocation of non-productive expenditure (including additional incentives for government officials, members of the House of Representatives, and military spending) towards strengthening the real sector and job creation.
- Evaluation of the increase in defense spending to prioritize education, health, and research.
- Budget efficiency directed at domestic consumption stimulus and the creation of quality jobs.
- Immediate provision of cash social assistance to the poor and incapable through the reallocation of the Red and White Village Fund and MBG budget.
3. Comprehensive protection for workers and communities affected by business activities
- Development of a decent work framework to ensure fair wages and working hours, as well as job safety.
- Establishment of regulations equivalent to laws to protect and ensure the welfare of digital platform workers with a tripartite scheme.
- Wider inclusion of workers into the Employment Social Security (BPJS Ketenagakerjaan) and Health BPJS with proportional mechanisms and contributions.
- Massive implementation of cash for work programs targeting young workers, laid-off workers, and other unemployed groups.
- Acceleration of legal certainty integrating business standards, human rights, and the environment to create investment that guarantees public rights protection and ecological preservation.
4. Rebalancing state expenditure priorities
- Stimulation of the real sector to create formal and decent jobs and reduce the vulnerability of the informal economy.
- Acceleration of the transition of 59 percent of informal workers to the formal sector through regulatory ease and fiscal incentives.
- Correction of economic policy direction from centralistic to people-oriented and democratic economy.
- Reallocation of investments from environmentally damaging extractive sectors to sustainable industries that promote long-term growth.
5. Policy accountability and transparency
- Building public trust through fiscal policy transparency and budget accountability.
- Comprehensive evaluation of the 2026 RAPBN involving public participation to ensure budget allocation is in favor of the people.