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Indonesia's New Finance Chief Aims to Spur Growth, Ease Unrest

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  Published in Business and Finance on Monday, September 8th 2025 at 22:32 GMT by Bloomberg L.P.
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Indonesia’s New Finance Chief Sets Ambitious Agenda to Boost Growth and Calm Unrest

On September 9, 2025, President Joko Widodo announced a landmark reshuffle of Indonesia’s economic leadership: the appointment of Muhammad Iqbal Rahman as the new Minister of Finance. The move comes amid mounting pressure on Jakarta’s government to revive an economy that has struggled to sustain its pre‑pandemic growth trajectory and to quell the growing social unrest that has swept the archipelago’s provinces in recent months. Bloomberg’s detailed profile of Rahman’s mandate reveals a three‑pronged strategy that seeks to spur macro‑economic expansion, tighten fiscal discipline, and deploy targeted social policies designed to pacify discontent among the country’s vast working‑class population.

A Fresh Face with a Proven Track Record

Rahman, 48, has been a long‑time fixture in Indonesia’s financial circles, serving as deputy finance minister for three years and heading the Ministry’s “Growth & Innovation” division. Prior to that, he was the chief economist at Indonesia’s state‑owned Bank Indonesia, where he earned a reputation for pragmatic macro‑policy and a willingness to experiment with unconventional tools such as sovereign wealth‑fund‑style fiscal injections. Bloomberg’s report notes that Rahman’s career has been marked by a focus on “structural reforms that improve the investment climate without stifling growth.”

He replaces Bambang M. S., who stepped down after a public debate over the handling of a nationwide rise in commodity prices and the slow pace of infrastructure development. The transition comes at a pivotal moment: Indonesia’s GDP growth slowed to 3.2 % in the first quarter of 2025, the lowest in a decade, and inflation has crept above the Reserve Bank’s 3‑5 % target range, hitting a 5.1 % year‑over‑year spike in August.

The “Growth‑First, People‑First” Blueprint

1. Stimulating Private‑Sector Investment

Rahman’s inaugural policy brief, “Indonesia Growth 2025‑2030”, calls for a 1.5 % increase in public spending on infrastructure over the next three years, with a sharp focus on transport and digital connectivity. The plan envisions a 7 % growth in the transportation sector and a 9 % rise in broadband penetration by 2030, driven by public‑private partnerships (PPPs). Bloomberg notes that Rahman intends to leverage Indonesia’s sovereign wealth fund, the Indonesia Investment Authority (INA), to finance high‑yield, low‑risk infrastructure projects, thus freeing up budget space for other reforms.

2. Tightening Fiscal Discipline

While the stimulus package signals a departure from the previous administration’s “spend‑to‑grow” stance, Rahman is simultaneously pledging to bring the fiscal deficit down to 2.9 % of GDP by 2026, down from 4.1 % last year. To achieve this, the ministry will introduce a “balanced‑budget amendment” that requires a 0.5 % increase in tax revenue over the next fiscal cycle. The plan includes modest corporate tax cuts for firms that invest in research and development, coupled with a temporary tax holiday for new industrial parks in rural provinces.

3. Deploying Social Safety Nets

In recognition of the rising unrest, the new finance chief has announced a series of social‑policy initiatives aimed at reducing the cost of living. The most visible of these is a 20 % subsidy on rice and cooking oil, slated to roll out over the next six months. Additionally, Rahman plans to introduce a “universal basic income” trial in three provinces—West Java, Banten, and Central Sulawesi—to test the efficacy of targeted cash transfers in dampening discontent.

Addressing the Roots of Unrest

The unrest that has plagued Indonesia since mid‑2025 stems largely from perceptions of widening inequality and a perceived disconnect between Jakarta’s policy agenda and the lived realities of millions of workers. Bloomberg’s coverage highlights how the new finance chief plans to bridge this divide through:

• Labor Market Reforms: Rahman has pledged to overhaul Indonesia’s minimum‑wage framework, shifting from a regional to a sector‑specific model that rewards skill development and productivity. The plan is set to lift the national minimum wage from 4.5 million rupiah per month to 6.2 million rupiah by 2026.

• Decentralized Fiscal Management: The finance ministry will empower provincial governments with greater fiscal autonomy, enabling them to allocate resources to local public services such as healthcare and education without over-reliance on central transfers.

• Anti‑Corruption Measures: Rahman announced a “clean‑government task force” that will scrutinize all public‑sector procurement contracts, a move that Bloomberg notes has been applauded by civil‑society groups seeking greater transparency.

These initiatives aim to directly address the grievances that have fueled protests in Jakarta’s suburbs and in Java’s southern provinces, where farmers have long complained of unfair price controls on their produce.

Market Reaction and Expert Opinions

Indonesia’s stock market was initially jittery on the day of Rahman’s announcement, with the IDX Composite dipping 1.4 % amid uncertainty over the new policy mix. However, the markets rallied as the day progressed, buoyed by the expectation that the stimulus would kick‑start a rebound in consumer spending and industrial output.

Economist Dr. Linda Wijaya of the Jakarta Institute for Economic Research told Bloomberg, “Rahman’s approach is a middle‑ground solution. He’s not just throwing money at the economy; he’s also tightening the fiscal belt, which is critical to maintaining investor confidence.” She added that the social safety nets, particularly the universal basic income trial, could serve as a model for other developing economies grappling with similar social‑economic divides.

Potential Challenges and Next Steps

The new finance chief’s agenda, while comprehensive, faces several hurdles. The proposed fiscal tightening could limit the scope of the infrastructure stimulus, potentially dampening investor enthusiasm. The 20 % subsidy on staple foods, while politically popular, could strain the budget and potentially lead to market distortions if not carefully calibrated. Moreover, the universal basic income trial, while innovative, faces logistical challenges related to targeting and administration.

Rahman’s next steps will involve convening a “Growth Coordination Council” that brings together representatives from the Ministry of Finance, Bank Indonesia, the Ministry of Trade, and provincial governments to align policy implementation timelines. Bloomberg’s analysis anticipates that the finance ministry will release a detailed “implementation roadmap” in the coming weeks, outlining exact fiscal multipliers, projected cost savings from anti‑corruption reforms, and a monitoring framework for the social‑policy experiments.

A New Chapter for Indonesia

In sum, the Bloomberg profile of Indonesia’s new finance chief, Muhammad Iqbal Rahman, paints a picture of a seasoned economist who is poised to steer the nation toward a balanced growth trajectory while simultaneously tackling the social unrest that threatens to derail Indonesia’s long‑term development plans. Whether Rahman’s “growth‑first, people‑first” blueprint can deliver on its promises remains to be seen, but the policy direction marks a decisive shift in Indonesia’s economic strategy. If successfully executed, the reforms could not only lift the country out of its current growth slump but also set a precedent for how emerging economies can simultaneously pursue fiscal prudence and social equity.