Dissecting the Opportunities and Challenges of the 2026 Draft State Budget (RAPBN)

Good morning, Chief,

Here’s today’s curated briefing on key developments shaping Indonesia’s business ecosystem, prepared by the SUAR Team.

Tax Targets: Raising Revenue Without Hurting Business

The government has set a tax revenue target in the 2026 State Budget (APBN) of IDR 2,357.7 trillion, an increase of 13.5% from the 2025 tax revenue outlook of IDR 2,076.9 trillion. Achieving this target will require hard work and maximum effort. At the same time, the government must ensure that the higher 2026 tax revenue target does not disrupt the business climate.
There are three strategies to boost tax revenue without burdening society and the business sector with higher tax rates. These include optimizing tax extensification, maximizing the collection of Income Tax (PPh) and Value-Added Tax (VAT/PPN), as well as improving the Coretax tax administration system.
Chairperson of the Indonesian Employers Association (Apindo), Shinta Kamdani, stated that the government could carry out tax extensification, one of which is by targeting the shadow economy or underground economy.

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Renewable Energy: Business Openings in RAPBN 2026

In the 2026 State Budget Draft (RUU APBN 2026), the government has allocated IDR 37.5 trillion for the development of renewable energy (EBT). This is part of the total allocation of IDR 402.4 trillion to strengthen energy security, which has been set as one of next year’s priority programs.
Government funds can be used to expand electricity access in rural areas, such as through the development of communal solar power plants (PLTS) in villages. A study by the Institute for Essential Services Reform (IESR) shows that Indonesia has solar energy potential ranging from 3.3 Terawatt-peak (TWp) to 20 TWp, spread across the archipelago from Sabang to Merauke.

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Industry Demands Certainty in Supply and Affordable Gas Prices

In recent times, manufacturing production has been disrupted due to limited gas supply. One of the affected sectors is the food and beverage (F&B) industry. In fact, this industry contributes 41.15% to the non-oil and gas gross domestic product (GDP), equivalent to 7.2% of national GDP in the first quarter of 2025.
Spokesperson for the Ministry of Industry, Febri Hendri Antoni Arief, explained that the establishment of this crisis center was taken in response to the increasing number of reports from domestic industry players regarding supply restrictions, reduced gas pressure received, and high gas prices imposed.

The manufacturing industry is demanding certainty in gas supply and more affordable gas prices following the policy on limiting the quota of certain natural gas prices (HGBT), which is considered to have a negative impact on the industry.

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Downstream Mining Sector Investment Creates Economic Growth

The aggressive downstreaming of the mining sector has successfully attracted investment, created jobs, and ultimately driven economic growth. One of the notable achievements of mining downstreaming can be seen in the performance of Indonesia’s mining giant, PT Freeport Indonesia (PTFI). PTFI President Director Tony Wenas emphasized that the company he leads continues to make a significant contribution to the national economy. In his speech commemorating Indonesia’s 80th Independence Day in Mimika, Sunday (August 17, 2025), he stated that in 2024 Freeport contributed USD 4.7 billion, or around IDR 80 trillion, to the state treasury. Of that amount, IDR 11 trillion was allocated directly to Central Papua, including Mimika Regency as its main operational area.
The government’s commitment to downstreaming was also underscored by President Prabowo Subianto in his Financial Note speech for the Draft State Budget (APBN) 2026. The President stressed that natural resources must be managed for the benefit of the people by expanding downstreaming, creating jobs, and ensuring that value addition remains in Indonesia.

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It’s Time for Creative Regions to Boost Their Own-Source Revenue

The significant reduction in transfer funds to regions (TKD) in the 2026 State Budget Draft (RAPBN) has become a momentum for local governments to achieve fiscal independence. On Friday (August 15, 2025), the government announced that the allocation of TKD in the 2026 RAPBN would decrease by around 29% compared to the 2025 State Budget, to Rp 650 trillion. This poses a challenge for many regional governments that have long relied heavily on central government funds. However, the reduction can also be seen as an opportunity for regions to strengthen their fiscal independence.
The 2023–2024 Provincial Government Financial Statistics Report by the Central Statistics Agency (BPS) illustrates optimism that provincial governments will be able to increase their fiscal independence. This is reflected in the contribution of regional own-source revenue (PAD), which increased to Rp 233 trillion or 56.60% of regional income, most of which came from local tax revenues (2024). Meanwhile, transfers from the central government became the second-largest contributor to regional revenues (42.71%).

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Bank Indonesia Board of Governors Meeting (RDG BI) – August 2025:
The RDG BI, held on August 19–20, 2025, will announce its results on Wednesday (August 20, 2025) at 14:00 WIB. In this meeting, members of Bank Indonesia’s Board of Governors conducted a comprehensive evaluation of global and domestic economic conditions, monetary developments, and financial system stability. The outcome of this RDG is highly anticipated by the market as it will determine the direction of future monetary policy, including the benchmark interest rate (BI-Rate), which directly affects borrowing costs, inflation, the rupiah exchange rate, and national economic growth. The announcement will be broadcast through Bank Indonesia’s official Instagram and YouTube channels.

Indonesia International Baby Product & Toys Expo (IBTE) 2025:
IBTE 2025 returns as Southeast Asia’s largest exhibition for the baby products and toy industry. The event will take place over three days, from August 20–22, 2025, at Jakarta International Expo (JIEXPO). IBTE 2025 serves as a platform for manufacturers, distributors, and business players to showcase product innovations, establish partnerships, and explore business opportunities in Indonesia’s market. Visitors can attend the event free of charge by registering through the IBTE website at https://ibte.co.id/.