Dissecting the Opportunities and Challenges of the 2026 Draft State Budget

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The following is important information related to the development of the business universe that needs attention today based on the curation of the SUAR Team.

Racking Brains to Achieve High Tax Targets Without Burdening the Business World

The government set a tax revenue target in the 2026 Draft State Budget (APBN) of IDR 2,357.7 trillion, up 13.5% from the 2025 tax revenue outlook of IDR 2,076.9 trillion. Hard work and maximum effort are needed to achieve this target. On the one hand, the government must ensure that the 2026 tax revenue target that has increased does not disrupt the business climate.
There are three strategies to boost tax revenue without having to burden the public and the business world with tariff increases. The three strategies are optimizing tax extensification, maximizing the collection of Income Tax (PPh) and Value Added Tax (VAT), and improving the Coretax tax administration system.
Chairperson of the Indonesian Employers Association (Apindo) Shinta Kamdani said that the government can carry out tax extensification, one of which is targeting the shadow economy or underground economy.

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New Renewable Energy Business Opportunities from the 2026 Draft State Budget

In the 2026 State Budget Bill (RUU APBN), the government has budgeted Rp 37.5 trillion for the development of new renewable energy (EBT). This is part of a total budget of IDR 402.4 trillion to strengthen energy security - which is one of next year's priority programs.
The government budget can be used to build access to electricity to rural areas, such as the construction 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 between 3.3 Terrawatt-hour (TWp) and 20 TWp, spread from Sabang to Merauke.

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Industry Seeks Certainty of Supply and Affordable Gas Prices

Recently, production in the manufacturing industry has been disrupted due to limited gas supply. One of them was experienced by the food and beverage (F&B) industry. In fact, this industry contributed 41.15% to non-oil and gas gross domestic product (GDP), which is 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 move to establish the crisis center was taken following the increasing number of reports from domestic industry players regarding supply restrictions, decreased gas pressure received, and the high gas prices charged.

The manufacturing industry is asking for certainty of supply and more affordable gas prices following the policy of limiting certain natural gas price quotas (HGBT) which is considered to have a negative impact on the industry.

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Downstream Mining Sector Investment Creates Economic Growth

Mining downstreaming has been successful in attracting investment, creating jobs, and ultimately economic growth. One of the successes of mining downstreaming can be seen in the performance of a giant mining company in the country, PT Freeport Indonesia (PTFI). PTFI President Director Tony Wenas emphasized that the mining company he leads continues to make a significant contribution to the national economy. In his speech at the 80th anniversary of Indonesia's independence in Mimika, Sunday (17/8/2025), he said that in 2024 Freeport contributed USD 4.7 billion or around Rp 80 trillion to the state treasury. Of that amount, Rp 11 trillion was channeled directly to Central Papua, including Mimika Regency as the main operational area.
The downstream commitment was emphasized by President Prabowo Subianto in his speech on the Financial Note of the Draft State Budget (APBN) 2026. The President asserted that natural resources must be managed for the benefit of the people by expanding downstreaming, creating jobs, and ensuring added value remains in Indonesia.

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It's Time for Creative Regions to Increase Original Revenue

The significant reduction in the allocation of funds for transfers to regions (TKD) in the 2026 Draft State Budget is a momentum for local governments to realize fiscal independence. The government, on Friday (15/8/2025), submitted a decrease in the allocation of transfers to regions (TKD) in the 2026 Draft State Budget of around 29% compared to the 2025 State Budget to Rp 650 trillion. This is a challenge for many local governments that have been heavily dependent on central funds. However, this decrease can also be interpreted as a momentum for regions to strengthen their fiscal independence.
From the 2023-2024 Provincial Government Financial Statistics report by the Central Statistics Agency (BPS), there is optimism that the provincial government will be able to increase regional independence. This can be seen through the contribution of regional own-source revenues (PAD) which increased to IDR 233 trillion or 56.60% of regional income, where most of it was contributed from regional tax revenues (2024). Meanwhile, transfer revenue from the center became the second largest contributor to regional income (42.71%).

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August 2025 Bank Indonesia (BI) Board of Governors Meeting (RDG): The Bank Indonesia RDG, which was held from August 19 to August 20, 2025, will announce the results of the meeting on Wednesday (20/8/2025) at 14:00 WIB. During the meeting, members of the Bank Indonesia Board of Governors conducted a comprehensive evaluation of global and domestic economic, monetary, and financial system stability conditions. The results of this RDG are awaited by the market because they determine the direction of future monetary policy, including the determination of the benchmark interest rate (BI-Rate) which has a direct impact on borrowing costs, inflation, the rupiah exchange rate, and national economic growth. The result announcement will be broadcast via Bank Indonesia's Instagram and YouTube social media channels.

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