MBG Jumbo Budget Opportunities and 2026 Regional Budget Challenges

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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.

2026 Free Nutritious Meal Budget Rises 400%, Prospects for Businesses

In the 2026 Draft State Budget (APBN), the budget for the Free Nutritious Meal (MBG) program will increase to IDR 355 trillion, a 400% increase compared to the 2025 budget of only IDR 71 trillion. This could be an opportunity and a challenge for the business world.
The Free Nutritious Food Program (MBG) will reach 82.9 million people by 2026. With that many recipients, the program will spend around IDR 1.2 trillion every day. One nutrition service unit (SPPG) will manage approximately IDR 10 billion per year, 85 percent of which is used to purchase raw materials. And 95 percent of the raw materials are agricultural products.

Of the total MBG budget, 85% is allocated for the procurement of kitchen raw materials, ranging from vegetables, livestock products, fisheries, to plantations. This is a great opportunity for the 29 million UMKM in the food sector, especially those in rural areas, to grow and develop.

Read more here.

Regional Transfer Budget Reduced, Local Governments Need to Be Creative and Innovative

The 2026 Draft State Budget (RAPBN) sets the allocation of transfer funds to the regions (TKD) at Rp 650 trillion. This figure dropped significantly by IDR 214.1 trillion or 24.8% compared to the 2025 State Budget outlook which reached IDR 864.1 trillion.
The government's decision to cut the allocation of transfer funds to the regions (TKD) has drawn mixed reactions from various heads of government in the regions. They said this could potentially burden regional finances and hamper regional development. Meanwhile, various experts suggest that regional heads can be more creative in exploring the potential for new local revenue (PAD) to cover the deficit due to reduced transfer funds from the center to the regions.

Read more here.

Falling BI Rate Boosts Growth when Fed Rate Will Fall as well

The Bank Indonesia (BI) Board of Governors Meeting (RDG) on Wednesday (20/8/2025) decided to lower the benchmark interest rate (BI Rate) by 25 basis points to 5.00%, the Deposit Facility rate to 4.25%, and the Lending Facility rate to 5.75%. This is the second time in a row that BI has lowered the BI Rate. Previously at the July RDG, BI also lowered the BI Rate by 25 bps. Throughout this year, BI has cut interest rates four times with a total of 100 bps.

The Board of Governors made this decision for the needs of the domestic economy while considering global conditions. The inflation rate and rupiah exchange rate are still within the target range. From the external aspect, various data show the tendency of the United States (US) central bank, The Federal Reserve (The Fed), to reduce the benchmark interest rate.
A decrease in the BI Rate can encourage economic growth, one of which is from a decrease in bank lending rates. Banking players will gradually adjust interest rates for both deposits and loans that are more accommodating.

Read more here.

Boosting Tax Ratio so that Tax Revenue Can Surge

The tax revenue target in the 2026 Draft State Budget (APBN) amounts to IDR 2,357.7 trillion, an increase of 13.5% compared to the 2025 tax revenue outlook of IDR 2,076.9 trillion. Creative and innovative efforts are needed to achieve this target, one of which is by increasing the portion of tax revenue compared to gross domestic product (GDP) or tax ratio. OECD data states that Indonesia's tax ratio position in 2023 is at the level of 12%.

Efforts that can be made include improving the tax database and optimizing levies. In addition, revamping the system to encourage people to pay taxes.

Read more here.

Increased Budget to Support Food Self-Sufficiency

The government increased the food security budget allocation in the 2026 Draft State Budget by 5.9% to IDR 164.41 trillion. This shows the government's serious commitment to realizing food self-sufficiency, especially in rice and corn.
Indonesia's agricultural sector faces challenges in the form of declining production and the number of farmers. Data from the Central Statistics Agency (BPS) shows that rice production, which had reached 54.9 million tons in 2022, fell to 53.1 million tons in 2024. The same thing happened to corn. Its production also decreased from 16.5 million tons in 2022 to 15.1 million tons in 2024. This trend indicates that it is still difficult for Indonesia to maintain the consistency of food crop production, which is a mainstay in food security.

Read more here.

International Licensing Conference: This conference on licensed businesses will be held Thursday, August 21, 2025 at JIExpo, Jakarta. The conference takes the theme of the presentation, "Prospects and Trends of the Global Licensing Industry 2025". Present at the event as speakers were Managing Director of Greater China & Southeast Asia Licensing International Tani Wong, Chairwoman of Indonesia Licensing Association (ASENSI) Susanty Widjaya, and Vice President and General Manager of Disney Consumer Products South Asia Pacific The Walt Disney Company.

Road to G20 Summit: F20's Call for Just Transition and Climate Justice: Multi-stakeholder Dialogue in the framework of Road to G20 Summit with the theme F20's Call for Just Transition and Climate Justice was organized by The Habibie Center supported by the Ford Foundation and the Ministry of Home Affairs of the Republic of Indonesia. This event is a strategic discussion forum organized by the F20 (Foundations Platform) as part of a series of events leading up to the G20 Summit. The event aims to discuss important issues related to equitable energy transition and climate justice by involving various stakeholders, including representatives from philanthropic organizations, government, private sector, and civil society. This dialogue can be followed online through a live broadcast of The Habibie Center's YouTube channel on August 21, 2025 at 12.00 WIB.

"The key to investing is not to judge how much an industry will affect society, or how much it will grow, but rather to determine the competitive advantage of a particular company and, importantly, the durability of that advantage." (Warren Buffet-Businessman)