Indonesia Targets Ambitious 8% Economic Growth Through Flagship Social Programs

Indonesia Sets Ambitious Economic Growth Target

The Indonesian government has announced an ambitious target of 8 percent economic growth, a goal President Prabowo Subianto believes is achievable through the implementation of two key national programs: the Free Nutritious Meal (MBG) initiative and the Red-and-White Village Cooperatives (KDMP). This target was reiterated by President Subianto at the Forbes Global CEO Conference 2025 in Jakarta, where he expressed confidence in the nation's economic trajectory. The current economic growth rate for Indonesia stood at 5.12 percent in the second quarter of 2025, with the International Monetary Fund projecting a 4.9 percent growth by year-end.

The Free Nutritious Meal Initiative: A Catalyst for Growth

The Free Nutritious Meal (MBG) initiative, a flagship program of President Subianto's administration, aims to address issues of stunting and malnutrition while simultaneously stimulating economic activity. The program, which launched in January 2025, currently operates nearly 11,900 kitchens and provides meals to approximately 35.4 million people daily, a scale equivalent to feeding 'seven Singapores'.

The economic contributions of the MBG program are significant:

• It has directly created an estimated 1.5 million jobs.
• Each kitchen typically employs around 50 workers and engages at least 15 local suppliers, including farmers, fishers, and food vendors, thereby generating strong economic spillovers.
• Economists estimate that the employment generated by the program could add an additional 2 to 3 percentage points to Indonesia's GDP growth rate.
• The government has earmarked 335 trillion rupiah (approximately $20 billion) for the program in 2026, aiming to feed over 34 million schoolchildren daily.

While the program has faced scrutiny regarding food safety incidents, the government has pledged to enhance oversight and improve safety standards to ensure its successful and safe implementation.

Red-and-White Village Cooperatives to Empower Rural Economies

Complementing the meal initiative, the Red-and-White Village Cooperatives (KDMP) program is designed to strengthen rural economies and reduce poverty at the grassroots level. The government plans to establish these cooperatives in 70,000 to 80,000 villages across Indonesia, with 81,147 villages and sub-districts having already established them as of July 2025. President Subianto officially launched the program in Klaten, Central Java, in July 2025.

The cooperatives are envisioned as centers for village economic activities, providing a range of services:

• They will feature warehouses for storing agricultural products.
• They will operate shops for basic necessities.
• They will offer savings and loan services to help villagers avoid predatory lending.
• Some cooperatives are also expected to include small clinics, pharmacies, and transportation solutions for farmers.

Coordinating Minister for Economic Affairs Airlangga Hartarto indicated that the village cooperatives could potentially quadruple annual village cash flow from Rp1 billion to Rp4 billion. The initial capital for this program is estimated at Rp 400 trillion (approximately $25 billion), with state-owned banks expected to provide loans of up to Rp5 billion for each cooperative. Despite concerns from some analysts about the program's rapid rollout and potential for mismanagement, the government maintains that it will be a significant job creator and a backbone for local economies.

An Ambitious Vision for Indonesia's Future

President Subianto's administration views these programs as crucial steps towards achieving Indonesia's long-term goal of attaining high-income status by 2045. While the 8 percent growth target is ambitious, especially given Indonesia's historical growth trajectory of around 5 percent since 2000, government officials remain optimistic. They emphasize that the combined impact of job creation, increased domestic consumption, and empowerment of local economies through these initiatives will drive the nation towards its economic aspirations.