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Finance Minister Purbaya yudhi Sadewa: A New Engineer at the Helm

Jakarta, September 15, 2025 – Indonesia‘s new Finance Minister, Purbaya Yudhi Sadewa, marks a return to a familiar pattern in post-reform era appointments. He is the second Finance minister with an engineering background sence 1998, following Bambang Subianto, a chemical engineer. Both Purbaya (electrical engineer) and subianto are graduates of the Bandung Institute of Technology (ITB).

historically, Indonesian presidents have leaned towards appointing economists or those with social science backgrounds to the Finance Ministry, with exceptions made for Habibie and Prabowo, who both chose engineers. Subianto’s success in stabilizing the rupiah during the 1998 economic crisis – bringing it from a low of Rp 16,800 to around Rp 6,550 against the US dollar – highlights the potential of this unconventional choice.

Purbaya’s appointment echoes this past success, coming at a time of economic sensitivity following recent demonstrations. Initial reactions to the new minister have been mixed, with some observers noting his direct, “cowboy” style, and independent dialog style reminiscent of a candid engineering student.

During a recent meeting with the House of Representatives Commission XI, Purbaya acknowledged that prolonged economic pressure stemmed from flawed fiscal and monetary policies, specifically tight liquidity without accompanying spending.He also emphasized the crucial role of the private sector in driving economic growth and pledged support through improved policies.

One of Purbaya’s first actions was channeling funds through state-owned banks (Himbara) in an effort to stimulate liquidity. This move signals a proactive approach to addressing economic challenges.

What specific infrastructure projects are expected to stimulate economic activity and improve long-term productivity?

Minister of Finance Purbaya Offers Hopeful Update in Economic Strategy

Key Pillars of teh Revised Economic plan

Minister of Finance Purbaya recently delivered a cautiously optimistic assessment of the nation’s economic trajectory, outlining key adjustments to the existing economic strategy. The update, presented during a parliamentary session on September 14th, 2025, focuses on bolstering domestic demand, attracting foreign investment, and managing inflationary pressures. These adjustments come amidst global economic uncertainty and fluctuating commodity prices. The core of the revised plan revolves around three primary pillars:

* Infrastructure Growth: Continued investment in critical infrastructure projects – including transportation, energy, and digital networks – remains a priority. This is expected to stimulate economic activity and improve long-term productivity.Specific projects highlighted include the expansion of the national railway network and the rollout of 5G infrastructure in key urban centers.

* Fiscal Consolidation: The government is committed to responsible fiscal management, aiming to reduce the budget deficit through increased revenue collection and streamlined government spending.This includes measures to combat tax evasion and improve the efficiency of public services.

* human Capital Development: Recognizing the importance of a skilled workforce, the government plans to increase investment in education and vocational training programs. this initiative aims to equip citizens with the skills needed to thrive in a rapidly evolving job market. Focus areas include STEM education and digital literacy.

Addressing Inflation and Currency Stability

A significant portion of Minister Purbaya’s address was dedicated to addressing concerns surrounding rising inflation and the stability of the national currency, the Rupiah. The Minister acknowledged the impact of global supply chain disruptions and geopolitical tensions on domestic prices.

Strategies to Curb Inflation

The government is implementing a multi-pronged approach to mitigate inflationary pressures:

1. Monetary Policy Adjustments: Bank Indonesia is actively managing interest rates to control the money supply and curb demand-pull inflation. recent adjustments have seen a moderate increase in benchmark interest rates.
2. Supply Chain Resilience: Efforts are underway to diversify import sources and strengthen domestic supply chains to reduce reliance on volatile global markets. This includes supporting local producers and promoting import substitution.
3. Price Controls (Targeted): While generally avoiding broad-based price controls, the government is considering targeted interventions to stabilize the prices of essential goods, such as food and fuel, for vulnerable populations.

Rupiah Stabilization Measures

To bolster the Rupiah, the government is taking the following steps:

* Foreign Exchange Reserves: Utilizing foreign exchange reserves to intervene in the currency market and stabilize the rupiah’s value.

* attracting Foreign Direct Investment (FDI): Implementing policies to attract FDI, which can increase the supply of foreign currency and strengthen the Rupiah. this includes streamlining investment procedures and offering tax incentives.

* Export Diversification: Promoting export diversification to reduce reliance on a limited number of commodities and increase foreign exchange earnings.

Impact on Key Economic Sectors

The revised economic strategy is expected to have a varying impact on different sectors of the economy.

Manufacturing Sector

The manufacturing sector is anticipated to benefit from increased infrastructure investment and improved access to credit. Government incentives are being offered to encourage manufacturers to adopt new technologies and enhance their competitiveness. The “Making Indonesia 4.0” initiative remains central to this strategy.

Tourism Industry

The tourism industry, still recovering from the pandemic, is expected to receive a boost from targeted marketing campaigns and infrastructure improvements. The government is also working to simplify visa requirements and improve tourism infrastructure in key destinations.

Agriculture Sector

The agriculture sector will benefit from increased investment in irrigation infrastructure and access to modern farming techniques. The government is also committed to supporting farmers through price support programs and access to affordable credit.

Foreign Investment Climate & Recent developments

Indonesia has seen a steady increase in foreign investment over the past year, especially in the digital economy and renewable energy sectors. Recent policy changes aimed at simplifying investment regulations and offering tax incentives have contributed to this positive trend.

Case Study: The Morowali Industrial Park – The Morowali industrial Park in Central sulawesi serves as a prime example of successful FDI attraction. The park, focused on nickel processing, has attracted billions of dollars in investment from China and other countries, creating thousands of jobs and boosting local economic development. However, it has also faced scrutiny regarding environmental and labor practices, highlighting the importance of sustainable and responsible investment.

benefits for Citizens & Practical Tips

The successful implementation of this economic strategy promises several benefits for Indonesian citizens:

* Job Creation: Increased economic activity is expected to lead to the creation of new jobs across various sectors.

* Increased Income: higher economic growth should translate into increased incomes for workers and businesses.

* Improved Living Standards: Investments in infrastructure and social programs are expected to improve living standards for all citizens.

Practical Tips for Businesses:

* explore Government Incentives: Businesses should actively explore available government incentives and support programs.

* Invest in Technology: Embrace digital technologies to improve efficiency and competitiveness.

* Focus on Sustainability: Adopt sustainable business practices to attract investors and meet growing consumer demand for environmentally pleasant products and services.

Economic Forecasts & Future Outlook

While acknowledging the challenges ahead, Minister Purbaya expressed confidence in the nation’s ability to achieve sustainable economic growth. The government is projecting a GDP growth rate of 5.2