Indonesia rolls out larger Eid stimulus to lift consumption, targets civil servants and gig workers

[JAKARTA] More than 10 million civil servants in Indonesia will receive Eid holiday bonuses this year as part of a 55 trillion rupiah (S$4.1 billion) government stimulus package aimed at strengthening household consumption ahead of the festive season.

Coordinating Minister for Economic Affairs Airlangga Hartarto said on Tuesday (Mar 3) that the allocation is 10 per cent higher than last year’s Eid bonus, which totalled 49 trillion rupiah.

The bulk of the funds will be channelled to central and regional government employees as well as pensioners, forming one of the largest seasonal fiscal injections in recent years.

The move comes as policymakers seek to safeguard growth momentum amid lingering external uncertainties and softer global trade conditions.

In addition to civil servants, the stimulus will cover workers in the platform economy.

Ride-hailing companies GoTo and Grab are set to distribute a combined 220 billion rupiah in holiday bonuses to around 850,000 drivers, doubling last year’s allocation of 100 billion rupiah for the same period.

The holiday bonus for ride-hailing partners was first introduced last year following a request from President Prabowo Subianto, amid growing calls to improve the welfare of gig economy drivers.

The issue has gained prominence as drivers continue to push for better pay and working conditions.

Their participation in large-scale student-led protests in August 2025 highlighted the sector’s growing visibility and influence, adding to pressure on the government to address concerns over income stability and labour protections in the platform industry.

SEE ALSO

Indonesia trade surplus falls sharply in January on softer exports

Stimulate demand, inflation in focus

Economists said the measures will likely provide a meaningful lift to short-term spending.

David Sumual, chief economist at Bank Central Asia, said the combination of measures is expected to strengthen household purchasing power and provide a meaningful boost to consumer spending in the lead-up to the Eid holiday.

This is a period when Indonesia, the world’s largest Muslim-majority country, typically sees a surge in retail activity and homecoming travel.

However, he cautioned that the potential inflationary impact should not be overlooked.

He pointed out that February inflation had already risen sharply to above 4.5 per cent, exceeding Bank Indonesia’s (BI) target range.

Indonesia’s inflation accelerated markedly in February, temporarily breaching the upper limit of the central bank’s target band. Headline inflation rose to 4.76 per cent year on year in February from 3.55 per cent in January.

The increase was driven by base effects stemming from last year’s electricity tariff discount, which created a low comparison base, as well as stronger seasonal demand during Ramadan.

Rising gold prices also contributed to higher consumer price pressures.

Brian Lee, economist at Maybank, said an escalation or prolonged conflict involving Iran could pose upside risks to inflation, particularly if higher logistics costs, rising international freight rates and an oil price spike are passed through to consumers amid trade disruptions.

He added that as Indonesia remains a net oil and gas importer, heightened geopolitical uncertainty could weigh on the rupiah.

“A weaker exchange rate would likely increase the cost of imported food and other goods, potentially adding further pressure to domestic price levels,” he said.

Lavanya Venkateswaran, senior economist at OCBC, said the new fiscal package, combined with persistently high inflation and volatile external pressures, will likely keep Bank Indonesia on hold in the near term.

“It remains to be seen whether BI will be able to find room to ease,” she added.

Indonesia’s economic growth is projected at 5.4 to 5.6 per cent this year, with some forecasts suggesting it could reach as high as 6 per cent under more favourable conditions.

Indonesia’s economy grew 5.11 per cent year on year in 2025, marking the strongest performance in three years despite falling slightly short of government targets.

Prabowo has set steady growth as a foundation for achieving the longer-term goal of 8 per cent expansion.