Indonesia’s middle-class decline prompts call for fiscal support
Indef says support could lower education, healthcare and essential goods costs rather than take the form of direct cash transfers.
Indonesia should give middle-class households greater priority in its fiscal stimulus, the Institute for Development of Economics and Finance (Indef) said, citing pressure on purchasing power from higher living costs and taxes.
Statistics Indonesia (BPS) figures put the middle-class population at 46.7 million in 2025, or 16.6 per cent of all residents. That compares with 47.85 million, or 17.13 per cent, in 2024 and 57.33 million, or 21.45 per cent, in 2019.
BPS defines the group by monthly spending of between Rp2 million and Rp9.9 million per person.
Speaking at an online discussion in Jakarta, Riza Annisa Pujarama, a researcher at Indef’s Center of Macroeconomics and Finance, said middle-class households faced economic strain even as lower-income families received various forms of government assistance.
She proposed reducing household expenses rather than necessarily providing cash payments. Options included broader education access, measures to stabilise essential goods prices and tax relief for basic needs.
Pujarama also sought an expansion of state-run early childhood education facilities, saying provision remained much smaller than in the private sector. She stressed the importance of quality schooling from early childhood to junior high for human capital development.
On taxation, she urged consideration of value-added tax relief for essential items. She pointed to exemptions in several countries for disability equipment, including wheelchairs and hearing aids, and said women’s hygiene products such as sanitary pads also merited consideration.
