Economy
Before taking office, Widodo sought to have outgoing president Susilo Bambang Yudhoyono (SBY) take responsibility for a further increase in fuel prices through further cuts to subsidies. Previous attempts by SBY to do so had led to civil unrest. On 1 January 2015, Jokowi introduced measures that appeared to reduce fuel subsidies. The policy prompted demonstrations, which Jokowi said were necessary to redirect spending toward infrastructure, education and health. From March 2015, however, the government set the price of Premium-branded petrol below market rates, effectively shifting the subsidy burden to the state-owned oil company Pertamina rather than the central government budget. The government also introduced a single-price policy aimed at selling fuel through official channels at the same price across the country, including in remote parts of Kalimantan and Papua. It said this target had been achieved by 2017.
In the first quarter of 2015, year-on-year GDP growth was 4.92 per cent, and in the second quarter it fell to 4.6 per cent, the lowest figure since 2009. Growth later remained above 5 per cent, though still below levels some observers regarded as desirable for the economy. The Indonesian rupiah (IDR) also weakened during Jokowi's administration: its exchange rate against the U.S. dollar briefly passed IDR 15,000 in 2018, its lowest level since the 1997 Asian financial crisis, and fell further to 16,700 in 2020. Year-on-year inflation in June 2015 was 7.26 per cent, higher than in May (7.15 per cent) and in June the previous year (6.7 per cent).
In 2016, the administration signed a tax amnesty law after a lengthy public debate and pushback, allowing wealthy Indonesians to declare previously unreported assets before the government tightened rules and oversight over imports and exports. It became the most successful programme of its kind in history, with more than IDR 4,865 trillion (approximately US$366 billion) in previously undeclared assets reported to the tax office.
Infrastructure development was a major feature of the Jokowi administration, with an emphasis on roads, railways, seaports, airports and irrigation. In 2016, the state budget allocated Rp 290 trillion (US$22 billion) to infrastructure, the largest such allocation in Indonesian history at the time. In total, his administration planned 265 infrastructure projects beginning in 2016. In September 2015, Indonesia awarded a $5.5 billion high-speed rail project to China, disappointing Japan, which had also sought the contract. Indonesia's transport ministry later listed numerous shortcomings in the project's plans, casting doubt on its viability and highlighting the administration's difficulties in turning mega-projects into reality while seeking foreign investment. Other major projects included the completion of the 4,325-kilometre Trans Papua road and the Trans-Java Toll Road, the start of construction on the Trans-Sulawesi Railway, and the Trans-Sumatra Toll Road, a US$50 billion plan to develop the maritime sector, including 24 "strategic ports", and the expansion of airport capacity in remote areas. The port development and modernisation programme, known as the Sea Toll Road, was intended to reduce price disparities between the more developed western regions and the less populated eastern regions of the country.
The opposition criticised the scale of infrastructure spending, noting that Indonesia's national debt rose by 48 per cent between 2014 and March 2018 to US$181 billion. They also argued that much of the debt had been used for remuneration rather than infrastructure development. In April 2018, Jokowi also introduced a policy allowing foreign workers in Indonesia to work without an Indonesian-language requirement, arguing that this would increase investment. The measure faced significant opposition from labour unions, which argued that it would raise unemployment.
During the 2019 presidential election campaign, Jokowi introduced the Pre-Employment Card, a training-assistance programme intended to improve workforce skills through training, retraining and upskilling. It was introduced alongside the Smart Indonesia College Card and the Cheap Food Card.
Eligible recipients of the Pre-Employment Card received training funds of IDR 1,000,000, which could be used on partner digital platforms. More than 150 training institutions provided courses that could be purchased and followed online from anywhere.
During the COVID-19 pandemic, the government shifted the Pre-Employment Card into a semi-social assistance programme to help workers affected by layoffs and recent graduates entering the labour market. To expand its reach, the budget was doubled to IDR 20 trillion. When the programme was launched in April 2020, the government said it was intended to reduce the cost of training for workers and companies, lower the cost of accessing information about training, improve the skills and competitiveness of Indonesian workers, and supplement formal education. The programme, however, remained limited to online training.
In 2020, the DPR passed the Omnibus Law on Job Creation. Although it was intended to boost investment and reduce red tape, it was also widely seen as weakening labour and environmental protections, prompting a series of protests in major cities. Jokowi defended the law as necessary for job creation and urged protesters to challenge it through the Constitutional Court of Indonesia. The law, which revised more than 70 existing laws and contained around 1,200 clauses, had been proposed by Jokowi after his 2019 re-election. Several groups criticised the government's lack of transparency during its deliberation. In the same year, Indonesia recorded its lowest inflation rate on record and experienced its first recession since the 1997 Asian financial crisis.
In November 2021, Jokowi promised at the COP26 climate summit to end and reverse deforestation in Indonesia by 2030 as part of the summit's first major agreement. The European Commission later approved a measure to phase out palm oil-based biofuels by 2030. During a meeting with European Commission President Ursula von der Leyen, Jokowi expressed concern about the EU Regulation on Deforestation-free products (EUDR), which aims to prevent products linked to deforestation from entering the EU market.
The Jokowi administration continued its predecessor's policy of resource nationalism, increasing government shareholding in multinational companies such as Freeport McMoRan, TotalEnergies and Chevron. In 2018, in a move intended to reduce imports, oil companies operating in Indonesia were ordered to sell their crude oil to state-owned Pertamina. A ban was also imposed on exports of raw nickel ore to encourage the growth of domestic nickel-related industries such as smelters and battery factories. The policy was later extended, with export bans on unprocessed copper, tin, bauxite and gold ores expected to take effect in mid-2023. By 2023, Indonesian nickel exports had risen from US$3 billion annually to US$30 billion.
