Indonesia, explained.
Students receive lunch plates at a free-meal program at a state elementary school in Bogor, West Java, 6 January 2025 (Aditya Aji/AFP via Getty Images)
From food self-sufficiency to resource processing, Jakarta is building strategic capability in an uncertain era.
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Indonesia’s bet on economic self-relianceIndonesia’s bet on economic self-reliance
Geopolitical pressure is a familiar reality for developing nations like Indonesia, which have long managed commodity cycles, capital reversals, and shifting global priorities. However, the intensity has now reached a new threshold. Trade wars and persistent friction between major powers have transformed food and energy security from abstract policy goals into urgent national security mandates. For Indonesia, that shift is not merely a headline. Lessons shape policy.
Against this backdrop, the debate over Indonesia’s priority programs – free nutritious meals, village cooperatives, food self-sufficiency, and industrial downstreaming – is often framed strictly as a fiscal concern. Critics ask: “What is the cost?” and “Can the budget absorb it?” While these are valid questions, they are the wrong starting point. The more important question is what issue the government is seeking to fix, and the correct answer is the construction of national resilience.
Food security offers the clearest illustration of this shift. Indonesia’s achievement of rice self-sufficiency in 2025 was a landmark: national production rose by more than 13% to 34.71 million tons, yielding a surplus of 3.52 million tons – the highest in the nation’s history. This allowed Indonesia to forgo imports entirely for the year. While reported as an agricultural milestone, its true value is strategic depth. A country able to sustain its own food source exhibits a long-standing strength when it comes to dealing with external shocks.
The Free Nutritious Meals program for students extends this logic into a permanent institutional framework. The initiative currently reaches more than 60 million beneficiaries through 23,000 community kitchens and nearly 740,000 workers. The procurement architecture is intentionally local, sourcing from farmers, fishers, and village logistics operators. This means the program is continuously stress-testing and deepening domestic supply chains. Every kitchen sourcing from a nearby farm instead of an importer acts as a node of resilience. Multiplied across thousands of districts, the result is a food system structurally insulated from global disruptions.
Instead of stabilising revenues first and spending later, the government is choosing to strengthen the productive base first, betting that fiscal revenues will naturally follow as economic activity deepens.
Complementing this is the "Red and White" Village Cooperatives initiative, which addresses the supply side. By establishing a cooperative in every village – targeting 80,000 locations, with 27,000 under construction – the program consolidates rural production. This reduces intermediaries and provides smallholders with better access to financing and distribution. Where the meals program creates predictable demand, the cooperatives build the supply to meet it. Together, they form a coherent architecture for a self-sustaining rural economy.
This same logic drives industrial downstreaming. Indonesia sits on the world’s largest reserves of nickel. Banning raw ore exports in favour of domestic processing is a move towards geopolitical agency. In an era where control over mineral supply chains equals power, a country that only ships raw dirt is permanently dependent on others to define its value. Building domestic processing capacity changes that equation and reduces fiscal vulnerability to commodity price shocks that have historically destabilised Indonesia’s economy.
What connects these seemingly disparate programs is a shared premise: in a fragmented and competitive world, economic self-sufficiency is an urgent national security imperative. Indonesia is not withdrawing from global trade; rather, it is ensuring that when external conditions deteriorate, the domestic economy has enough depth and autonomy to absorb the shock without collapsing into crisis.
However, the fiscal concerns raised by rating agencies are real and should not be dismissed. Revenue mobilisation remains limited, while the costs of these priority programs are substantial; spending is rising while revenues remain constrained. This is an accurate snapshot of the present, but it misses the government’s underlying medium-term logic: stronger revenues ultimately depend on stronger, more integrated growth. Evaluating whether Indonesia can “afford” this resilience is an incomplete exercise unless we also ask what it costs not to build it. Countries that rely heavily on global markets for basic survival at a time when those markets are weaponised by rivalry face a more complex kind of risk.
Indonesia’s low tax-to-GDP ratio is a serious concern, and conventional fiscal wisdom has therefore tended to prioritise administrative reform, particularly through improving tax compliance and strengthening enforcement. While the government is pursuing these avenues, administration alone cannot bridge a structural revenue gap. The more durable path is to expand the tax base by formalising and deepening domestic production.
This represents a deliberate reversal of the standard sequencing. Instead of stabilising revenues first and spending later, the government is choosing to strengthen the productive base first, betting that fiscal revenues will naturally follow as economic activity deepens.
Indonesia’s rice reserves, community kitchens, village cooperatives, and nickel smelters are not “glamorous” achievements. They are slow, costly, and difficult to build. But in a world where the terms of global interdependence are being rewritten, the ability to sustain your own people and process your own resources is the best asset a government can provide. This is the real story behind these programs – and it is a more significant story than the deficit.
The writer works at the Indonesian Ministry of Finance; the opinions expressed are the writer's own and do not represent the views of the Ministry of Finance
About the author
Retno Maruti
Retno Maruti is a senior policy analyst at Indonesia's Ministry of Finance focused on international economic issues.
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