Indonesia’s MBG Budget Reduces Spending, Boosts Economy
Prasetyo Hadi, head of the Ministry of State-Owned Enterprises (BUMN), announced on June 11, 2026, that the government is considering options to reduce the budget for the Ministry of BUMN (MBG), according to Bloomberg Technoz. The statement came as pressure mounted for a comprehensive review of the ministry’s financial management, with calls for improved transparency and accountability from both public officials and civil society groups.
The proposal to trim the MBG budget follows growing scrutiny of the ministry’s operations, including allegations of inefficiencies in state-owned enterprise (BUMN) investments. Kompas.com reported that several opposition figures and watchdog organizations have demanded an evaluation of the BUMN Governance (BGN) framework, citing concerns over misallocation of public funds. “The current system lacks clear oversight, and without reforms, the risk of corruption remains high,” said a representative from a Jakarta-based anti-graft advocacy group, though the group did not provide a specific name.
In response, the Minister of State Secretariat (Mensesneg), Pratikno, pledged to strengthen governance within the MBG, according to Kompas.com. “We are committed to implementing stricter financial controls and ensuring that all BUMN activities align with national development priorities,” Pratikno stated in a press conference on June 10. The announcement followed a meeting between President Prabowo Subianto and senior officials, including Prasetyo Hadi, to discuss economic reforms. Presiden RI reported that the president emphasized the need for “efficient resource allocation” to support small and medium enterprises (UMKM), which have faced financial strain amid rising inflation.
A survey conducted by the Indonesia Business Climate Index (IBCI) and cited by Republika.id found that recent MBG initiatives had a “modest positive impact” on UMKM access to financing. The study, which surveyed 1,200 business owners nationwide, indicated that 42% of respondents reported improved loan approvals since the implementation of new BUMN lending policies in 2025. However, the survey also highlighted persistent challenges, with 68% of participants citing “complex bureaucratic procedures” as a barrier to accessing funds.
The MBG’s budget reduction proposal has sparked mixed reactions. While some economists welcomed the move as a step toward fiscal responsibility, others warned of potential risks. “Cutting the budget without a clear plan could undermine critical infrastructure projects and weaken the government’s ability to support strategic industries,” said Dr. Suryadi, an economist at the University of Indonesia, in an interview with Kompas.com. The Ministry of Finance has not yet commented on the proposal, but officials have indicated that any changes would require parliamentary approval.
The developments come amid broader debates over the role of state-owned enterprises in Indonesia’s economy. Critics argue that BUMN have often prioritized political interests over economic efficiency, while supporters emphasize their importance in driving national growth. The government’s push for transparency in MBG operations aligns with international standards, such as the World Bank’s 2025 report on public sector accountability, which urged emerging economies to adopt stricter oversight mechanisms.
As the review process unfolds, stakeholders are closely monitoring how the government balances fiscal austerity with economic stability. The outcome could set a precedent for future budget decisions, particularly as Indonesia faces pressure to meet its 2030 sustainable development goals. For now, the focus remains on reconciling competing priorities: reducing waste, preventing corruption, and ensuring that BUMN continue to serve as engines of economic growth.