Indonesia cuts outlay on giant free meals programme to US$21 billion

Straits Times

5 hours ago

Mr Prabowo Subianto has acknowledged challenges of the free meals drive while describing it as a long-term investment in Indonesia's future. PHOTO: REUTERS
Indonesia has trimmed spending plans for what could still be the world's second-most expensive free meals programme, offering modest relief from fiscal pressures as President Prabowo Subianto advances a host of big-ticket projects.
Planned spending on the programme, which targets reaching 83 million people in the coming months, is now forecast at 350 trillion rupiah (US$21 billion or S$26.8 billion) next year after officials revised ingredient cost estimates lower by a third, said Mr Dadan Hindayana, head of the newly created National Nutrition Agency. That marks a 22 per cent drop from spending plans earlier this year.
This year's expenditures are expected to total about US$7.5 billion, Mr Hindayana said in a recent interview. That represents a 29 per cent reduction from prior plans.
The recalibration of the five-days-a-week programme, aimed at improving health outcomes for students, children under five, and pregnant or breastfeeding women in the world's fourth-most populous nation, could ease some investor concerns about Indonesia's budget deficit outlook as the president presses for big projects early in his presidency.
Mr Prabowo has backed consumer stimulus measures, started rolling out tens of thousands of new community cooperatives and floated plans for an US$80 billion sea wall off the north Java coast.
Indonesia's free meals initiative could be the world's most expensive after the US, which budgeted US$29.4 billion for meals in the school year ended 2023, according to the Global Child Nutrition Foundation, a Seattle-based nonprofit that surveys such programmes. The third most expensive programme that year, at a little over US$10 billion, was in France.
One challenge will be to meet demand for food inputs, with the meals initiative sourcing eggs, chicken, fish, vegetables and fruit locally, Mr Hindayana said. He added that milk demand will soon outstrip supply, and that the government plans to import as many as 1.5 million dairy cows in the coming years – potentially tripling the nation's existing herd – from countries such as Australia, New Zealand, Brazil, the US and European nations.
'We need time to induce people or farmers and everyone to produce food locally,' he said. 'Right now we still have no problem, but in the near future we need more supply.'
Mr Hindayana said officials are still seeking to roll out meals to all 83 million recipients by the end of the year – even though it will require a 16-fold increase from five million currently. The drive thus far has been complicated by instances of food poisoning and logistical challenges in a country of more than 17,000 islands. He said the imminent deployment of some 30,000 university graduates to serve as managers of kitchen units would help accelerate efforts.
Private investment is another hurdle. The government is banking on the private sector to set up the bulk of some 32,000 kitchens to source foods and cook and distribute meals. Currently fewer than 1,900 are in operation.
That has been a hard sell in the early going, with a single kitchen costing as much as US$183,000 and needing perhaps two years to break even, said Mr Aditya Perdana, a political lecturer at the University of Indonesia.
'People aren't convinced with the investment model and prefer to just wait and see the progress,' he said.
He added that while there has not been serious opposition to the free meals programme from political parties or citizens, implementation remains a question. 'You can be ambitious, but you must also be rational to avoid adding a burden to the state budget,' he said.
Analysts at Nomura Holdings Inc. last week reiterated their forecast for Indonesia to post a fiscal deficit this year of 2.9 per cent of gross domestic product, higher than a budgeted 2.5 per cent and close to the country's legal limit of 3.0 per cent. They cited weak economic growth and low commodity prices, along with plans to accelerate spending in the second half of the year, including for the free meals programme.
They added that they expect the government to announce a wider fiscal deficit outlook in July, when finance officials typically submit a mid-year budget review to parliament. Ministries will also begin discussing their budgets and work plans for 2026 with lawmakers next month.
Mr Prabowo has acknowledged challenges of the free meals drive while describing it as a long-term investment in Indonesia's future.
'Many people already express much negativity surrounding the free nutritious meal programme; they say it is an impossible programme,' he said in a cabinet meeting last month, according to a statement. 'We need to prove them wrong.'
'We will call it a success, God willing, in December 2025,' he said. BLOOMBERG
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