Jakarta. Government budget cuts have weighed heavily on Indonesia’s construction stocks, with the Jakarta Composite Index (JCI) dropping 1.4 percent to 6,648.1 on Monday. Analysts say reduced infrastructure spending under President Prabowo Subianto's administration is pressuring the sector, which led to market declines with a 3.09 percent drop.

State construction firms Adhi Karya (ADHI) and PT PP (PTPP) saw their shares drop nearly 3 percent, while state toll road operator Jasa Marga declined 0.5 percent. Telecommunications tower company Sarana Menara Nusantara (TOWR) fell more than 2 percent, and construction firm Acset Indonusa (ACST) dropped 2.35 percent.

Herditya Wicaksana, Head of Research at MNC Sekuritas, said that the government’s efficiency drive is set to dampen business activities, particularly in infrastructure projects, a sector heavily reliant on state funding.

“Budget cuts or tighter fiscal policies will directly affect companies operating in certain sectors. Infrastructure is one of the most impacted,” Herditya told Beritasatu TV on Monday.

Under President Prabowo’s administration, the focus on infrastructure development has shifted compared to the massive construction push seen during Joko Widodo’s decade-long leadership. Prabowo has prioritized populist initiatives, such as the Free Nutritious Meals Program (MBG), over large-scale infrastructure projects.

“This approach leans toward social programs, and as a result, infrastructure-related stocks may face sustained pressure,” Herditya added.

He predicted that construction stocks would struggle to recover in the medium term if the narrative around budget cuts and reduced infrastructure investment continues.

“In 2025, the infrastructure sector will likely remain under pressure due to policies that are more socially oriented,” Herditya concluded.

The Public Works Ministry recently announced the suspension of all toll road projects funded by the State Budget (APBN) as part of budget efficiency measures. The ministry faces the largest budget reduction this year, with a planned cut of Rp 81 trillion—equivalent to 80 percent of its allocation.

These cuts are part of the government’s broader Rp 306.69 trillion spending reduction directive for 2025, outlined in Presidential Instruction No. 1 of 2025 on Budget Efficiency.