Declining Tax Revenue Signals Indonesia’s Economic Slowdown, Retail Group Warns
Jakarta. Indonesia’s tax revenue fell by 30 percent in February 2025, indicating a broader economic slowdown, according to the Jakarta chapter of the Indonesian Shopping Center Management Association (APPBI).
APPBI Jakarta Chairman Mualim Wijoyo said the decline reflects weakening consumer purchasing power. The impact is particularly evident in the retail sector.
“In retail, the decline is very noticeable. We’ve seen a wave of layoffs and company closures, which indicates our economy is struggling,” Mualim said on Monday.
Mualim noted that consumer spending had started to decline in the second half of 2024. Holiday shopping during Christmas, New Year, and Lunar New Year was significantly lower than in previous years.
Shopping malls, which typically see a surge in visitors during Ramadan, also experienced a downturn.
“This year, many F&B outlets are not as crowded as before. The economic slowdown is evident in shopping centers. It could also be because the holiday bonuses (THR) haven’t been distributed yet,” he added.
Finance Minister Sri Mulyani Indrawati reported that Indonesia’s state budget (APBN) posted a deficit of Rp 31.2 trillion, or 0.13 percent of GDP, by the end of February. This marks the first fiscal deficit since the pandemic, following early-year surpluses from 2022 to 2024.
Declining tax revenue was the primary driver of the deficit. Tax revenue dropped by 25 percent to Rp 240.4 trillion, with income tax collection shrinking by 30.19 percent to Rp 187.8 trillion. The customs and excise revenue, however, slightly increased by 2.13 percent to Rp 52.6 trillion.
Deputy Finance Minister Anggito Abimanyu attributed the decline to seasonal fluctuations, explaining that tax revenue tends to rise at year-end due to holiday spending but dips in the early months of the year.
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