Jakarta. Indonesian stocks closed lower on Friday as investors locked in profits ahead of the weekend, outweighing positive domestic sentiment over planned fiscal savings in the Free Nutritious Meals (MBG) program and gains across most Asian markets.

Jakarta Composite Index (JCI) fell 31 points, or 0.47%, to close at 6,636 after moving between 6,633 and 6,704 during the session.

Trading volume reached 35.3 billion shares, with turnover totaling Rp 14.84 trillion ($841.02 million) across more than 2 million transactions. A total of 256 stocks gained, 363 declined, and 172 remained unchanged.

On the domestic front, Pilarmas Investindo Sekuritas said Finance Minister Purbaya Yudhi Sadewa's plan to improve efficiency and potentially cut the budget for the Free Nutritious Meals (MBG) program to below Rp 200 trillion could support confidence in the government's fiscal management.

Purbaya has opened the possibility of reducing the MBG budget to below Rp 200 trillion through efficiency measures and greater use of technology. This year's allocation has already been cut from around Rp 330 trillion to Rp 240 trillion, while the 2027 budget is also set at around Rp 240 trillion.

“We see the plan to improve efficiency and bring the MBG budget below Rp 200 trillion as a positive signal for the government's fiscal management,” Pilarmas said. “With the allocation previously standing at around Rp 240 trillion, potential savings of more than Rp 40 trillion could provide additional fiscal space to finance other priority programs, maintain the deficit, and reduce pressure on the government's financing needs,”  Pilarmas added.

The government also plans to strengthen oversight through the Finance Ministry and assign regional officials to take turns monitoring the program's kitchens (SPPG).

Pilarmas said efficiency should not be interpreted simply as budget cuts, but as an effort to improve the effectiveness of every rupiah spent.

“The use of technology, digitalized distribution, supply chain improvements, and tighter oversight of SPPG operations could help reduce potential leakages and operating costs without compromising food quality or the number of beneficiaries,” Pilarmas said.

However, the brokerage warned that the government must ensure its savings target does not undermine the nutritional quality of the program or its ability to reach intended beneficiaries. “The program has a long-term impact on the quality of human resources. Its success should therefore not be measured solely by how much of the budget is reduced, but also by the quality of services and benefits received by the public,” Pilarmas said.

Pilarmas said the efficiency drive could also support investor confidence in the government's fiscal credibility if the savings are structural and sustainable. “Greater fiscal space could give the government more flexibility to meet other spending needs while maintaining the health of the state budget,” it said in its report, Friday.

“However, investors will continue to watch the implementation to ensure that the savings genuinely come from productivity improvements rather than simply delaying spending or reducing the program's coverage.”

Meanwhile, Asian stock markets mostly advanced as expectations of a Federal Reserve interest rate hike in September eased. Comments from Fed Governor Christopher Waller also reinforced those expectations.

Waller said he would be willing to support keeping interest rates unchanged if inflationary pressures showed signs of easing. The remarks led markets to see the Fed as more likely to hold rates steady rather than raise them in September.

“The sentiment became one of the factors supporting Asian regional markets, including Indonesia’s stock market,” Pilarmas wrote in its research note on Friday.

Japan’s Nikkei rose 1.26%, while South Korea’s Kospi gained 1.64%. Hong Kong’s Hang Seng jumped 1.74%, while China’s Shanghai Composite fell 0.78%.

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