Prabowo Orders 5 Percent Cap on State Microloans

Indonesian President Prabowo Subianto has directed the country’s state-owned banks to cap annual interest rates on microloans at 5 percent, a sweeping move aimed at shielding low-income citizens from aggressive informal lenders.

Indonesian President Prabowo Subianto, center, is greeted and hugged by a child in tears while surrounded by security guards during a rally for International Workers' Day, or May Day, near the National Monument (Monas) in Jakarta, Indonesia, May 1, 2026. INSTAGRAM/presidenrepublikindonesia

JAKARTA — Prabowo unveiled the credit mandate during a May Day address to cabinet ministers, business executives, and labor unions on Friday (May 1, 2026), framing the policy as a direct intervention to protect the working class.

Low-income earners, including farmers, fishermen, and factory workers, frequently rely on informal credit to make ends meet. Prabowo noted that these vulnerable groups often face crippling debt, with unregulated borrowing costs sometimes soaring to 70 percent a year.

"I have ordered the Republic of Indonesia's state banks, soon we will disburse credit for the people at a maximum of 5 percent a year," Prabowo told the crowd.

The president emphasized that his administration requires all ministries to secure grassroots economic benefits before executing new policies. The state bank loan cap serves as the financial centerpiece of that domestic agenda, ensuring the government provides rational funding alternatives.

The credit facility was part of a broader populist package rolled out for International Workers' Day. Prabowo also announced a new regulatory limit on commission fees charged by ride-hailing applications, capping platform deductions at 8 percent of driver earnings.

Additional measures introduced Friday include the formal ratification of the long-stalled Domestic Workers Protection Law and a state pledge to construct one million subsidized homes annually, strategically located near major industrial hubs to reduce worker commute times.

The aggressive policy shift reflects a wider economic strategy to stimulate domestic consumption by easing the baseline financial burden on Indonesia's blue-collar demographics.