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It's 4:00 a.m. and dozens of kitchen

staff are cooking up a storm in a

coastal village in southern Indonesia.

>> There's some doing the cooking, chopping

up vegetables, some are doing the

packing. Roslin Madison is Bloomberg's

chief Asia correspondent based in

Singapore. She and Bloomberg reporter

Echolista Ureini visited the remote

village kitchen in West Teour in March.

There workers prepare thousands of pat

lunches that are delivered to school

children, pregnant women, and new

mothers almost every day. They're pretty

functional, I would say. I mean, it's a

reusable metal tray that's separated

into compartments. You'll often get a

portion of rice, sometimes egg, chicken

or tempeh, a small portion of soup,

vegetables. Usually there's one piece of

fruit. We saw watermelon, um, dragon

fruit.

>> The lunches are part of a vast state-f

funed program in Indonesia where free

meals are delivered to more than 60

million people.

>> It's a massive undertaking. Indonesia is

the world's largest collection of

islands. And so you're talking about

distributing free meals, you know,

across thousands of islands, many of

them far away from big cities like

Jakarta. Providing free nutritious meals

for children under 18 and pregnant women

was a big part of Indonesian President

Proo Subanto's election campaign. He

launched the program in January 2025 and

this past year he's been ramping up the

program at a startling pace and cost.

It's now about 15 billion dollars of

allocation from the budget this year.

And when you think about the overall

national budget, that's a bit over 6%.

And on a par with things like the

national healthcare budget,

foreign investors have expressed concern

about the program's ballooning price

tag, especially at a time when

Indonesia's economy is already under

immense pressure.

>> Hear from a top Indonesian official

about commodity export control plans

that have rattled markets. for this open

of Indonesia and stocks are just getting

absolutely tossed out the window.

>> Despite investor concerns, PBO has

doubled down on the program, saying

it'll help create jobs, boost

consumption, and economic growth. But

Rosland says there's little evidence to

show that the program so far is anywhere

near the economic gamecher that PBO

promised it would be.

>> Parents that we spoke to weren't really

saving any money out of this program.

They said their kids often came home

still hungry. Investors are saying, "Is

this really going to be uh a massive

multiplier for the economy?" And they

have doubts about that.

This is the Big Take Asia from Bloomberg

News. I'm Rebecca Chung Wilkins filling

in for Wanha. Every week, we take you

inside some of the world's biggest and

most powerful economies and the markets,

tycoons, and businesses that drive this

evershifting region. Today on the show,

Indonesia's free lunch program, what it

takes to feed tens of millions of people

every day and how safety problems and

ballooning costs are worrying investors

and could threaten the future of the

scheme.

>> Ros, you visited some of the schools and

community centers in Indonesia where

these free meals were delivered. How did

the kids like their pat lunches?

>> I think every child is on the planet

doesn't like green beans cuz they were

all pushing those around on their plate

every time. Sometimes they were swapping

bits of the meals with each other that

they didn't like or the ones they

wanted. But I would also say

particularly in the rural area um there

was a sense from these kids that they

kind of appreciated the gesture. When

Indonesian President PBO began laying

the groundwork for his free meals

initiative, it was aimed at addressing a

growing public health crisis. As of

2024, nearly 1 in five Indonesian

children were affected by stunting, a

condition linked to long-term

malnutrition.

PBO has made fighting this condition

personal. He's very much detached his

personal brand to this and he was

motivated by the desire he says to take

better care of the people of Indonesia

and to lift them up in a way to give

them opportunities through better

nutrition. And you can see how important

it is to him. He's enlisting the

military to help roll out this program.

He's a former military general as we

know. He's a bit of a state

interventionist at heart. uh a bit of a

socialist when it comes to economic

policy. So he sees a very strong role

for the state in economic policy in

Indonesia and that has kind of cascaded

through all his policies so far. Just

last week, PBO announced that the

government's going to take direct

control of exports of some commodities

through a new state export body. This is

part of course of PBO's push for the

state to play a larger part in the

economy. He's argued that more of the

profits from natural resources should

stay home and be channeled into social

programs and infrastructure. And of

course that includes uh his very very

big free meals program. Prao says the

program is supposed to do much more than

just improve nutrition. He says that it

could transform the economy too. So it

is that idea again of of leveraging of

this program to not just improve uh

child nutrition which is very important

and their retention rates at school so

more kids turning up to school but also

staying at school but it is that

multiplier effect on the economy that he

talked about.

>> PBO talked about that multiplier effect

at the World Economic Forum earlier this

year.

>> Our free meals strengthens our economy.

More than 61,000

micro, small and medium enterprises and

cooperatives

are now a part of this supply chain.

We are creating

more than 600,000

jobs

just at the kitchens.

>> So create an ecosystem of jobs locally

wherever these central kitchens are

located. also potentially help

consumption so that if parents aren't

spending so much money feeding their

kids, they have perhaps a bit more money

to invest elsewhere in the economy. And

essentially, can it just be a

contributor to GDP and to rising

prosperity in Indonesia? So, he's

banking on this program to do an awful

lot. For now, at least, Indonesians seem

to be on board. Opinion polls suggest

the program has been fairly popular and

the government has moved quickly to

scale it up. Now there are more than

25,000 kitchens operating nationwide,

each serving up to 3,000 meals a day.

But as Ros found, the reality of

delivering food at that scale and across

an archipelago of more than 17,000

islands can be messy. In the rural area,

it's rough going. You know, the roads

are often washed away. They're prone to

flooding. their potholed already. So,

the trucks have to navigate these roads

to make each stop and they've got to try

and make each stop on time. And they say

every day they're feeling pressured to

make sure that they do their deliveries

on time. Another logistical challenge

that they face, particularly in the

rural area is that there aren't big

farmer markets open every day. They have

to drive a couple of hours to another

bigger town to source produce. So that's

another logistical challenge because

it's sort of 4-hour round trip to get

there and back.

>> Then there's the question of food

safety. Across the country, at least

15,000 children have fallen ill due to

food poisoning linked to the program.

There were particularly early on quite

widespread and documented cases of food

poisoning. There was some reports even

of shards of glass in some meals. There

are still those occurring, but they do

seem to be tapering off. When we spoke

to the head of the National Nutrition

Agency, he was telling us very clearly

they are penalizing kitchens for

infringement. So, they might stop their

payments for a couple of weeks. In

extreme cases, they will close those

kitchens entirely.

Critics of the program point to food

safety issues like these, and they're

beginning to ask whether the program can

actually deliver the kind of economic

payoff promised by the government. Ros

put that question to the head of Celios,

a Jakarta based think tank. The head of

the think tank, I asked him how he would

grade it. He said, "Well, I give it an F

for now." Um and they've been critical

in a bunch of ways about this program

including again that idea of an economic

multiplier and they don't see it. In

fact, one thing they said is that

anecdotally that they have found

evidence of an inflationary impact of

this program at a localized level. So

parts of Indonesia where there have been

people saying, "Well, we're seeing

increases in chicken prices and egg

prices because the kitchens are are

hoovering up all these things."

After the break, we look at the cost of

running such an ambitious program and

why PBO's enthusiasm for this kind of

social experiment is making investors

nervous.

Indonesia's free meals program is

expected to feed nearly 83 million

people or around a third of the

population by the end of this year. To

do that, the government has set aside

$15 billion, five times the amount it

spent last year. That's according to the

National Nutrition Agency. But

Bloomberg's Rosalyn Madison says

investors are worried about that growing

price tag.

>> It is a large amount of the budget. They

have looked to trim a bit of it and the

government is looking at cost cutting

measures as a whole to try and save

about $7.1 billion. That's again as

they're under pressure from rising

energy prices and the impact of the war

in the Middle East. And that's putting a

lot of questions over the legal budget

deficit cap which has been set at 3% for

a long time. And that's been a

cornerstone for investors for many years

and they're looking at that closely and

saying are you going to breach that

budget cap and will the free bills

program be a factor in you doing that?

For more than two decades, Indonesia has

lived with a strict fiscal rule. Since

2003, the government has been legally

required to keep its budget deficit

below 3% of GDP, a safeguard put in

place after the Asian financial crisis.

But in March, a government officials

suggested temporarily easing that limit

to cope with higher oil prices. For

markets, Ros says that was a red flag.

Both Moody's and Fitch cited it that 3%

figure as a factor when they lowered

their rating outlooks on Indonesia this

year. So the rating houses are watching

that 3% figure very closely and saying

the spending. A lot of this is coming

from these big ticket programs including

free meals. It's coming at a time when

investors are also nervous about the

broader investability in Indonesia.

>> President Proanto last week announced

the government would take control or

direct control of exports of some of

Indonesia's most important commodities.

his

>> Indonesia is obviously a massive

exporter of commodities and particularly

this is going to hit palm oil, coal and

ferro alloys which could include some

nickel products and it's a lot of money.

More than a fifth of the country's

export revenue last year came from

commodities. So it's a very big player

globally and this is making investors

worried because they're saying hang on

no one knew this policy was coming.

Everybody was taken by surprise and does

this mean that Indonesia is drifting

further away from that mantra of being

market friendly and also what does it

mean if you have greater state control

over the economy does that leave it open

to greater political influence over

state companies for example

even the bond market usually the calst

part of Indonesia's markets has started

to show signs of strength government

borrowing costs have been creeping

higher. Proo has told Bloomberg that

fiscal discipline remains a priority and

he's committed to keeping the budget in

check. Some critics say the government

needs to redesign the program to scale

it back and learn how similar schemes

have worked elsewhere. Some of the

people that we spoke to, they want it to

be much more targeted. They say this

idea that it has to go across everywhere

in Indonesia, the one approach

everywhere no matter the demographics of

that area, the socioeconomic status of

that area. Uh but put it in places of

demonstrated need um have it

regionalized and have much more

collaboration with local administrations

um than there is occurring now. So they

want it to be much more focused than it

is. So the US and UK for example they

kind of target kids who are specifically

below the poverty line. So it's not a

blanket thing but for families who

qualify. India has a very big program.

It's much more of decentralized model.

So it's a combination of federal and

state government funding and states are

responsible for the implementation. The

states have to submit detailed plans on

the number of schools, number of

children, sort of transport costs and so

on and they work a lot with NOS's and

there is research that shows an

improvement in literacy and health

outcomes from that program.

Ros says perhaps the biggest issue for

critics of the program is the fact that

it's being pitched as a cure all for a

raft of Indonesia's economic ailments.

the government or PBO and his

administration expect this program to

achieve so much on a macro level. You

know, create jobs, consumption, help

parents save, boost GDP, you name it,

plus nutrition and school outcomes. If

you look at free meal programs in other

countries, they don't necessarily have

such a vast set of goals around them in

a way. Some countries they're simply

focused on let's get a free meal each

day to kids in need. Let's hopefully

improve their nutrition. And hopefully

that means they come to school more and

they stay at school more. They're not

necessarily tied to a whole economic

multiplier effect as they are in this

case. Criticism of the program has come

from all quarters and some people think

it should be scrapped altogether. But

PBO isn't backing down. Here's how he

defended the free meals program in his

New Year speech in January.

Are there shortcomings? Yes. In an

undertaking of this scale, shortcomings

are inevitable. Are there deviations?

Yes. In an undertaking of this scale,

there definitely will be shortcomings

and deviations. But objectively,

statistically, we can say that the

program has succeeded by 99.99%.

So Rosit, it's pretty clear that the

program isn't going away, but it is

already seeing some cutbacks. Because of

pressures from rising oil prices, the

government recently decided to cut back

on meal offerings in some places from 6

days a week to five. What other changes

do you think he might make to the

program? Might he roll it back even

further?

If anything, some investors are saying

they see the chance that he accelerates

next year because that's sort of the

point where you start to think about

your re-election prospects. If you're

going to you run a lengthy election

campaign and if he is going to run for

reelection in 2029, then next year you

start to see the signs of that. So very

unlikely that he he scales back at least

significantly. There may be further

changes to the program, you know, again.

So, not 6 days a week, but 5 days a

week, which is already something they're

doing. Perhaps they limit the number of

kitchens. Perhaps they do trim the

budget for it even further. But there's

no sense at all that he's going to make

a wholesale departure from this program.

He's put too much of his political

capital into it to do so.

This is the Big Take Asia from Bloomberg

News. I'm Rebecca Chung Wilkins. To get

more from the Big Take and unlimited

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