Presidential Instruction No. 1 of 2025 on Spending Efficiency in the Implementation of the 2025 State and Regional Budgets, issued on 22 January 2025, set state spending cuts of Rp306,695,177,420,000, made up of Rp256.1 trillion in ministry and agency spending and Rp50.6 trillion in transfers to regions (Presiden Republik Indonesia, 2025). The Ministry of Public Works' 2025 indicative ceiling of Rp110.95 trillion was at first cut to Rp29.57 trillion. After the cut was revised, as presented at a working meeting with Commission V of the House of Representatives on 13 February 2025, the final indicative ceiling became Rp50.48 trillion. The minister said no new national roads would be added in 2025, and routine road preservation was planned for the first 6 months only (Maharani, 2025).
For project owners and contractors, the practical question is whether this budget pressure may touch construction safety costs. This analysis reads the legal basis for the cuts and the rules on the cost of applying the construction safety management system (SMKK), then considers the implications for project and contractor management.
Legal Basis for Cuts
The instruction asks ministers and agency heads to identify planned savings across operational and non-operational spending, at minimum office operations, maintenance, official travel, government assistance, infrastructure development, and equipment and machinery procurement. Personnel spending and social assistance are excluded. The results go to the partner House commission for approval and are then applied as budget blocks (Presiden Republik Indonesia, 2025, Diktum KETIGA). The instruction governs amounts and spending lines under review. It does not change the technical standards for delivering construction.
Duties That Remain
Those technical standards come from Law No. 2 of 2017 on Construction Services. Article 59(1) requires both project owners and service providers to meet the Security, Safety, Health and Sustainability Standards in every construction undertaking, and Article 59(3) names occupational safety and health standards among them (Pemerintah Republik Indonesia, 2017).
Minister of Public Works and Housing Regulation No. 10 of 2021 on Construction Safety Management System Guidelines translates that duty into budgets. The cost of applying SMKK is defined as the cost needed to apply the system. For construction works it covers preparing the construction safety plan and related documents, outreach and training, work and personal protective equipment, insurance and permits, construction safety personnel, health facilities, traffic signs and management, expert consultation, and risk control activities. The project owner must ensure all of these costs are budgeted and applied, the provider must include them in its bid, and contracts with subcontractors must include an SMKK budget as needed (Kementerian Pekerjaan Umum dan Perumahan Rakyat [Kementerian PUPR], 2021).
The consequence in tendering is clear. Under lowest-price evaluation, a bidder that does not submit an SMKK cost estimate is disqualified, and under value-based evaluation its price score is set to zero (Kementerian PUPR, 2021, Pasal 22). During construction, the construction safety plan and the work traffic management plan must be adjusted to changes in scope and conditions, with the owner's approval (Kementerian PUPR, 2021, Pasal 25).
Reading the Gap
Comparing the two instruments, we conclude that budget efficiency works at programme level, deciding how many packages proceed and how large they are, while SMKK duties work at package level. A package that still goes to tender must still carry an adequate SMKK cost.
The risk we see lies in practice rather than in the rules. Pressure to lower the owner's estimate can lead to SMKK costs being drafted as a token line. Packages postponed and then rushed in the second half of the year can compress schedules. Han et al. (2014), studying a construction project, found schedule delays and rework to be critical factors in accident occurrence, in a model linking production pressure to workers' safety perceptions, training, supervision and crew size. Limiting road preservation to 6 months also means maintenance squeezed into a short window on roads that stay open to traffic. The Han et al. findings come from a single project outside Indonesia, so we offer this assessment as a direction for vigilance, not a certainty.
Compliance Implications
- For project owners: keep the SMKK cost line in the owner's estimate in line with the package risk level, and treat any reduction as a decision that needs a written basis (Kementerian PUPR, 2021).
- For providers: do not win tenders by thinning SMKK costs, since a bid without that estimate is disqualified or scored zero (Kementerian PUPR, 2021, Pasal 22).
- Flow the SMKK budget down into subcontractor and supplier contracts, then check what is actually spent on site (Kementerian PUPR, 2021).
- When scope is reduced or schedules are compressed, update the construction safety plan and obtain the owner's approval (Kementerian PUPR, 2021, Pasal 25).
- Watch for signs of production pressure, such as consecutive overtime and rework, as early indicators (Han et al., 2014).
Nusa Safety's Role
Nusa Safety can help project owners and main contractors check whether the safety systems of their contractors and subcontractors work as planned through an HSE and CSMS Audit, and build contractor prequalification and control through CSMS Development and Prequalification. Companies that want their OHS management system aligned with project obligations can also get support with SMK3 and ISO 45001 implementation. Legal questions on contracts and procurement are best referred to an advocate. Nusa Safety issues internal training certificates only and is not a PJK3.
This article is general information and not legal or professional advice for any specific case.
References
- Han, S., Saba, F., Lee, S., Mohamed, Y., & Peña-Mora, F. (2014). Toward an understanding of the impact of production pressure on safety performance in construction operations. Accident Analysis & Prevention, 68, 106-116. https://doi.org/10.1016/j.aap.2013.10.007
- Kementerian Pekerjaan Umum dan Perumahan Rakyat. (2021). Peraturan Menteri Pekerjaan Umum dan Perumahan Rakyat Nomor 10 Tahun 2021 tentang Pedoman Sistem Manajemen Keselamatan Konstruksi [Minister of Public Works and Housing Regulation No. 10 of 2021 on construction safety management system guidelines]. https://pasal.id/peraturan/permen/permen-pupr-no-10-tahun-2021
- Maharani, A. S. A. (2025, February 23). Panjang jalan nasional 2025 tak bertambah akibat efisiensi anggaran [No new national road length in 2025 due to budget efficiency]. Kompas.com. https://www.kompas.com/properti/read/2025/02/23/210000021/panjang-jalan-nasional-2025-tak-bertambah-akibat-efisiensi-anggaran
- Pemerintah Republik Indonesia. (2017). Undang-Undang Nomor 2 Tahun 2017 tentang Jasa Konstruksi [Law No. 2 of 2017 on construction services]. https://pasal.id/peraturan/uu/uu-no-2-tahun-2017
- Presiden Republik Indonesia. (2025). Instruksi Presiden Nomor 1 Tahun 2025 tentang Efisiensi Belanja dalam Pelaksanaan Anggaran Pendapatan dan Belanja Negara dan Anggaran Pendapatan dan Belanja Daerah Tahun Anggaran 2025 [Presidential Instruction No. 1 of 2025 on spending efficiency in the 2025 state and regional budgets]. https://pasal.id/peraturan/inpres/inpres-no-1-tahun-2025
