appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Resty Woro Yuniar

Indonesia lost nearly US$1 trillion in resource wealth over a 34-year period due to deceptive trade practices, President Prabowo Subianto declared in parliament on May 20.
That same day, a set of new export controls was unveiled. Foreign-exchange earnings would be locked in Indonesian banks for a prescribed time limit and producers of coal, palm oil and ferroalloys would be required to route sales through a new state-owned enterprise.
But barely had the ink dried on the new rules when talk of future exemptions began.
Countries that had free-trade agreements with Indonesia, such as the United States, might eventually be spared the most stringent requirements, officials signalled. Nickel pig iron, which accounts for the lion’s share of Indonesia’s nickel exports, was left off the list entirely. Some palm oil derivatives too.
Chief Economic Affairs Minister Airlangga Hartarto sought to clarify the rules on May 21, explaining that exporters from countries with reciprocal trade or bilateral agreements with Indonesia would be allowed to deposit just 30 per cent of their foreign-exchange proceeds in a non-state-owned bank for a minimum of three months.
Most other non-oil-and-gas exporters, by contrast, must retain 100 per cent of their earnings in special accounts specifically within state-owned banks for 12 months. The upstream oil and gas sector, meanwhile, has been completely exempted from the Danantara centralised marketing framework – though it remains subject to the lighter 30 per cent retention rule for three months. Confused?

Energy and Mineral Resources Minister Bahlil Lahadalia assured the market that existing contracts would not be disrupted, though companies would need to “synchronise their data and communicate” with the new state-owned entity to be known as Danantara Sumberdaya Indonesia, or DSI – an arm of the sovereign wealth fund Danantara.
By January 1, 2027 at the latest, DSI is expected to fully control export-related transactions, from sales to delivery, according to industry briefing documents.
To lead DSI, Danantara tapped Luke Thomas Mahony, an Australian with a background in trading and minerals and a prior directorship at Vale Indonesia.
Market confusion
For the companies, investors and industry players that Jakarta was ostensibly trying to reassure, the patchwork of rules and piecemeal exemptions has had the opposite effect.
“These exceptions raise many questions,” said Wijayanto Samirin, an economist at Paramadina University in Jakarta. “Why are some countries excluded? This certainly raises questions about fairness.”
Centralising exports could, in theory, add 60 trillion rupiah (US$3.36 billion) a year to state coffers, Wijayanto said, but he warned that “the costs caused by this uncertainty are extraordinary and investors will not see this positively”.
The market’s response was swift. Prices of Indonesian palm oil fell 10 per cent in a daily auction immediately after the announcement, according to American financial intelligence and analytics firm S&P Global.
“Palm oil buyers’ attention may now shift to Malaysia until more is known about how the export mechanism in Indonesia will be implemented,” said Paramalingam Supramaniam, director at Malaysia-based commodity brokerage firm Pelindung Bestari, in remarks to the US firm.

Officials have also launched investigations into several companies over alleged under-invoicing and transfer pricing that Prabowo referred to in his parliamentary speech.
Prabowo said the practice had caused US$908 billion in state losses between 1991 and 2024 and had led to low salaries for teachers, civil servants and inadequate state revenues.
Finance Minister Purbaya Yudhi Sadewa told reporters on Tuesday that 10 “major” crude palm oil producers were under scrutiny, including Singapore-based Wilmar International and Musim Mas Group. He accused the 10 companies of selling their crude palm oil to Singapore-based trading companies on paper only, while in reality shipping it directly to the US with mark-ups of up to 50 per cent.
Purbaya said his ministry had reviewed 20 crude palm oil exporters in total, with the remaining 10 found to have reported “small” under-invoicing. “We’re focusing on the big companies. If the big companies do that, the small ones probably do the same,” he said.
‘Indecisive’ stance
Aside from the rules themselves, economists say another concern surrounds the institution being handed responsibility to enforce them.
Dipo Satria Ramli, an economist at the Centre of Reform on Economics Indonesia, called DSI’s placement under Danantara a “red flag”, pointing to US credit rating agency Moody’s warning in February that the sovereign wealth fund’s establishment “raised risks to policy credibility and potential contingent liability for the government”.
Both Moody’s and Fitch Ratings have since cited Danantara as a reason for revising their outlook on Indonesia’s sovereign credit rating from “stable” to “negative”.
The government’s “indecisive” stance on the new rules could harm the investment climate “at a bad time when the economy and foreign direct investment are weakening”, he said.

Dipo further suggested that the exemptions to partner countries might have been granted as a result of lobbying pressure, while the leniency for US-linked exporters was likely a result of the Indonesia-US agreement on reciprocal trade known as the “ART”.
“The ART’s legality is still a bit up in the air in the US,” he said. “[But] it seems to me that Indonesia has decided not to fight the obligations the US imposed on them.”
Officials have pushed back against the pessimism. Airlangga said on May 22 that industry associations had responded “positively” and were preparing for implementation, adding that the only outstanding requests were for “transparency and clarity” on DSI’s structure.
“The responses have been positive. Associations understand our move and are preparing for implementation,” he said. “We are not giving comments, but we are hoping for immediate formation of solid management.”
Pandu Sjahrir, Danantara’s chief investment officer, pledged on Tuesday to listen to the market’s concerns, accommodate them “and translate them to regulators”.
“We will also provide updates to the market on the formation of DSI every two to three weeks,” he said. “In this way, the existing uncertainty can be transformed into something more measurable as a risk.”


Southeast Asia supports multilateralism, wary of US or China leadership: survey

Named as an enemy: Indonesia’s uneasy Aukus moment

Malaysia deploys air force aircraft for cloud seeding to combat worsening haze

Why the Global South keeps its doors wide open to Russia

Indonesia

Chasing billions: Indonesia’s commodity export crackdown sows confusion

Indonesian President Prabowo Subianto speaks at the parliament complex in Jakarta, Indonesia, on May 20. Photo: Xinhua

A sign for Indonesia’s sovereign wealth fund Danantara is seen in front of its headquarters in Jakarta. Photo: Reuters

Men load palm fruit onto a truck at a palm oil plantation in Indonesia. Finance Minister Purbaya Yudhi Sadewa says 10 “major” crude palm oil producers are under scrutiny. Photo: AP

Smoke rises from a nickel processing and smelting hub in North Maluku, Indonesia. Nickel pig iron has been excluded from the new export control rules. Photo: AFP

Indonesia’s President Prabowo Subianto reacts during a parliamentary session on May 20. Photo: AP

Indonesia’s rupiah sinks to record low as Prabowo shrugs off rout fears

Indonesian President Prabowo Subianto delivers a speech in front of stacks of cash representing the fines paid by companies breaking forestry laws last month. Photo: Reuters

Indonesian Finance Minister Purbaya Yudhi Sadewa at the Bank Indonesia building in Jakarta on May 7. Photo: AFP

Indonesian banknotes are seen after being withdrawn from an ATM machine in Denpasar, Indonesia. The Indonesian rupiah fell to a record low against the US dollar on Tuesday. Photo: EPA

A stacker organises containers at Tanjung Priok Port in Jakarta, Indonesia. Indonesian is heavily dependent on imports for staple foodstuffs such as wheat, soybeans and garlic. Photo: AP

Farmers work in a field during the start of the rice planting season in Aceh Besar regency, Indonesia, in May 11. Photo: EPA

Indonesia’s oil hub plan collides with Asean’s trust deficit

Oil tankers and cargo ships are seen at the oil depot and container terminal of Tanjung Priok Port in Jakarta, Indonesia, on March 31. Photo: AFP/Getty Images/TNS

Vessels are seen anchored in the Strait of Hormuz, off the port city of Khasab, Oman, on Sunday. Photo: AFP/Getty Images/TNS

A rickshaw driver pedals past a welcome sign for the 32nd Asean Economic Ministers Meeting in Chiang Mai, Thailand, in 2000. Photo: AP

A view of the International Energy Agency’s logo at its headquarters in Paris, France. Most of the IEA’s members are European countries. Photo: Reuters

This Week in Asia

Economics

News

Asia

Southeast Asia

New export rules promise billions in recovered revenue, but analysts warn the ensuing chaos could cost more than the gains


New export rules promise billions in recovered revenue, but analysts warn the ensuing chaos could cost more than the gains.


Chasing billions: Indonesia’s commodity export crackdown sows confusion

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}New export rules promise billions in recovered revenue, but analysts warn the ensuing chaos could cost more than the gains

New export rules promise billions in recovered revenue, but analysts warn the ensuing chaos could cost more than the gains