Indonesia is overhauling its trade policies for key commodities in a move the Associated Press described as sudden, with global implications for buyers and investors. Indonesian President Prabowo Subianto announced the regulation to parliament in Jakarta on Wednesday, setting a timeline for exports of coal, palm oil and iron alloys to be handled by a new state-owned enterprise by September.
Prabowo said the government’s immediate goal is to increase oversight and curb practices that reduce tax revenue. He told lawmakers that exporters have lost the government “as much as $908 billion” due to underreporting of sales and related problems, and he said the “primary objective of this policy” is to “strengthen oversight and monitoring — and to combat under-invoicing, transfer pricing and the diversion of export proceeds.”
The policy names PT Danantara Sumberdaya Indonesia as the entity taking over the export role. The company was officially registered the day before Prabowo’s announcement, and the plan described by the AP says it is 99% owned by Danantara, the sovereign wealth fund Prabowo launched last year, which is designed to increase state influence over pricing and the management of strategic commodity trade.
Indonesian officials said the steps are meant to be phased to give stakeholders time to adapt. Airlangga Hartarto, the coordinating economic minister, said from June to August private companies are expected to turn over their import and export transactions to Danantara, and he said the government would focus initially on transparency in reporting. Hartarto also said there would be an explanation for investors later “so that stakeholders will be informed before June 1.”
While the government has framed the change as governance reform, several experts warned that the pace of the rollout could be difficult for businesses to absorb. They said companies involved in exporting and contracting may face uncertainty as rules shift toward a centralized state role, and they questioned whether the government can manage the takeover across industries quickly.
China is likely to face particular pressure under the new approach, according to multiple analysts cited by the AP. The report said Indonesia is the world’s largest exporter of thermal coal and palm oil, and it has the world’s biggest known reserve of nickel, a mineral used in electric-vehicle batteries. It also said China is Indonesia’s largest trading partner and one of its biggest investors, and experts described China as closely monitoring Indonesia’s “initiative to nationalize.”
Lei Xie of the UK-based think tank Third Generation Environmentalism said in the AP report that China is “closely watching Indonesia’s ‘initiative to nationalize’” and considering “how it would impact China’s further cooperation,” adding that “The future path that Indonesia is taking is highly important for China.” Li Shuo of the Asia Society Policy Institute’s China Climate Hub said Indonesia supplies commodities that “underpin China’s dominance in electric vehicles, batteries, and industrial manufacturing,” and that “the relationship is evolving.”
Other analysts said the policy could also become a lever in competition for resources beyond China. The AP report said Indonesia is trying to diversify investors by exerting state control, potentially opening space for investment from the United States and others, though that competition could intensify depending on how consistently the policy is implemented. Bhima Yudhistira of the Jakarta-based Center of Economic and Law Studies characterized the move as a “hostile takeover,” saying it could lead to revisions of contracts in industries controlled by China.
Prabowo’s announcement also came after the AP report said China-linked business concerns had surfaced earlier. It said that even before the latest regulation, the China Chamber of Commerce in Indonesia sent a five-page protest letter highlighting concerns about Indonesia’s business climate, including “excessively stringent regulation, over-enforcement, and even corruption and extortion” by competent authorities, and that the chamber said those issues “severely disrupted normal business operations” and “undermined long-term investment confidence.”
Indonesian trade groups and researchers said the government needs to spell out how the new central export arrangement will affect different sectors. Eddy Martono, chairman of the Indonesian Palm Oil Association, told the AP that Danantara’s impact on small-volume trade, specialized product exports and downstream industries “still needs to be spelled out,” and he said exporters typically have established markets and Indonesia must ensure it does not “lose these markets if they are not managed properly.” Syahdiva Moezbar of the Finland-based Centre for Research on Energy and Clean Air said whether the policy attracts new investors depends on the transparency of implementation, according to the AP report.
Delgado reported from Bangkok.