Quick summary: Indonesian President Prabowo Subianto has announced the centralisation of key commodity exports through a state owned enterprise to reclaim lost revenues and tighten national control over natural resources. The policy requires all natural resource exporters to store 100% of their earnings in domestic banks from June to help stabilise the pressured rupiah, causing immediate stock market volatility and drawing caution from trade economists. This dramatic shift carries profound implications for global trade and public policy, as the government attempts to balance strict nationalist resource management against market distortions that could threaten macroeconomic stability and public well being.
Indonesian President Prabowo Subianto announced on Wednesday, 20th May, that his government will centralise exports of key commodities to boost state revenues and tighten the country’s grip over its abundant natural resources.
Speaking in a fiery address to parliament, Mr Prabowo said Indonesia had lost as much as US$908 billion in revenues over the last 34 years because its commodities were being sold on the cheap. He added that exports like palm oil and coal would in future be sold through a central government-run enterprise.
“Today the Indonesian government that I lead will issue a regulation on management of commodity exports,” Mr Prabowo said.
“The issuance of this regulation is a strategic step to strengthen management of commodity exports. All sales of our resources, from palm oil, coal must be through a state-owned enterprise (SOE) selected by the government as sole exporter.”
Indonesia is the world’s largest exporter of thermal coal and palm oil.
Senior Economic Minister Airlangga Hartarto said the 1st stage will cover coal, palm oil, and ferroalloy, with a review every 3-months to evaluate which additional commodities may be added. A 3-month transition period will allow exporters and buyers to continue doing business as usual, during which the government-appointed entity will monitor export transactions.
Danantara Indonesia sovereign wealth fund chief Rosan Roeslani said the transition period could be extended to the end of 2026, after which all exports must go through the state-appointed firm, overseen by Danantara.
Starting 1st June, all exporters of natural resources from Indonesia must also store 100% of their export earnings in Indonesian state-owned banks. Mr Airlangga said this was intended to stabilise the rupiah, which has come under significant pressure in recent days.
The move targets concerns about under-invoicing and transfer pricing among exporters. Mr Airlangga confirmed the policy directly addresses how exporters account for these practices.
Mr Prabowo framed the policy in nationalist terms: “In the opinion of the government, and I am sure every patriot will support this, the earth, water, and all the resources within it must be enjoyed by all Indonesians.” He acknowledged that, despite being a resource-rich G20 member, Indonesia had not managed its economy well enough to maximise state revenues.
Rumours of the plan spooked markets over concerns about changes to pricing mechanisms and squeezed trader margins. Jakarta’s main stock index fell 3.5% on 19th May and was down 2% on 20th May before paring losses.
Not all observers are convinced the policy will achieve its goals. Rizki Siregar, assistant professor and international trade economist at the University of Indonesia, warned that the export control agency “may create more distortions instead of being a solutions to the distortions, on top of already severe distortions that exporters face.”
Officials have emphasised that phased implementation and transition monitoring aim to minimise disruption while delivering long-term improvements in resource governance.
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