Key facts
- Indonesia is implementing resource nationalism policies to gain greater control over its critical mineral exports.
- President Prabowo Subianto's government is centralizing export control for commodities like coal, palm oil, and nickel.
- A new state-owned enterprise will manage these key commodity exports by September.
- The policy aims to boost tax revenues and combat trade malpractices.
- China, Indonesia's largest trading partner, faces potential impacts on its access to vital resources.
Indonesia is aggressively accelerating its pivot toward resource nationalism, aiming to secure a larger share of profits from its critical mineral wealth. Under President Prabowo Subianto, the government is implementing centralized control policies across its booming mining and energy sectors. A new regulation, announced to parliament, mandates that a recently established state-owned enterprise will handle the country’s exports of coal, palm oil, and iron alloys by September.
This strategic shift is partly driven by a desire to increase tax revenues and combat under-invoicing and transfer pricing, which Prabowo stated have led to significant revenue losses. The new entity, PT Danantara Sumberdaya Indonesia, is 99% owned by Danantara, the sovereign wealth fund launched last year, which will strengthen the government's influence over commodity pricing.
As Indonesia's largest trading partner, China is expected to be significantly impacted by this policy pivot. Experts note that China's access to vital commodities underpinning its clean technology industries, electric vehicles, and battery production could be affected. The swiftness of the new rules may also alter the dynamics of cooperation between Indonesia and China, with some analysts suggesting it could attract more U.S. investment.
Trade analysts are skeptical about the implementation timeline, but the government has indicated that investors will receive further explanations before June 1, with a focus on transparency in reporting during the initial phase.