Key facts
- Indonesian President Prabowo Subianto's administration has implemented new policies centralizing commodity exports and requiring exporters to retain earnings in state banks.
- Business groups, including those representing miners, coal, nickel, and palm oil producers, have requested clear technical guidance and legal certainty regarding these new rules.
- Chinese investors have raised concerns directly with President Prabowo about regulatory inconsistency, cuts to nickel quotas, increased royalties, and alleged extortion.
- Arsjad Rasjid, chairman of the Indonesian Business Council, stated that the "sudden" policy changes are causing significant confusion within the private sector.
- The business lobby is seeking improved government communication to address concerns and maintain international market confidence in Indonesia as a global commodity supplier.
Indonesian President Prabowo Subianto's administration is facing criticism from the business community over "sudden" and confusing policy changes, particularly concerning commodity exports and foreign exchange retention. Arsjad Rasjid, chairman of the Indonesian Business Council, has warned that these shifts are creating "dangerous distrust" and urged the government to improve communication and provide transparent technical guidelines.
New rules implemented in May and June require natural resource exporters to centralize their sales through a new company, Danantara Sumberdaya Indonesia (DSI), and to keep 50% of their export earnings in state banks for one year. These measures aim to improve tax revenue and prevent under-invoicing. However, business groups, including associations of miners, coal miners, nickel smelters, and palm-oil producers, have expressed concerns about legal certainty regarding ongoing contracts, payments, and shipping provisions.
Adding to the regulatory uncertainty, Chinese investors, who dominate much of Indonesia's nickel sector, have directly communicated their frustrations to President Prabowo. They cited issues such as inconsistent regulations, significant cuts to nickel ore quotas (over 70%), royalty hikes, and allegations of extortion. These policies, they argue, threaten existing projects, discourage future investment, and put hundreds of thousands of jobs at risk.
The business groups are seeking clarity and collaboration with the government to ensure the smooth implementation of the new policies and to maintain Indonesia's credibility as a global commodity supplier. The lack of transparent guidelines and the perceived arbitrary enforcement of regulations are creating significant unease among both domestic and foreign investors.