Indonesia's New Export Plan Sparks Business Concerns Over Implementation and Payment

Indonesian trade ministry officials faced a barrage of questions from exporters of palm oil, coal, and ferroalloys concerned about a new export control plan. The controversial strategy, designed to extract more profit from the nation's natural resources, was discussed in an online forum.

Businesses voiced apprehension regarding the implementation of the new rules, despite the earlier publication of detailed regulations. President Prabowo Subianto's surprise announcement last month proposed channeling all key commodity exports through a state firm by early next year. The goal is to increase government revenue through stricter controls on the sale and pricing of Indonesia's abundant resources.

The government released 11 pages of regulations earlier this month, outlining the implementation schedule for these controls. More detailed guidelines for three strategic commodities, effective June 1, were also issued. Exporters are now required to report all export activities to the state firm Danantara Sumberdaya Indonesia (DSI).

During the trade ministry's online awareness campaign, exporters raised concerns about the integrity of long-term contracts and the unclear commercial mechanism for affected products. Questions arose about payment currency, with one company representative asking if sales to DSI would be recognized as U.S. dollar exports or local sales in Indonesian rupiah, citing concerns about currency risks from U.S. dollar loans. They also questioned whether payments would be made before export or by the end-customer, a critical factor for cash flow.

Ministry officials deferred many questions to DSI, which was not present at the event. They stated that contracts would be handled on a business-to-business basis. Queries about reaching DSI were also raised, as the firm reportedly had only one employee, its CEO, at the time of Prabowo's announcement. Danantara stated that DSI's operations would initially be supported by civil servants from various ministries, but the firm is actively hiring and developing monitoring technologies.

Another participant inquired about price negotiation with end buyers during and after the transition period, which extends to December 31, 2026. Danantara indicated it would review prices on existing export contracts to ensure they are not below market levels. Prabowo previously stated that underpriced commodities had cost Indonesia nearly a trillion dollars over the past 34 years.

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Starting from January 1, we are selling through DSI ... Will the sale to DSI be recognised as exports (paid in) U.S. dollars, or as a local sale with payments in Indonesian rupiah?