Indonesia's President Prabowo Subianto announced a sweeping new policy in late May 2026, mandating state control over key raw material shipments, including coal and palm oil. This move, which took effect in early June, requires exporters to report sales documents to a newly established state firm, Danantara Sumberdaya Indonesia, an arm of the sovereign wealth fund Danantara. The policy aims to channel more profits from the country's natural resources into social programs and facilitate Indonesia's transition to a middle-income nation, according to Prabowo. The initial announcement and subsequent implementation have rattled raw materials markets, leading to uncertainty and causing some traders to hold up shipments.
The radical changes have unnerved investors, contributed to record low Rupiah values, and prompted a "Sell Indonesia" sentiment among some in the market. The policy specifically targets major commodities where Indonesia is a dominant global player, such as thermal coal, palm oil products, and nickel products. Details released in early June clarified that most major palm oil products, in addition to coal and ferronickel, would be subject to the new export regime. The lack of clarity initially surrounding the overhaul left traders searching for answers, even as a transition period began.
In response to the market turmoil and discussions with major exporters and traders, Indonesia is now weighing potential exemptions from these new export controls. These carve-outs could allow commodity traders to bypass all or part of the rules. The primary condition for such exemptions would be in exchange for investments in the country and participation in joint ventures with Indonesian entities. This development suggests a more nuanced approach is being considered to mitigate the negative impact on the economy and maintain relationships with key market players.
