BY EMMANUEL OGBONNA
Indonesia is moving to tighten government control over its vast natural resource sector through sweeping new regulations that will place state-owned enterprises at the center of exports for key commodities including palm oil, coal and iron alloys.
The policy marks one of the most significant interventions by the government into the country’s commodity trade in decades and reflects President ’s broader push to increase state oversight of strategic industries while boosting national revenues.
Speaking before parliament on Wednesday, Prabowo said Indonesia had suffered enormous financial losses over the years because many of its commodity exports were deliberately undervalued. He claimed the country may have lost as much as $908 billion due to underreported export values and other practices aimed at reducing tax obligations.
According to the president, the new regulations are intended to close loopholes that have allowed companies to manipulate pricing and divert export proceeds abroad. He described the practice as a form of fraud and deception that has deprived Indonesia of wealth generated from its own natural resources.
Prabowo said the central objective of the policy is to strengthen oversight and monitoring mechanisms while tackling under-invoicing, transfer pricing and the diversion of export earnings outside the country.
Indonesia occupies a dominant position in global commodity markets. The Southeast Asian nation is the world’s largest exporter of thermal coal and palm oil, while also holding the biggest known reserves of nickel, a mineral considered critical for electric vehicle batteries and modern industrial manufacturing.
Control over nickel supplies has become increasingly important amid intensifying competition between China and the United States for access to strategic minerals needed for the global energy transition and advanced manufacturing industries.
Despite Indonesia’s status as a commodity powerhouse, analysts note that state-owned enterprises currently manage only a relatively small share of the country’s overall commodity exports. The new policy would dramatically expand government involvement in the sector.
Under the plan, private companies will gradually hand over import and export transaction responsibilities to state-owned firms. The first phase is scheduled to run from June through August, with full implementation expected by September. Once completed, state-owned enterprises are anticipated to manage trade transactions between domestic suppliers and international buyers.
The government believes the changes will significantly increase tax collection and strengthen control over foreign exchange earnings generated by resource exports.
Prabowo argued that Indonesia must take greater control over the sale and management of its natural resources to ensure the country receives fair value for its commodities. He said the government no longer wants Indonesia to lose revenue simply because authorities lacked the resolve to properly manage resources that belong to the Indonesian people.
The policy shift comes as the government faces mounting fiscal pressures caused by global energy market instability linked to conflict in the Middle East. Rising fuel costs have forced Jakarta to expand subsidies aimed at protecting consumers from inflation and surging energy prices.
Economists say the new export controls could help offset some of those rising costs by increasing state revenues from commodity sales.
of the Jakarta-based Energy Shift Institute described the move as the government’s most ambitious attempt yet to directly control Indonesia’s commodity sector.
He said the measures could help compensate for budget pressures created by larger fuel subsidies introduced in response to the global energy shock stemming from the Iran conflict. According to analysts, the broader impact on state finances and trade flows could be substantial if the policy is fully implemented.
At the same time, Indonesia’s economy is facing growing financial strain. The country’s central bank raised its benchmark interest rate by 0.5 percentage point to 5.25% on Wednesday, citing pressure on the rupiah and concerns over currency weakness amid volatile global markets.
Some experts believe stronger government oversight could also create opportunities to address environmental damage caused by years of intensive resource extraction.
from the energy think tank Ember said centralized commodity management could potentially improve accountability and reduce the overexploitation of natural resources if implemented effectively.
However, she cautioned that public trust would remain a major issue, particularly because corruption has historically plagued parts of Indonesia’s resource sector. She said strong monitoring and transparency would be essential to ensure the system operates fairly and according to regulations.
Indonesia has already been taking a more aggressive approach toward managing its natural resources in recent years. Authorities have cracked down on illegal mining operations and pushed companies to process minerals domestically rather than exporting raw materials abroad.
In 2020, the government banned exports of unprocessed nickel ore in an effort to build a domestic refining and manufacturing industry capable of producing higher-value products inside Indonesia instead of overseas.
That strategy has helped attract billions of dollars in foreign investment, particularly from Chinese firms involved in battery production and electric vehicle supply chains.
Analysts say the latest measures represent another step in Indonesia’s effort to assert greater economic sovereignty over industries viewed as strategically important to the nation’s long-term growth and geopolitical influence.
The policy could also reshape Indonesia’s relationships with major trading partners as governments and multinational corporations increasingly compete for secure access to critical minerals, energy resources and agricultural commodities.
With global demand for natural resources continuing to rise, Indonesia appears determined to ensure that a larger share of the profits generated from its commodities remains under state control and within the domestic economy.
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