Indonesia’s Prabowo says new state firm’s role is to monitor key commodity exports

By Bernadette Christina and Ananda Teresia

JAKARTA, Aug 14 (Reuters) – Indonesian President Prabowo Subianto said on Friday that the new state export firm will monitor key commodity shipments and its role will be expanded, but said it would not take over control of exports.

Prabowo used his second Independence Day speech to highlight his plan to secure more revenue from Indonesia’s natural resources, at a time when his approval rating is falling and there is growing investor scepticism over his ambitious policies and plans to control commodities exports.

“We do not want the Indonesian people to be cheated anymore. Indonesia’s wealth must not enrich a select few while leaving our people to live in hardship,” he told parliament on Friday, saying that the new export entity had identified a potential $5 billion in export proceeds from differences in the reported and actual prices.

Global commodity markets were rattled in May when Prabowo unveiled his plan to centralise exports of palm oil, coal and ferroalloy under Danantara Sumberdaya Indonesia to tackle under-invoicing, and investors have since been looking for clarity over the scope of DSI’s role.

Prabowo said that in its first two months of operation, DSI has monitored more than 6,500 transactions for the three key commodities and overseen $14 billion worth of exports.

Soon, this monitoring would expand to cover 50 ports and, “in the short term, DSI will manage all strategic commodity exports, not only three,” the president said.

PROBLEMS NOT YET RESOLVED

He acknowledged Indonesia had encountered issues, but said those were on the way to being addressed.    

“I cannot yet say that all the nation’s problems have been resolved, or that every promise I made has been fulfilled. Not yet,” he told parliament, but said investment would create jobs and economic growth could reach 6% by the end of the year.

Prabowo took office in October 2024 after a sweeping election victory built on promises to root out corruption, lift economic growth from 5% to 8% and give free meals to tens of millions of children. 

But his administration has struggled this year with a depreciating rupiah and a poorly performing stock market, as well as concerns over government overspending and central bank independence, while his flagship free meals programme has been hit by budget cuts and allegations of mismanagement.

INVESTORS AWAIT BUDGET AND POLICY CLARITY 

Later on Friday, Prabowo will unveil his government’s 2027 budget proposal, which will be closely watched by investors given concerns about policy direction, fiscal discipline and risks to the country’s credit ratings.

Prabowo told parliament that Indonesia should be able to stand on its own feet due to his self-sufficiency drive, which he said had been achieved in eight food commodities. He also said food supply was secure despite threats from the El Nino weather pattern. 

He also highlighted tighter control over other key sectors, including a crackdown on illegal tin mining, reorganisation and revenue improvement at many state companies as achievements of his administration. 

(Reporting by Jakarta bureau; Writing by Gibran Peshimam, Fransiska Nangoy; Editing by Martin Petty and John Mair)