JAKARTA, June 5 — Indonesia today issued a much-anticipated regulation to bring exports of its strategic commodities under central government control, a move aimed at boosting state earnings and stabilising its rupiah currency.
President Prabowo Subianto announced on May 20 that Indonesia would bring exports of all of its strategic commodities under the control of a new state company, a move that has spooked investors.
The 11-page regulation, published on the website of the State Secretariat Ministry, was signed on May 20 by Prabowo and outlines the implementation schedule for the new controls.
Palm oil, coal, and ferroalloys can only be exported by a state-owned enterprise, either as “the owner or sole mediator”, the regulation said.
“In the export of strategic natural resource commodities by the state-owned export enterprise ... the selling price shall be determined by the state-owned export enterprise,” it said, adding that the enterprise can also set margins.
The regulation will be extended to more strategic commodities later, to be decided by certain ministers.
Exemptions to the new centralised export rules could be granted to business entities that have a contract or agreement with the Indonesian government containing “provisions related at least to investment, divestment, and domestic processing and or refining”.
The exemptions will be decided at a coordinating meeting involving related ministers, the regulation said.
The regulation does not specify the state-run entity that will act as the country’s sole commodity exporter, but the government’s communication agency today said in a fact sheet that “the government has appointed Danantara Sumberdaya Indonesia (DSI) as the designated export SOE (state-owned enterprise)”.
“Maintaining the confidence of international trading partners and investors is a priority, and every step taken by DSI is designed to reinforce that confidence,” DSI’s parent company, Danantara Indonesia said in a statement, adding that export contracts that have already been signed may continue to be carried out.
Once the regulation comes into effect on June 1, commodity exporters will begin channeling shipments through DSI.
Danantara said in the statement that DSI would serve as an “intermediary” to oversee exports “while allowing the commercial relationship between producers and their trading partners to continue”.
But after December 31, commodity exports “can only be carried out” by the state entity, according to the regulation.
The Trade Ministry will issue detailed rules to implement the policy in due course.
