May 29, 2026
JAKARTA – President Prabowo Subianto’s bold strategy to recover billions in lost revenue from under-invoicing by placing natural resources export activities under a single state-controlled gatekeeper, Danantara Sumberdaya Indonesia (DSI), may do more harm than good. While the policy could boost state revenue, it also reflects the government’s growing preference for centralized economic intervention. At a time when Indonesia needs private capital to drive growth, the move risks deepening concerns that the country is becoming less predictable and less friendly to investors.
The policy met with a backlash from local exporters immediately after it was announced on May 20.
Industry players fear the centralized export scheme will squeeze profit margins, weaken long-standing relationships with overseas buyers and create fresh uncertainty over how companies restructure their businesses.
The rushed timeline has only amplified those concerns: President Prabowo has announced the transition period will begin in June toward full enforcement in September, which leaves exporters with little time to adapt.
More troublingly, major business associations say they were not consulted before the policy was unveiled.
The anxiety extends beyond coal, crude palm oil (CPO) and ferroalloys, the first commodities targeted under the scheme. Businesses in other resource sectors are now wondering whether they could eventually be pulled into the same centralized system.
For many people, the idea of a centralized export agency evokes uncomfortable memories of the Clove Marketing and Buffer Agency (BPPC), the controversial body established during the New Order era and chaired by Hutomo “Tommy” Mandala Putra, the youngest son of then-president Soeharto. Promoted as a mechanism to stabilize prices and protect farmers, the agency was handed sweeping control over the purchase, distribution and export of cloves.
In practice, however, the BPPC became synonymous with inefficiency, rent seeking and market distortion. The agency eventually collapsed under mounting debt and excessive stockpiles before it was dissolved during the 1998 Asian financial crisis.
That history offers a warning for today’s policymakers: that grand, state-led schemes designed to curb leakages and boost revenue may sound appealing on paper, but without strong governance and market discipline, they can quickly spiral into costly failures. And unlike cloves in the 1990s, the commodities now being targeted represent a far larger market that is also more deeply integrated in global supply chains.
Under-invoicing has long been a chronic problem. By reporting export prices below their actual value, companies deprive the country of foreign exchange earnings that are badly needed, given the rupiah is under pressure these days.
But solving that problem does not require the state to take over the entire export system. Better data integration, stricter customs monitoring and tougher law enforcement would be far less disruptive than creating a centralized gatekeeper with sweeping export authority.
Even officials appear to recognize the challenge. While the President announced full enforcement by September, the government later indicated that the policy might not be fully implemented until January 2027, following an evaluation of the transition period.
To preserve stability of trade in natural resources, the government should remain a regulator, not become a market player. Once the state begins positioning itself as the latter, investors will inevitably start questioning where the boundary lies and whether profitable sectors could eventually be brought under greater state control.
Those concerns have only intensified with the rise of state asset fund Danantara, which has openly signaled its intention to enter “red ocean” sectors traditionally dominated by private businesses.
That leaves the government with a critical choice: pursue a short-term increase in state revenue through export centralization or preserve the long-term credibility of the country’s business climate, which is essential to attract the investment necessary to sustain growth and create jobs.