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Current Affairs

Indonesia’s Prabowo tightens state grip on palm oil, coal amid monopolistic fears

Indonesia will require exports of key commodities to pass through a state-appointed enterprise in a sweeping effort to curb revenue leaks, tighten oversight of natural…

By Samantha Johnson / May 20, 2026
Indonesia will require exports of key commodities to pass through a state-appointed enterprise in a sweeping effort to curb revenue leaks, tighten oversight of natural resources and keep more foreign exchange earnings at home.
Under the new regulation, producers would have to sell their commodities to the new state-run agency, which would then transact with overseas buyers, effectively ending direct international sales by private companies.

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Prabowo framed the move as a necessary step to tackle under-invoicing, transfer pricing and other practices he said had drained money from Indonesia’s economy and weakened the state’s ability to fund public services.

But the plan has also triggered warnings from economists, farmers and industry groups, who say the shift could create a state monopoly, disrupt existing contracts and complicate Indonesia’s access to global markets.

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“Over the past 22 years, Indonesia recorded a trade surplus of US$436 billion, but US$343 billion flowed out of the country. This is why teachers’ salaries remain low, why civil servants struggle, and why our budget often feels insufficient,” Prabowo said.

“One of the major causes is under-invoicing, a form of fraud. Some exporters deliberately report lower export values than the actual transaction value, often through overseas shell companies they control. This practice occurs in palm oil, mining, and many other commodities.”

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