Prabowo’s plan to centralise coal, palm oil and nickel exports raises monopoly fears and investor uncertainty.
Indonesia is preparing one of its biggest economic shifts in decades, with President Prabowo Subianto proposing a state-controlled agency to handle all strategic commodity exports – a move critics say could concentrate power, disrupt markets and unsettle investors.
What Prabowo Is Proposing
Prabowo told Parliament on May 20 that a new state entity, Danantara Sumberdaya Indonesia, under the Danantara sovereign wealth fund, would take charge of overseas sales of coal, palm oil and ferroalloys, with scope to expand to other strategic resources. Under draft rules, foreign buyers would no longer contract directly with Indonesian exporters but instead deal via the agency, which would control contracts, shipping and payments. A transition starts June 1, with full effect from Sept 1.
Business Fears: Monopoly, Rent-Seeking And Lost Markets
Industry groups quickly warned the plan could hand monopolistic power to politically connected interests. Mansuetus Darto, who chairs the Association of Indonesian Oil Palm Farmers’ Organisations representing hundreds of thousands of smallholders, said the proposal “opens room for a trade monopoly, economic rent-seeking” and domination of export chains by groups close to power, noting farmers and businesses were not consulted even though palm oil underpins millions of livelihoods. Producers’ association chairman Eddy Martono cautioned that exporters risk losing long‑standing overseas markets and may struggle to meet buyers’ specific product requirements under a centralised system.
Curbing “Leakages”: The Official Rationale
Government officials argue the reform is needed to plug “leakages” from under‑invoicing, where exporters allegedly understate shipment values to cut taxes and shift profits offshore. Prabowo cited estimates that Indonesia lost about US$908 billion between 1991 and 2024 from such practices. A NEXT Indonesia Center report estimated mis‑invoicing cost around US$20 billion in coal export value between 2015 and 2024, mainly on shipments to India, and noted that large volumes of palm oil are routed via Singapore before resale at higher prices in the US and Europe, eroding Indonesia’s tax take.
Markets React And Risks For Global Supply
Analysts question whether a single state‑linked gatekeeper will fix leakages or simply re‑route control. Control Risks’ Achmad Sukarsono said “leakage is the stated rationale, but control is the actual objective,” arguing Prabowo is uneasy with private, especially foreign, intermediaries managing top exports. The Financial Times reported benchmark palm oil prices on the Malaysian exchange rose nearly 2 per cent and nickel prices also climbed after the announcement on fears of supply disruption, while London‑listed AEP Plantations’ shares fell more than 20 per cent. Achmad warned the regulation ends direct company‑to‑buyer contracting, potentially slowing decisions, injecting political influence into pricing and volumes, and complicating long‑term supply agreements.
Governance, Expansion Risk And Policy Continuity
FGS Global’s Dedi Dinarto said a centralised system could improve oversight of export prices and proceeds, but is “not a silver bullet”: its success will hinge on governance, pricing transparency, enforcement and protection of existing contracts. He and other experts note that the draft gives the government broad discretion to expand the list of covered commodities without parliamentary approval, adding to long‑term investor uncertainty. Dedi said the move continues Indonesia’s push to extract more value from natural resources, but marks a shift from Joko Widodo’s focus on downstream processing toward Prabowo’s focus on controlling how strategic commodities are traded and monetised through state channels.
The planned creation of Danantara Sumberdaya Indonesia signals a powerful new phase of resource nationalism that could reshape how coal, palm oil and other commodities move from Indonesia to the world. For Indonesians and Singaporeans, the stakes are high: stronger state control might plug real leakages, but if governance and transparency fall short, it risks creating a slower, more politicised export bureaucracy that unnerves investors, distorts markets and ultimately undermines the very growth Prabowo hopes to secure.
Sources: Straits Times (2026) , Yahoo! Finance (2026)
Keywords: Danantara Sumberdaya Indonesia, Coal And Palm Oil Exports, Under Invoicing Losses, Trade Monopoly Concerns, MSCI And Ratings Pressure
