Indonesia Seizes Control of Resource Exports Under Prabowo's Nationalist Push

In a sweeping policy shift that caught global commodity markets off guard, Indonesian President Prabowo Subianto announced on May 20, 2025, that all exports of palm oil, coal, ferroalloys, and other strategic commodities must be centrally managed by state-owned enterprises. The newly created entity PT Danantara Sumberdaya Indonesia (DSI), operating under the sovereign wealth fund Danantara, will assume exclusive control over these exports. The move marks an abrupt end to private trade dominance in Indonesia's resource sector and represents a dramatic consolidation of state power over the economy.

Prabowo justified the policy by claiming Indonesia lost $908 billion in state revenue over the past 34 years due to underreported export prices, stating: "We must set the prices ourselves. If they don't accept it, don't do business with us!" The announcement came without prior warning or industry consultation, leaving traders and foreign investors scrambling to adapt. The rollout occurs in two phases: a transition period from June 1 to December 31, 2026, during which exporters must declare contract and pricing data to DSI for supervision, followed by DSI becoming the exclusive export trading company starting January 1, 2027.

The aggressive resource seizure reflects mounting economic pressures facing the Prabowo administration, which took office in October 2024. The Indonesian rupiah has plummeted to 18,000 per U.S. dollar as of June 2026—its lowest level since the 1998 Asian financial crisis—pressured by the Middle East conflict driving oil prices higher and straining energy subsidies. Facing a fiscal crunch, the government has increasingly treated the resource sector as a critical source of revenue.

Since taking office, Prabowo has deployed a comprehensive array of policies to tighten state control. In early 2025, the SIMBARA mineral resource management system expanded to cover nickel, using blockchain technology to track extraction to sales via a quota system. Throughout 2025, the government introduced progressive royalty rates tied to market prices, shortened mining quota validity from three years to one year, and imposed full pricing and taxes on by-products including cobalt and chromium. Enforcement intensified sharply: by September 2025, 190 mining permits were suspended and approximately 1,000 illegal tin mines were shuttered.

The policy shift extends beyond export controls to encompass the entire nickel supply chain. In May 2026, Indonesia established an Industrial Estate Holding Company to restructure state-owned industrial parks under Danantara, consolidating logistics and transport systems. This move, combined with unified export pricing, signals government ambitions to control both upstream and downstream operations. The tightening comes as nickel ore grades have degraded from 1.8%-2.0% a decade ago to around 1.5% currently, while extraction costs have surged as easily accessible coastal mines deplete.

Foreign firms, particularly Chinese companies that have invested tens of billions in Indonesia's resource sector, face significant challenges under the new regime. An open letter from the China Chamber of Commerce in Indonesia had already questioned exorbitant taxes, mining quota restrictions, and forced foreign exchange retention periods that have constrained corporate cash flows. With Jakarta's policies swinging dramatically under Prabowo's nationalist agenda, established Chinese mining companies must now navigate an uncertain operating environment.