JAKARTA – When President Prabowo Subianto rose before Indonesia’s plenary parliamentary session on May 20, 2026, few foresaw that he would deliver an address that will inevitably shift the world’s fourth most populous nation’s economic destiny.
In the speech, the leader announced the most consequential restructuring of the country’s commodity export architecture in a generation — one that will funnel Indonesia’s strategic natural-resource wealth through a single, centralized, state-controlled gate.
At the center of this resource-nationalism ambition is PT Danantara Sumberdaya Indonesia (DSI), a state-owned enterprise placed at the heart of a new centralized export system under the sovereign investment fund BPI Danantara.
The move reflects the Prabowo government’s drive to reclaim economic sovereignty under Article 33 of Indonesia’s Constitution. Yet it also raises a far more pressing question: whether Indonesia’s domestic market institutions are capable of absorbing the shockwaves such a radical restructuring will unleash.
Prabowo’s extraordinary move stems from deep frustration in Jakarta over decades of financial leakages in the commodity sector. Data from the United Nations and the World Bank suggest that Indonesia may have lost as much as US$908 billion in foreign-exchange earnings between 1991 and 2024 due to export manipulation.
The leakages allegedly flowed through under-invoicing, physical volume manipulation and transfer pricing schemes routed via shell companies in tax-friendly jurisdictions such as Singapore.
The intellectual foundation for the new policy was strengthened by an artificial intelligence-based investigation initiated by Finance Minister Purbaya Yudhi Sadewa, together with the ministry’s National Single Window Agency (LNSW). A random AI-run audit of ten major commodity exporters reportedly uncovered recurring patterns.
Although shipments sailed directly from Indonesian ports to the United States, the export documentation was deliberately rerouted through subsidiaries in Singapore. Comparisons between Indonesia’s export declarations and actual import records in the US revealed commodity prices at destination ports that were nearly double the values reported domestically, reinforcing suspicions that export proceeds were being retained offshore.
To plug those leakages, PT DSI has been designed to operate in two aggressive phases. During the first phase, which runs until December 31, 2026, the company will act as a transaction supervisor and export document verifier for coal, crude palm oil and ferroalloys such as aluminum.
Beginning January 1, 2027, however, PT DSI will transform into a full-fledged sole trader operating under a “buy-and-own” mechanism. Producers will be required to sell commodities domestically to PT DSI, which will then handle all exports directly and receive 100% of export proceeds in foreign currency.
Repackaged state capitalism
The single-gate export policy suffers from several structural flaws. First, it reflects a classic fallacy of composition.
Because AI-driven audits identified irregularities among a limited sample of companies, the government has effectively imposed state control over the entire national commodity industry. Such coercive intervention punishes compliant firms alongside violators.
Second, the policy commits a category error. Foreign exchange leakages caused by under-invoicing are fundamentally failures of customs enforcement and regulatory oversight. Yet instead of reforming customs institutions, the government has chosen to dismantle market competition and replace it with a state trading monopoly.
This form of state capitalism risks replacing market failure with state failure. Indonesia’s own history offers a cautionary precedent. During the New Order era, the government established the Clove Support and Trading Board (BPPC) under the pretext of stabilizing prices and protecting farmers.
In practice, the system depressed farm-gate prices, encouraged smuggling, and concentrated profits among politically connected rent seekers. Concerns about historical repetition are hardly exaggerated, given the striking similarities between the BPPC model and the proposed PT DSI structure.
The policy’s internal contradictions become even more glaring when examining the upstream oil and gas sector, which has been permanently exempted from both export centralization and foreign exchange retention obligations.
Energy Minister Bahlil Lahadalia justified the exemption on the grounds of preserving investment certainty for long-term production-sharing contractors.
The upstream oil and gas sector, he argued, is already tightly supervised by SKK Migas, leaving little room for fraud. The exemption exposes a fundamental paradox. If compliance in the oil and gas sector can be secured through administrative oversight without imposing a state monopoly, why should coal and palm oil require an entirely different framework?
The Ghana lesson
Indonesia’s export centralization plan resembles institutions such as Ghana’s Cocoa Board (COCOBOD), which maintains monopoly control over cocoa exports. COCOBOD has indeed been relatively successful in limiting export misreporting compared with Ghana’s more liberalized gold sector.
Yet the broader record is far less flattering. COCOBOD has long struggled with bureaucratic inefficiencies, chronic liquidity shortages, and widespread cocoa smuggling triggered by subsidy delays. As a result, Ghana’s cocoa productivity has remained substantially below global averages.
From the perspective of international trade law, PT DSI’s status as a State Trading Enterprise (STE) would also be subject to significant constraints under Article XVII of the 1994 General Agreement on Tariffs and Trade (GATT), which requires state trading entities to operate solely on commercial considerations.
The financial mismatch between government ambition and PT DSI’s actual capacity is equally alarming. Indonesia’s mining sector alone contributed 2.2 quadrillion rupiah (US$124 billion), or roughly 10.5% of national GDP, in 2023. Palm oil exports in 2025 were valued at approximately 590 trillion rupiah ($33.2 billion).
Under the second phase of the scheme, PT DSI would need to provide enormous working capital to purchase commodities upfront from domestic producers before shipment. That would require hundreds of trillions of rupiah in readily available liquidity every year.
Yet PT DSI reportedly begins with only minimal capitalization. Attempting to run such a massive centralized trading operation without deep financial reserves could easily trigger transaction bottlenecks at ports and disrupt commodity flows.
Mounting economic risks
The market reaction to the May 20 policy announcement was immediate. Indonesia’s benchmark stock index reversed sharply, suffering significant losses, as investors worried about shrinking business flexibility and rising compliance burdens for commodity exporters.
More importantly, the policy threatens Indonesia’s foreign direct investment climate. In 2025 alone, downstream mining industries attracted 373.1 trillion rupiah ($21 billion) in investment, while palm oil downstream projects secured 35.9 trillion rupiah ($2 billion) in the third quarter alone.
A single-gate export monopoly undermines legal certainty, raises the cost of capital, and risks driving foreign investors toward competing commodity producers. The policy may also complicate Indonesia’s ambition to secure full membership in the Organisation for Economic Co-operation and Development in July 2026.
OECD accession requires adherence to the principle of competitive neutrality, which prohibits governments from granting state-owned enterprises unfair privileges that distort market competition. PT DSI’s monopoly structure runs directly against that principle.
Compounding the problem, BPI Danantara’s governance framework appears inconsistent with OECD anti-corruption and integrity standards. Concerns range from overlapping ministerial roles to exemptions from wealth disclosure requirements and legal protections shielding certain financial management losses from state-loss investigations. Such governance anomalies place Indonesia in an increasingly defensive position internationally.
Over the medium term, Indonesia’s strategic commodity exports may suffer declining volumes due to mounting bureaucratic friction. Coal exports had already contracted by 21.74% in early 2025 amid weakening demand from India and China.
Additional regulatory friction could encourage buyers to shift contracts toward competitors such as Australia or Russia. In the palm oil sector, global buyers may increasingly favor Malaysia, which continues to operate under a relatively open-market system.
Indonesia, therefore, risks permanently losing global market share, facing trade retaliation in the form of higher tariffs, and becoming entangled in prolonged disputes at the World Trade Organization. The solution to foreign exchange leakage is not the destruction of market mechanisms through state monopoly.
It lies instead in strengthening AI-based customs enforcement, optimizing the National Single Window system and improving export proceeds compliance through transparent and credible regulatory supervision.
Ronny P. Sasmita is a senior analyst at Indonesia Strategic and Economic Action Institution, a Jakarta-based think tank.