Last month, Indonesian President Prabowo Subianto blindsided his own ministers, stunned the business community and confused global markets with the announcement that exports of key commodities — including palm oil, coal and certain minerals — would soon be channelled through Danantara Sumberdaya Indonesia, a new subsidiary of Indonesia’s state investment vehicle, Danantara.
The policy’s ostensible goals are to expand state oversight of exports and combat tax evasion by resource firms while positioning Danantara as a major player in the global commodities trade. The details continue to evolve, and local business associations are in the meantime pleading with the government to roll the new system out slowly.
This proposed solution to Indonesia’s long-standing problems of revenue leakage has been met with widespread scepticism — if the problem is dodgy invoicing, then why not reform customs and other taxation processes? That the government has not opted for more narrow technical solutions speaks to the grander political objectives at the heart of Danantara Sumberdaya Indonesia.
This new policy is just one in a series of interventions that illuminate the shifts underway in Indonesia’s resource nationalism — from favouring domestic business over foreign rivals to a more wholesale subordination of private interests to state priorities.
Under former presidents Susilo Bambang Yudhoyono and Joko Widodo, resource nationalism defined Indonesia’s approach to governing its extractive industries. The government compelled major foreign oil, gas and mining firms to divest, while also gradually enacting the bans on raw mineral exports that now underpin Indonesia’s ‘downstreaming’ schemes.
These policies did more than satisfy an ideological preference for nationalist intervention shared by elites and voters — they also aligned with the interests of Indonesia’s domestic business class. Their presidencies saw many foreign mining firms exit Indonesia, either put off or pushed out by new restrictions on foreign ownership upstream. And while Jokowi Widodo did consolidate and expand state-owned miners’ assets, he also made sure to deliver opportunities to major private interests. Resource nationalism benefited politically-connected oligarchs with interests in extractive industries by creating opportunities for them to acquire formerly foreign-owned assets that may otherwise have been beyond their reach.
For more than a decade, Indonesia’s resource nationalism has served local capital as much as the state — while also generating political credit for government. Policies were shaped, often decisively, by the preferences of domestic business interests who had the means and political connections to either influence policy outcomes or take shares in foreign projects. Nationalist interventions were often marked by conflicts of interest and corruption, but they also had support across a broad spectrum of state and business actors.
Today, Prabowo’s deeply held statist ideology, and his disdain for important factions of Indonesia’s oligarchic class, is driving a new kind of resource nationalism that targets the interests of those domestic firms advantaged by previous waves of nationalist intervention.
The policy trend was visible soon after Prabowo’s elevation to the presidency in October 2024. By early 2025, his government was launching crackdowns on mining and plantation activities, disciplining major resources firms with unclear permits and expanding the state’s commercial involvement in these lucrative industries. The Forest Area Enforcement Task Force (or Satgas PKH) led by Prabowo’s key political ally, Minister of Defense Sjafrie Sjamsoeddin, has confiscated over 3 million hectares of palm oil and forest plantations from dozens of companies accused of breaking forest protection rules. Some of these assets have been taken over by a new state-owned agribusiness company, Agrinas.
Both Danantara’s new export regime and the ongoing Forest Area Enforcement Task Force are positioned as responses to long-standing problems that Indonesian elites — and ordinary voters — want confronted. There is little doubt that major resource firms engage in ‘creative’ accounting to avoid taxation, and many manipulate licencing processes and encroach on protected land for mining and plantation activities.
At the same time, the application of Prabowo’s new brand of resource nationalism is highly discretionary in practice. These interventions and others, like the Patriot Bond scheme also overseen by Danantara, are thought to be disproportionately targeting businesses without the ‘right’ connections, or those owned by the ethnic Chinese tycoons who sit atop Indonesia’s rich lists — and with whom Prabowo has had an openly adversarial relationship.
This background explains why the launch of Danantara Sumberdaya Indonesia — enacted with little meaningful consultation across government, industry, and civil society — has not just deepened anxiety about erratic policymaking processes under Prabowo but also prompted speculation about how the reordering of rent seeking opportunities figures in the drive to give Danantara its new brokerage role.
Prabowo-era policy trends are nonetheless in step with global trends. Many resource-rich countries are embracing and experimenting with more nationalist approaches to their resource industries against the backdrop of rising minerals demand and geopolitical competition. Initiatives that increase public oversight over extractive industries are crucial for ensuring states and citizens get more value from their finite resources, and in some contexts increasing state ownership can achieve these goals.
There is also little doubt that Indonesia’s resource sectors need reform. More narrow interventions that target tax collection through firm auditing and improved customs regulation would help to reduce under-invoicing, while rehabilitating independent anti-corruption bodies and courts, and improving environmental and social safeguards in extractive projects, are indispensable for tackling the entrenched corruption and long-standing land disputes that plague Indonesia’s commodities sectors. But the heady mix of statism, coercion and nativism that define Prabowo’s brand of resource nationalism is not the solution.
Eve Warburton is Senior Lecturer at the Department of Political and Social Change in the Coral Bell School of Asia Pacific Affairs, The Australian National University.