AGP Executive Report

Rupiah & FX Strategy: Bank Indonesia is expanding local currency transactions (LCT) with partner countries to cut reliance on the US dollar and protect rupiah stability amid global uncertainty, alongside tools like FX interventions, interest-rate adjustments, and SRBI to attract portfolio inflows. Labor Market Data: Indonesia’s Manpower Ministry says the National Labor Force Survey (Sakernas) is key for designing targeted workforce policies, including school-to-work transition programs and vocational training, with BPS reaffirming its commitment to labor statistics quality. MSME Retail Push: Trade Minister Budi Santoso says local MSME products now account for over 60% of items stocked in modern retail, helped by partnerships with retailers and continued placement in major malls and chains. AI Infrastructure Financing: Zankore secured up to $3.1bn in senior term-loan funding to buy Nvidia GPU capacity and build AI cloud infrastructure, starting with 100MW in Indonesia and scaling up across Southeast Asia. Mining Safety & AI: MIND ID is rolling out AI for workplace safety and operational monitoring, including fatigue detection in coal mining and compliance alerts for protective gear. Logistics Trade Link: CULines launched a new direct weekly China–Indonesia container service (CN1) linking Shanghai/Ningbo to Jakarta/Surabaya to reduce transit time and handling costs. Volcano Disruption: Indonesia’s Anak Krakatau eruption has again disrupted travel and sparked a search for missing journalists after a speedboat went missing near Jakarta.

Indonesia–US Digital Cooperation: Indonesia and the United States are expanding AI and online child-protection collaboration, with Jakarta pushing a risk-based AI governance framework to keep innovation moving while improving safety and trust. Energy & Grid Tech: Bidgely will bring AI-driven smart meter analytics to Enlit Asia 2026 in Jakarta (Sept 22–24), aiming to help utilities cut bill shock, curb energy theft, and improve grid planning. Aviation Disruption Update: Major Indonesian airports have reopened after the Anak Krakatau eruption, with flights resuming gradually as ash is cleared and aircraft inspections continue. Trade & Compliance Watch: A U.S. case highlights how plywood shipments can be hit by customs enforcement when identity fraud and undervaluation are used to evade anti-dumping and countervailing duties. Regional Environment: Malaysia’s PM Anwar Ibrahim urged ASEAN to strengthen and better enforce transboundary haze mechanisms, citing dangerous air quality levels and calling for serious investigation into haze sources. Foreign Investment Structure (Indonesia): A legal explainer weighs when foreign investors should expand within one PT PMA versus creating new subsidiaries, depending on licensing, tax, and regulatory needs. Global Macro: Global inflation is cited around 4.8%, while markets remain sensitive to Fed expectations and oil prices.

Volcanic Disruption & Air Travel: Indonesia’s Anak Krakatau ash forced airport closures and flight cancellations, but operations resumed early Tuesday as Soekarno-Hatta, Halim Perdanakusuma and Bandung reopened, while AirNav Indonesia cleared five more airports via NOTAMs—though monitoring continues as ash clouds linger. Disaster Finance: Finance Minister Purbaya Yudhi Sadewa said BNPB has about Rp950 billion in ready-to-use disaster funds, with a Rp5.7 trillion budget ceiling, and additional allocations will come only after BNPB submits requests. Rice Support: The government allocated Rp17 trillion for Q4 rice assistance for 33.2 million low-income families, shifting to consolidated 30kg quarterly packages managed by Bulog. Financial Inclusion Push: Indonesia plans mass bank account creation for citizens turning 17, using NIK-linked digital applications by BRI and BSI integrated with Dukcapil and connected to QRIS for easier social-assistance delivery. Rupiah & Reserves: The rupiah edged up to around Rp17,632 per US dollar as FX reserves rose to US$146.5 billion, supporting external resilience amid global volatility. ASEAN Haze: Malaysia’s PM Anwar Ibrahim urged ASEAN to review transboundary haze mechanisms and called for deeper investigation into open burning in Indonesia. MSME Recovery: Aceh disaster-hit MSMEs get Rp350.2 billion in 2026 support, including direct Rp3 million aid for tens of thousands of microenterprises. Payments Tech Deal: Adyen partnered with Limitless Technology Group to streamline payments across multiple gifting e-commerce brands across Asia-Pacific, consolidating gateways for faster reconciliation.

Aviation Disruption: Mount Anak Krakatau’s ash cloud has hit 2,961 flights and stranded about 341,000 passengers, with seven airports (including Jakarta’s Soekarno-Hatta and Halim) extended closed until 11:59 p.m. WIB, while airlines and airports scramble with diversions, refunds, and crisis teams. Disaster Response & Fire Policy: President Prabowo ordered a bigger, more anticipatory forest-fire response, including more aircraft for weather modification, additional firefighting assets, and permanently stationed village equipment to stop outbreaks early. Financial Inclusion Push: Prabowo directed the government to ensure every Indonesian has a bank account, using integrated civil and population data with Bank Indonesia systems to lift inclusion and literacy. Energy & Commodities Watch: Indonesia’s nickel ore quota is cut to about 260–270 million tonnes, tightening supply as El Niño-linked water shortages could reduce output at key processing sites. Market & Tech Angle: Insurtech funding in APAC is shifting from hype to profit-focused “ecosystem” plays, with Indonesia among the countries attracting more investment. Regional Business: Garuda is offering 170,845 free domestic round-trip seats for eligible international passengers to spread tourism spending beyond Jakarta and Bali. Geopolitics: Indonesia and several Arab/Islamic nations condemned Israeli officials’ calls for expelling Palestinians from Gaza.

Disaster Preparedness: President Prabowo ordered a comprehensive disaster mitigation master plan, including prepositioning equipment and scaling up the disaster budget, as Indonesia faces overlapping crises from Flores earthquake recovery to Anak Krakatau activity. Volcanic Ash Disruption: Anak Krakatau’s eruption has grounded flights and closed eight airports, stranding about 270,000 passengers and hitting Jakarta’s connectivity; airlines report daily losses up to IDR 19bn and are offering refunds and rescheduling. Public Services Under Strain: West Java temporarily halted the Free Nutritious Meals (MBG) programme for schools shifting to distance learning due to ash risks, while lawmakers urged integrated, equal protection for affected communities. Aviation and Travel Fallout: Batik Air cancelled multiple KL–Jakarta services; UK travel advice was updated, stressing mask use and staying indoors during ash-related low air quality. Carbon Market Integrity: Indonesia said skilled workers are central to a credible, high-integrity national carbon market, pairing human resource strengthening with carbon trading regulations. Creative Economy Push: The Creative Economy Agency is expanding market access for local entrepreneurs into premium spaces like SCBD Park to boost sales and ecosystem growth. Corporate Moves: Bumi Resources completed its acquisition of Loyal Metals, while Indonet secured a $530m credit facility for a data centre project. Energy & Waste: Indonesia is accelerating waste-to-energy (WtE) development with Chinese expertise and a new regulation aimed at land, grid support, and longer-term commercial certainty for investors. Tragedy in Papua: A market fire in Central Papua killed 11 people, including six children, as police investigate the cause.

Volcanic Disruption: Indonesia shut eight airports after Mount Anak Krakatau erupted, stranding about 170,000 passengers and delaying or cancelling hundreds of flights; authorities also prepared alternative airports in Java as ash tests continued and some operations were suspended into the evening. Aviation Impact (Jakarta Route): Jakarta’s Soekarno-Hatta was among the hardest hit, with airlines cancelling flights and rerouting travelers, while Indonesia’s transport ministry said safety checks drove the closures. Regional Diplomacy: Indonesia joined Qatar, Saudi Arabia, Jordan, the UAE, Pakistan, Egypt and Türkiye in condemning Israeli ministers’ calls for forced displacement of Palestinians from Gaza, reiterating support for a two-state solution. Diaspora Policy: Indonesia’s plan for limited dual citizenship for “talent” diaspora drew diaspora interest, with applicants watching details on eligibility, fees and taxes. Renewables Investment Angle: A market guide highlighted Indonesia’s push for renewable capacity under PLN’s 2025–2034 plan, pointing to opportunities for foreign investors across generation and clean-energy infrastructure. Media & Consumer Business: Godrej Consumer Products appointed WPP Media as its global media agency partner, consolidating media operations across multiple countries including Indonesia.

Aviation Disruption: Indonesia’s Mount Anak Krakatau eruption has shut six airports and suspended operations at Jakarta’s Soekarno-Hatta, disrupting hundreds of flights and stranding more than 22,000 passengers; the government is preparing three alternative airports across Java—Kertajati (Majalengka), Ahmad Yani (Semarang) and Juanda (Sidoarjo)—while airlines like Malaysia Airlines and Batik Air cancel routes to Jakarta. Consumer Protection: The Transportation Ministry says passengers whose flights are cancelled due to volcanic ash will receive 100% refunds, with airlines urged to notify customers and process refunds electronically. Rail Mobility: KAI added capacity on Semarang–Jakarta and Gumarang services to handle shifting travel demand during the disruption. Trade & Industry: Trade Minister Budi Santoso urged local pet food manufacturers to upgrade competitiveness for stronger domestic sales and exports, citing fast growth in the sector and upcoming I-EU CEPA opportunities. Maritime Cooperation: Japan is considering ODA to upgrade Indonesia’s fishing ports and support coast guard patrol stops, aiming to strengthen maritime surveillance amid illegal fishing and smuggling risks. SME/AI Push: A Singapore-Indonesia business move backs an AI trade tool to help SMEs find new export markets.

Halal Compliance Update: Indonesia’s Halal Product Assurance Agency (BPJPH) issued Regulation No. 4/2026 setting rules for halal assurance of imported products, aiming for “certainty” for consumers and clearer compliance for businesses ahead of compulsory halal certification starting October 2026. Food Safety Pressure on Flagship Program: AP reports nearly 2,000 people—mostly students—fell ill in suspected food poisoning linked to Indonesia’s Free Nutritious Meals program between Sept. 1-3, with Health Ministry data citing 50,000+ affected across 560 cases since launch in January 2025. Firefighting in the Capital Pipeline: Indonesia is intensifying wildfire prevention in Nusantara using a Multi-Stakeholder Rapid Response Unit, while the Environment Ministry continues cloud seeding in West and Central Kalimantan to wet peatlands and support ground suppression. Workforce Upskilling: Manpower Minister Yassierli opened registration for the fifth batch of the National Vocational Training program via Skillhub until Sept. 16, targeting job seekers, laid-off workers, and aspiring entrepreneurs with competency-based training. GovTech for Social Aid Accuracy: Luhut Binsar Pandjaitan says GovTech data integration could cut misdirected social assistance from 77.6% to below 10%, with a planned October 2026 launch and a single digital ID by end-2026. Trade & Market Signals: Indonesia’s apparel export performance shows resilience in the US market as other suppliers face sharper declines, while the nickel outlook flags supply and refinery risks for 2026.

Indonesia Health & Pharma: BPOM urged local and foreign drug makers to build a stronger clinical-trial ecosystem in Indonesia, saying trials are costly and need an integrated setup across regulators, hospitals, and research facilities. Forest-Fire Response: Indonesia allocated Rp5.5 billion for West Kalimantan fire mitigation, including aerial and ground operations, peat rewetting, enforcement, and prevention, with weather modification and water-bombing support. Disaster Recovery: Indonesia’s education ministry said 1,931 schools in quake-hit East Nusa Tenggara have resumed classes, using a mix of makeshift classrooms, distance learning, and normal in-person sessions. Central Banking Leadership: Parliament backed Destry Damayanti as Indonesia’s first female central bank governor, with a focus on economic stability. Energy & Industry Policy: President Prabowo pushed accelerated downstreaming and SOE restructuring, targeting closures of at least 700 more SOEs by end-2026 and projecting up to Rp100 trillion in budget efficiencies. Trade & Markets: CPO futures in Malaysia are seen facing profit-taking next week amid high stocks, while gold traders in Indonesia flagged potential moves toward Rp2.6–2.7 million per gram. Regional Business & Media: Asia-Pacific media leaders in Shenzhen pledged responsibility in the AI era and launched an Asia-Pacific Media Partnership platform. Legal/BRICS: India’s CJI proposed a “living Nalanda University” approach for BRICS justice cooperation, including arbitration and mediation for cross-border business disputes. Cybersecurity: Panzer ransomware surfaced as a Ransomware-as-a-Service operation listing victims across multiple countries, including Indonesia.

BRICS Watch: India’s Sept. 12–13 BRICS summit in New Delhi will test whether an expanded bloc (including Indonesia) can turn political weight into shared outcomes on finance, trade, AI, climate, food and energy security. Energy & Deals: Indonesia’s Prima Energy agreed to buy about a 28.3% stake in Jadestone Energy, signaling continued upstream consolidation. Downstream Push: Indonesia says it will drive downstream investment via strategic planning, streamlined execution and incentives, targeting 28 commodities across eight sectors with a potential US$618.1bn pipeline and 3m jobs. EV Waste Planning: The Environment Ministry is building an EV battery waste management ecosystem, with used-battery generation expected to peak around 2040 and a takeback system via dealers/repair shops. Rail Capacity: KAI is boosting Green Line commuter capacity as demand rises, including moving toward 12-car trainsets. Forest Fires & Haze: Parliament Speaker Puan Maharani urged an integrated response to forest and land fires, while Kalimantan haze remains severe and firefighting faces aerial constraints. Maritime Environment: Mining permits overlapping Moramo Bay’s marine protected area are raising pressure on biodiversity, including the humphead wrasse. Trade & Tax: Indonesia seeks a double taxation agreement with Ireland to ease trade and investment and support access to the wider European market. Cyber Risk: A major airport data breach at Manchester Airports Group highlights ongoing exposure risks for customer data even when operations aren’t disrupted.

Entrepreneurship & Skills: Indonesia’s Manpower Minister Yassierli urged self-employed workers to win by staying in constant contact with customers, protecting product quality, and using post-service follow-ups to build long-term trust. Trade Policy: The government said the Indonesia–EU IEU-CEPA, set for implementation in 2027, will expand market access for palm oil, footwear, coffee, furniture, agri and fishery products, and telecom equipment, with 90.4% of tariff lines moving to zero duty at start. Nickel Supply Watch: Indonesia’s 2026 nickel ore quota was cut to about 260–270 million wet metric tonnes, tightening feedstock for smelters and HPAL/battery-material projects even if headline supply looks sufficient. Green Shipping Push: CIMC Enric-backed TEMAS Group launched its LNG-powered container ship “Digul Mas,” using LNG tank containers for inter-island logistics in eastern Indonesia, with a fleet of eight planned by 2027. Aviation Costs: Indonesia raised the maximum domestic flight fuel surcharge cap to 40% from 30% as avtur prices climbed, warning fares could rise if airlines use the higher cap. Wildfire & Haze Fallout: Aceh residents reported illegal gold mining continues despite crackdowns, while haze from Indonesia’s fires has triggered emergency measures in Malaysia’s Sarawak district of Serian. Tourism Recovery: Indonesia’s tourism ministry is preparing a reconstruction master plan for Bali’s Sade Village after the Aug. 22 fire, including a one-stop donation account and rebuilding with community input.

El Niño Watch: The UN’s weather agency warns El Niño is set to become “very strong” and likely persist through February, raising risks of floods, droughts and extreme heat—prompting governments to push emergency preparedness. Haze & Power Crunch in the Region: In the Philippines’ Metro Cebu, “acutely unhealthy” haze coincided with a long Visayas power-grid red alert, forcing schools online and highlighting how energy gaps can compound climate shocks. Indonesia Food Safety Alarm: Indonesia’s free school-meal rollout is linked to mass food poisoning cases across multiple provinces, with authorities pointing to improper storage and late delivery of pre-cooked meals. Indonesia–Russia Economic Diplomacy: President Prabowo used the Eastern Economic Forum to reaffirm Indonesia’s “free and active” foreign policy, stressing economic cooperation via the I-EAEU free trade agreement while avoiding military alliances. Central Banking Leadership: Indonesia swore in Destry Damayanti as the first female Bank Indonesia governor, putting stability at the top of the agenda. Trade & Industry Signals: Indonesia’s shrimp exports are slowly recovering after the “radioactive shrimp” fallout, but 2026 remains a multi-year low. Aviation Supply Chain: Airbus resumed A330 deliveries after a three-month halt caused by a tool found in a tail section, a reminder of how small production issues can ripple into delivery schedules.

El Niño Watch: The UN’s weather agency says El Niño is “firmly established” and will intensify into a “very strong” event, with near-100% odds it persists through February—raising risks of drought, floods and extreme heat that could hit Indonesia’s agriculture and wildfire season. Regional Haze Impact: Cebu City suspended in-person classes for two days as Metro Cebu’s air quality worsened (AQI peaking in the “acutely unhealthy” range), with haze linked to Indonesian fires. Trade & Logistics: President Prabowo pushed the Indonesia–Eurasian Economic Union FTA as a growth lever, aiming to double Indonesia–Russia trade; he also called for direct shipping and air links to make logistics more predictable. EV Manufacturing: BYD inaugurated a Rp16 trillion EV plant in Subang, targeting 150,000 vehicles/year and adding 5,000 jobs now, with plans to reach 20,000. Digital Finance: Pencil Finance completed the first fully on-chain student lending cycle, deploying US$1m to fund thousands of students across Southeast Asia. Energy & Industry: Indonesia–Malaysia agreed to boost Entikong–Tebedu border trade, while Indonesia’s wildfire risk also shaped military training safeguards for Super Garuda Shield.

Capital Markets: Alpaca Partners with the Indonesia Stock Exchange (IDX) to enable cross-border access for Indonesian retail investors to U.S. and other foreign securities via the PALN mechanism, aiming to widen global market connectivity. Trade & SMEs: Indonesia and Singapore are building an AI-based trade advisory platform (Taia) to help smaller firms find export markets and buyers, with milestones in January and a broader 2027 launch. Energy & Industry: Indonesia Energy Corporation says it discovered good-quality oil at the K-29 well in the Kruh Block, with production expected to start in the coming weeks. Digital Learning Infrastructure: Indonesia’s education and energy ministries are accelerating electricity access for schools to support the digital learning agenda, especially in remote and frontier regions. Business Climate Watch: S&P Global reports Indonesia’s manufacturing PMI slipped back to 49.8 in August, with output and employment contracting while new orders stayed roughly stable. Environment & Public Health: Indonesia’s wildfire haze is worsening across the region, with Metro Cebu recording “acutely unhealthy” air quality and Cebu City suspending in-person classes. Food & Commodities: India’s record wheat harvest and policy liberalisation are expected to open a $1.5bn export window, with Indonesia flagged among key demand markets.

Central Banking: Destry Damayanti was sworn in as Indonesia’s first female Bank Indonesia governor, with Aida S. Budiman and Solikin M. Juhro also taking office for 2026–2031 terms, as BI signals a focus on stability and sustainable growth. Budget & Fiscal Policy: Indonesia’s 2027 State Budget targets a narrower deficit of 2.4% of GDP (from 2.85%), relying heavily on tax revenue growth as SOE dividend shifts to Danantara could reduce non-tax support. Aviation Costs: The government raised the domestic flight fuel surcharge cap to 40% (from 30%) after aviation fuel prices increased, with monitoring on transparency and ticket disclosures. Trade & Industry: Indonesia posted a July goods trade surplus of US$0.12bn and a US$3.70bn surplus for Jan–Jul, while Batam reported Rp 29.89tn investment realization in H1 toward a Rp 66tn target. Green Jobs & Skills: Bappenas and the Manpower Ministry pushed faster green job creation and demand-driven vocational training, including new green-focused training centers. Energy & Education Access: Indonesia is speeding electricity supply for schools to support digital learning, including new connections and capacity upgrades where PLN grid access is limited. Climate & Forest Fires: Authorities opened investigations into three companies in Jambi over alleged wildfire-linked violations, as haze and fire impacts continue to disrupt the region. EV & Mobility Finance: Danantara and Bakrie Group’s VKTR explored financing up to Rp 2tn to expand commercial EV adoption via electric buses and trucks. Digital Economy & Security: Indonesia’s BNPT said 620 children across 34 provinces were exposed to violent extremism online in early 2026, prompting targeted interventions. IP for SMEs: The Industry Ministry strengthened IP protection for small firms to boost product value and competitiveness amid tougher global scrutiny.

Central Banking Shake-up: Indonesia’s parliament confirmed Destry Damayanti as Bank Indonesia governor, with Aida S. Budiman and Solikin M. Juhro as deputies, after Perry Warjiyo’s July resignation—BI leadership now set to prioritize stability and sustainable growth through 2031. Forest Fire Risk: With El Niño peaking, Indonesia warned September is the “real battleground” for forest and land fires, citing still-elevated burned areas and rolling out weather modification, water bombing, ground response, enforcement, and public awareness. Rupiah Watch: Reports highlight why the rupiah may weaken in September, as markets weigh global rate expectations and regional risk. Trade & Compliance: A LED maker agreed to pay $5.15m to settle U.S. allegations of misrepresenting LED origin to dodge tariffs—another reminder of how origin rules can hit exporters. Agri Prices: Indonesia’s farmers’ terms of trade rose to 129.19 in August as prices received outpaced prices paid, led by rice, palm oil, rubber, and broiler chickens. Digital Economy & Power: Asia’s data-center boom is colliding with power limits; Indonesia’s AI/data-center growth backdrop is increasingly about energy availability and grid strain. Wildfire Health Costs: Hazardous air quality and wildfire haze are driving respiratory cases and school disruptions across parts of Kalimantan and beyond.