AGP Executive Report

Markets: MSCI says Indonesia no longer merits emerging-market status and is consulting on a move to standalone classification, citing concerns over trading and market oversight. The shift could force index-tracking investors to sell Indonesian shares. Trade and Investment: Trade Expo Indonesia opened with 168 export MoUs planned and a US$17.5 billion transaction target. Indonesia and Timor-Leste also signed an investment treaty to streamline rules and encourage cross-border investment. Energy and Business: Bali’s fuel supply disruptions have caused long queues and prompted work-from-home measures, while soaring global oil-shipping costs add pressure on import bills. Solar Exports: US duties on Indonesian solar panels could make exports to that market uneconomic, raising risks for factory use and investment.

Trade and Exports: Trade Expo Indonesia opened with 1,873 exhibitors and buyers from 134 countries, targeting US$17.5 billion in deals. Eximbank is backing 10 exporters as officials push MSMEs into new markets. Energy Supply: A US$36.9 million West Java LPG plant can produce 52,800 tonnes a year, enough to meet 10–15% of demand in Jakarta and West Java. Wildfire Risks: Police say 92 of 97 land-fire reports have advanced to formal investigations, including probes of companies, as haze spreads across Southeast Asia. Bali Fuel Disruption: Long queues and temporary work-from-home measures expose supply vulnerabilities on the tourist island. Tourism: Mandalika’s MotoGP drew a record 157,875 spectators and an estimated Rp5.2 trillion (US$290 million) in economic impact. Investment and Industry: Indonesia is seeking Russian partnerships in shipbuilding, rail equipment and IT, while aiming to cut logistics costs to 12.5% of GDP by 2029.

Bali Fuel Disruption: Bali ordered three days of work from home, Oct. 15–17, to ease pressure on fuel distribution after tanker delays and panic buying triggered long queues. The disruption highlights risks to the island’s tourism-dependent economy. Trade and Investment: Trade Expo Indonesia opened with US$13.2 billion in memorandums of understanding, as Jakarta seeks foreign capital and stresses its fiscal credibility. Corporate Results: Waskita Beton Precast reported Rp1.08 trillion in operating revenue through the third quarter, with precast concrete, construction services and readymix each contributing substantially. Capital Markets: The IDX tightened IPO rules from Oct. 9 despite weak listings; just seven companies had gone public by the third quarter, against a 50-company target. Manufacturing: An export slump is driving layoffs in Indonesia’s textile industry, adding pressure to efforts to strengthen domestic production.

Fuel Disruptions: Tanker delays and surging demand have caused fuel queues across Bali, despite assurances that stocks are sufficient. The province has ordered three days of work from home, Oct. 15–17, to ease pressure on distribution. Trade and Industry: Trade Expo Indonesia opened with 168 memorandums of understanding worth US$13.2 billion. The government is targeting US$618 billion in downstream industry value by 2040, with more domestic processing of natural resources. Technology Trade: Indonesia is developing rules for trade in sensitive, dual-use technologies as it seeks a bigger role in semiconductors, AI and data centers. Manufacturing: Falling export orders and rising costs are driving closures and layoffs in textile, garment and footwear factories. Markets: The rupiah is Asia’s weakest-performing currency this year, down 6.8% against the dollar.

Growth & Fiscal Policy: Indonesia is targeting 8% growth and says it will keep the budget deficit below 3% of GDP, with the state budget positioned as a driver of expansion. Energy Deals: Eni agreed to sell 10% stakes in gas assets to Pertamina and Medco, pending approvals, deepening domestic participation in major projects. Investment: Indonesia is seeking more green investment and plans Rp1 trillion in startup funding through Garuda Spark. Financial Sector: AM Best kept its stable outlook for non-life insurers, though higher capital requirements could squeeze smaller players. Business Disruption: Bali’s fuel queues stem from delivery delays, not a national shortage; Pertamina says extra supplies are on the way.

Energy Costs: Indonesia will keep subsidized fuel prices unchanged despite crude reaching $112.81 a barrel in September, while retargeting subsidies and seeking to avoid a wider budget deficit. Growth Agenda: Deputy Finance Minister Juda Agung says the country needs 8% growth to make the most of a 10-to-15-year demographic window, with productivity, skills and job creation key. Green Investment: The government is pitching clean energy and other low-emissions sectors to investors, and wants regional enterprises to develop carbon-trading projects that also benefit local communities. Corporate Deals: Pertamina and Medco are set to acquire Eni’s Indonesian upstream interests, while Shinhan has established a holding company in Indonesia. Telkom is also moving ahead with a US$2.8 billion infrastructure spin-off. Trade and Industry: Indonesian beauty companies recorded US$2.23 million in potential deals at a Dubai trade fair. Steel exports, meanwhile, fell 4.9% year on year to US$17.8 billion in January–August amid global uncertainty and trade barriers. Tax and Business: Indonesia is hosting a tax-administration forum with representatives from 38 countries, as authorities focus on digital transactions, data exchange and taxpayer services.

Aviation: Qantas and Jetstar have applied for expanded Indonesia routes, including Perth–Jakarta and services to Bali; regulatory approval is still pending. Oil and gas: Pertamina and Medco are acquiring stakes in Eni’s Indonesian projects, deepening local control of upstream assets. Trade and investment: Indonesia and Egypt are targeting $5 billion in bilateral trade by 2030, with plans for a joint investment fund and CPO refinery. Manufacturing: The government aims to lift factory productivity by 18.7% by 2029, as it pursues stronger industrial growth. Digital infrastructure: Batam’s data-centre expansion is facing scrutiny after residents reported water shortages; authorities have told new operators to build desalination plants. Renewables: Indonesia’s SEDAYUSolar and China’s Yude Solar plan to develop solar projects through a joint venture.

Energy Deals: Pertamina and Medco agreed to acquire Eni stakes in East Kalimantan’s Kutei Basin, expanding Indonesian ownership in producing gas fields and major developments. Trade and Investment: Indonesia and Egypt plan a joint investment fund and are targeting $5 billion in bilateral trade by 2030. Business Climate: A government task force says it has resolved 135 of 190 business complaints, involving more than Rp625 trillion in investment and the potential for 31,000 jobs. Industry: Indonesia aims to lift manufacturing productivity per worker 18.7% by 2029, while BRIN warns that weak links between research and business keep innovations from reaching the market. Transport and Fuel: The government plans to bring motorcycle ride-hailing under public-transport law and is mapping local feedstock for E10 fuel, while assessing capacity for a possible E50 blend. Agriculture: Indonesia showcased processed local foods at an FAO exhibition in Rome, aiming to open markets and raise value for farmers.

Digital Investment: Indonesia’s data-centre industry is pressing for clear, coordinated permits as it seeks to attract investment. A broader strategy debate warns that infrastructure must help spread productivity beyond Java, not simply reinforce existing economic concentration. Energy Finance: New energy businesses across Asia face a shortage of equity, even as power demand grows. Regional firms say progress on the Asean Power Grid could encourage investment, but clearer rules are needed to make projects viable. Trade and Investment: Indonesia and Egypt are pursuing an economic partnership agreement and joint investment fund, with leaders targeting $5 billion in bilateral trade by 2030. Household Demand: Chicken prices rose 7.8% in the first nine months of 2026, outpacing wage growth of 4.9%. Bank Indonesia also reported weaker consumer confidence and slower retail-sales expectations.

Trade & Investment: Indonesia and Egypt are pursuing an Economic Partnership Agreement and joint investment fund, with leaders targeting $5 billion in bilateral trade by 2030, up from $2.38 billion in 2025. Markets: Indonesia’s benchmark bond yields have risen at least 100 basis points this year, part of a global surge that is unsettling investors. Jobs: East Java labor unions estimate 50,000 formal-sector workers could face layoffs in 2026, with manufacturing and labor-intensive industries most exposed. Industrial Policy: The government is considering National Strategic Project status for more industrial parks to accelerate downstream processing, attract investment and create jobs. Local Business: Mandalika’s MotoGP weekend lifted sales for local vendors; one food seller reported daily revenue above Rp2.5 million.

Investment & Development: Foreign capital inflows to Indonesia reached US$7.33 billion year to date, while Jakarta is seeking stronger Asian Development Bank support for human capital and digital infrastructure. Egypt Ties: President Abdel Fattah al-Sisi arrived in Jakarta for talks with Prabowo Subianto, with cooperation agreements expected in areas including fisheries and statistics. Industry Push: Indonesia has begun exporting EV batteries and aims to lift manufacturing above 20% of GDP, as it targets Rp3,839 trillion in downstream investment through 2029. Trade Outlook: Global trade reached a record US$35 trillion in 2025, but UNCTAD expects global growth to slow to 2.6% in 2026; Indonesia remains among the economies forecast to grow fastest. Business Rules: The government has ruled out delaying mandatory halal certification, keeping compliance requirements in focus for businesses.

Investment Flows: Foreign capital inflows into Indonesia’s financial markets reached Rp131.1 trillion ($7.33 billion) year to date, led by government bonds; equities, by contrast, saw Rp84.2 trillion in net outflows. Food Industry: The government plans three egg- and meat-processing plants, each requiring an estimated Rp200 billion, to expand markets for livestock and support price stability. Village cooperatives are also being linked with meal-program kitchens to supply processed fish. Energy Partnerships: Indonesia and Azerbaijan are pursuing five cooperation projects, including oil and gas exploration, production and trade involving Pertamina, SOCAR and Minarak Brantas Gas. Business Rules: Mandatory halal certification remains set to begin October 18, with tailored provisions planned for some small businesses and imports. Tourism: All ticket categories for this weekend’s Mandalika MotoGP have sold out, including premium seats.

Market Support: Danantara says it could intervene during market selloffs if asset valuations are attractive. Whoosh Restructuring: The government is drafting a decree to transfer the Jakarta–Bandung rail consortium’s shares to the Finance Ministry, aiming to restructure liabilities while keeping services running. Industrial Push: Indonesia has exported its first EV batteries and aims to raise manufacturing’s share of GDP above 20%; a new partnership with Airbus is also set to strengthen the aerospace sector. Growth Outlook: UNCTAD forecasts Indonesia’s economy will grow 5.2% in 2026, even as global growth slows to 2.6%. Agriculture and Tourism: The government plans to replant 9,000 hectares of coconut plantations in 2027, while Indonesia’s tourism competitiveness has improved in the latest WEF index.

Food Security: Indonesia’s rice procurement reached 4.11 million tonnes by Oct. 8, beating Bulog’s 4-million-tonne annual target and setting a record as the agency works to support farmers and stabilize grain prices. Public Finances: Non-tax state revenue rose 41.7% year on year to Rp492.3 trillion through September, boosted by Bank Indonesia’s surplus, forest-area fines and higher commodity prices. Industry and Technology: The government wants manufacturing to grow from about 19% of GDP to 20–25%, while prioritizing AI, semiconductors and digital skills as new engines of productivity. Growth Outlook: UNCTAD projects Indonesia’s economy will expand 5.2% in 2026, even as global growth slows to 2.6%. Household Resilience: The government is developing support for the pressured middle class, including better access to productive jobs, skills, financing and wider markets for small businesses.

Digital Competition: Meta has barred ByteDance and TikTok-linked ads on its platforms in Indonesia and six other markets, intensifying the fight for advertisers. Energy Investment: Indonesia is seeking U.S. data-analysis technology to help raise oil output toward 1 million barrels a day by 2030. Its 100-GW solar ambition, industry leaders say, depends on faster permits, clearer procurement rules and grid upgrades. Downstreaming: President Prabowo launched 11 North Maluku projects worth US$10.2 billion. Downstreaming accounts for 30% of national investment, while the government is considering a pause on new nickel smelters amid oversupply. Growth and Markets: Indonesia is targeting Rp13,000 trillion in investment to support 8% growth and aims to lift manufacturing’s share of GDP above 20%. FTSE has kept the country’s secondary emerging-market status.

Downstreaming and Investment: Prabowo launched 11 industrial projects worth US$10.2 billion in North Maluku, alongside Indonesia’s first EV-battery exports. Downstreaming made up 30% of first-half investment, while the Weda Bay park has attracted US$20 billion and employs more than 100,000 people. Fiscal Discipline: Finance Minister Suahasil Nazara ordered ministries to cut remaining travel budgets by 30% and freeze non-essential spending to keep the 2026 deficit below the 3% legal ceiling; the latest estimate is 2.85% of GDP. Industrial Estates: Danantara plans to merge 23 state-owned parks into one 35,000-hectare operator and waive land rent from next year, shifting revenue toward utilities and investor services. Gig Economy: A new regulation caps ride-hailing platform fees at 8%, but drivers question whether the rules will actually lift their income. Markets: FTSE Russell kept Indonesia’s emerging-market status unchanged, while continuing to review market reforms.