AGP Executive Report

Market Confidence: Indonesia’s stocks plunged nearly 12% after MSCI proposed an unusually severe downgrade that could remove the country from its global indexes, putting foreign investment and rupiah stability at risk. The proposal is not final; officials face pressure to improve market transparency and ownership disclosure before a decision expected in 2027. Domestic Investment: State investment agency Danantara pledged US$5 billion to Indonesian companies amid the market turmoil, while officials called the sell-off a potential long-term investment opportunity. Trade Ties: Indonesia’s Kadin and Senegal’s business chamber signed a pact covering trade, investment, logistics and banking, as Indonesian firms look to expand across West Africa. Energy Projects: Inpex delayed bids for key packages on its Abadi LNG project, which targets a final investment decision around mid-2027. Haze Costs: Singapore issued preventive notices to seven Indonesian firms linked to fires, requiring fire-control measures and raising the prospect of legal action as pollution disrupts businesses and daily life across the region.

Trade and Investment: Kadin Indonesia and Senegal’s business chamber signed a pact covering trade, investment, logistics and banking, while Indonesian firms are pursuing wider West African partnerships. Energy Projects: Inpex has delayed bid deadlines for work on the Abadi gas project, targeting a final investment decision around mid-2027. Markets: The Jakarta Composite Index plunged 11.57% on Friday after MSCI opened a review that could downgrade Indonesia from emerging-market status, citing concerns over ownership transparency and trading practices. Haze Costs: Southeast Asia’s meteorological centre issued its highest alert as Indonesian fires spread toxic smoke; Singapore has put seven Indonesian firms on notice, raising pressure for action. Transport: The Jakarta–Bandung Whoosh railway has carried more than 18 million passenger trips in three years, with station businesses including 29 small firms.

Markets: Indonesian shares plunged 11% in their steepest one-day fall in nearly 30 years after MSCI warned it could remove the country from emerging-market indexes, putting billions in potential foreign investment at risk. The rupiah also fell past Rp18,000 per US dollar, prompting Bank Indonesia to pledge intervention. Corporate Oversight: Indonesia’s market regulator imposed about US$117 million in fines tied to alleged share-trading manipulation involving three companies, as confidence in market transparency comes under pressure. Investment: State investment fund Danantara pledged US$5 billion for Indonesian companies and called the market slump a long-term investment opportunity. Trade: Trade Expo Indonesia is targeting US$17.5 billion in deals; separate agreements include US$50 million in durian sales to China and 14 Sindh–Indonesia partnerships worth a projected US$9.4 million. Business Risks: Singapore has issued notices to seven Indonesian firms over haze-linked fires and says it may take legal action, raising potential costs and diplomatic risks for companies.

Market Shock: Indonesia’s JCI plunged 11.6% on MSCI’s proposal to reclassify the market as standalone, its worst daily fall since 1998. The rupiah touched Rp18,070 per US dollar. Reform and Investment: OJK imposed US$116.7 million in fines over alleged share manipulation and IPO violations. Danantara says it plans to invest US$5 billion in Indonesian businesses over the next six to nine months, as officials urge calm and promise capital-market reforms. Haze Risks: Singapore plans warnings for seven Indonesian companies linked to fires and is considering further action; SGX RegCo is also questioning listed plantation firms about their role and response. Trade and Industry: Indonesia’s trade surplus reached US$7.25 billion, while the government is targeting US$45 billion in nickel downstreaming exports. Bali Fuel: Queues have prompted temporary odd-even restrictions on fuel purchases from Oct. 17, alongside emergency deliveries and extended station hours.

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.