AGP Executive Report

Middle East & Markets: Canada’s PM Mark Carney said at the G7 in France that Canada is ready to help restore shipping in the Strait of Hormuz if the reported Iran–US breakthrough is signed, as oil prices fell and Asian stocks jumped on the deal’s progress. Indonesia–Qatar Investment: President Prabowo met Qatar’s foreign minister in Jakarta; Qatar pledged US$4bn in investment and flagged support for healthcare, education and nutrition programs ahead of the 50th anniversary of diplomatic ties. Indonesia–Germany Economic Push: Prabowo and German President Frank-Walter Steinmeier agreed to deepen cooperation on energy transition, skilled workforce training and strategic minerals, while Indonesia urged Germany to back the Indonesia–EU IEU-CEPA deal. Indonesia Economic Data Drive: BPS kicked off field data collection for the 2026 Economic Census (SE2026) starting in Southeast Sulawesi, running June 15–Aug 31 and expanding coverage into agriculture, forestry and fisheries. Foreign Capital & Stocks: Danantara said a 36–40% market correction has drawn foreign investors back to undervalued Indonesian equities, supporting a rebound in the JCI and rupiah. Youth, AI & Online Safety: Indonesia highlighted mental resilience for youth in the AI era, while the UK announced a ban on social media for under-16s—an issue that will likely shape regional policy debates. Environment & Innovation: A Unand researcher reported progress on low-energy anammox wastewater treatment using local microbes, and a study found food and beverage plastics dominate macroplastic pollution on coastlines.

Market Mood & Rupiah: Indonesia’s rupiah strengthened to around Rp17,778 per US dollar as hopes for a US-Iran peace deal lifted risk sentiment and pushed crude prices lower, while the Jakarta Composite Index jumped on the same global relief. Energy & Commodities: Oil prices tumbled and stocks surged after the US and Iran said they reached a deal to reopen the Strait of Hormuz, easing supply fears that had been pressuring regional inflation and budgets. Investor Confidence & Transparency: Sovereign wealth fund Danantara pledged to disclose investment performance data more transparently after a Prabowo directive aimed at boosting investor trust and attracting higher-quality capital. Cross-Border Payments: Bank Indonesia and China’s PBOC launched a China-Indonesia cross-border QR payment linkage under a joint work program, expanding UnionPay QR merchant reach outside China. Policy & Business Climate: Indonesia’s business lobby warned that confusing policy shifts are sowing “dangerous distrust,” as executives call for clearer government communication. Local Economy & Research: BRIN is strengthening Magelang’s coffee ecosystem with research-backed seedlings and farming practices to raise productivity and market competitiveness. Finance Sector: OJK said insurance is becoming a key part of Indonesia’s economic resilience, citing growth in assets and premiums through April 2026. Protests & Fuel Pressure: Student groups staged new demonstrations in Jakarta, including demands to pause and review parts of social spending and to reassess fuel price hikes that are hitting households. Diplomacy: German President Frank-Walter Steinmeier arrived in Jakarta for talks with Prabowo covering defense, maritime cooperation, trade and investment, and climate/renewables.

Investor Sentiment & FX: Indonesia’s economy is “coming up for air” after a rupiah slide and a stock rout, but critics say policy moves—fuel subsidies and school-meal spending, tighter export controls, and parliament moves to tighten central bank oversight—are still spooking investors as the currency slips below 18,100 per dollar and the market has shed about a third of its value since the start of the year. Monetary Policy: The latest relief came after Bank Indonesia raised its base lending rate by 75 points in back-to-back hikes, though analysts warn concerns will linger. Food Security & Trade: Indonesia is pushing for more UAE investment to strengthen downstreaming and food supply chains under the I-UAE CEPA, while also touting record rice stocks of 5.3 million tons and warning against hoarding and price manipulation. Agriculture Modernization: Indonesia is leveraging BRICS ties to accelerate farm modernization and dairy self-sufficiency, aiming to cut import dependence as domestic milk output lags demand. Energy & Industry: Pertamina is tightening aviation fuel quality control in Bali ahead of the holiday travel surge, and Eni–Petronas launched the Searah 50/50 JV to combine Indonesia–Malaysia gas assets. Science & Infrastructure: BRIN has selected Piriou to build two research vessels for Indonesia’s deep-sea and coastal studies, and Indonesia opened its first radioactive contamination testing lab for seafood exports. Environment with Economic Angle: Jakarta’s lights-off campaign cut emissions by 60.14 tons CO2e, while Indonesia targets large-scale mangrove restoration and bamboo planting to support coastal livelihoods and climate mitigation. Capital Markets: Danantara’s US$1.5 billion global bond debut and Indonesia’s push to open capital market access for creative economy firms signal continued efforts to mobilize funding despite market stress.

Palm Oil Policy: Indonesia’s Trade Ministry issued Permendag 16/2026 to tighten export distribution of palm oil derivatives and strengthen state-owned exporters, with a phased transition to full enforcement from Jan 1, 2027. Investor Sentiment: Coverage flags Indonesia’s “perfect storm” of high energy costs, rupiah weakness, and tighter export controls, while noting BI’s recent rate hikes offered only temporary relief. Fuel & Protests: Hundreds of students rallied in Jakarta against Prabowo’s spending priorities and the gasoline price increase, with organisers citing demands to cut fuel and staple prices and review flagship programs. Food Assistance Debate: Deputy Coordinating Minister for Food Affairs said the government is still studying a proposal to add sugar to the food assistance program, after sugarcane farmers pushed for limited sugar allocations. Tourism & Airfares: The Tourism Ministry is coordinating with Transportation to curb rising domestic airfare pressures from higher aviation fuel costs, including allowing fuel surcharges up to 50% of the upper fare limit. Jakarta Sports Tourism: JAKIM 2026 drew 45,500 runners (up from ~31,000 last year) and 1,012 international participants, reinforcing Jakarta’s push as a sports tourism hub. Nutrition Policy Scrutiny: Indonesia’s Nutri-Level graded labels for sugar, salt and fat in beverages face scepticism from consumers and small outlets over consistent testing and implementation. Clean Tourism Push: The Tourism Ministry is expanding the Clean Tourism Movement nationwide, focusing on waste management, reduced single-use plastics, and destination governance. Indonesia-Japan Defense Talks: Japan and Indonesia agreed to explore deeper defense cooperation, including possible maritime information sharing and talks on transferring Asagiri-class destroyers. Food Security & Milk: A deputy minister urged higher daily milk consumption to support the “Golden Indonesia 2045” nutrition push, citing low current intake.

Student Protests & Fuel Prices: Hundreds of Indonesian students rallied in Jakarta against Prabowo’s spending priorities and the recent gasoline price hike, demanding lower fuel and staple food prices and an end to “wasteful” programs including free meals and village cooperatives. Food Security Agenda: Deputy Agriculture Minister Sudaryono said food security is central to Indonesia’s economic transformation, linking it to sovereignty and welfare while pointing to output gains, land optimization, farming modernization and irrigation expansion. Tourism Retail Push: Indonesia’s Tourism Ministry is mapping “shopping tourism” by turning local products into destination retail hubs, with Jakarta and Surabaya as anchors and plans to expand to other cities and tourism villages. BRICS Agriculture Moves: BRICS adopted the Indore Declaration, setting up initiatives on farmers’ seed rights, digital agriculture and agroecology, with India coordinating key mechanisms. Climate Risk Watch (El Niño): Forecasters say El Niño is officially underway and could be “very strong,” with experts warning of major economic damage from disrupted weather and supply chains. Infrastructure & Logistics: Indonesia is expanding its railway network to 10,524 km to cut logistics costs and ease congestion, with passenger numbers rising. Marine Waste Policy: Indonesia is preparing incentive and disincentive schemes for regions to curb marine pollution, tying rewards to proper waste management. Indonesia–US Economic Ties: US Deputy Secretary of State Christopher Landau visited Jakarta to deepen economic cooperation, including digital economy, renewable energy and investment outreach. Jakarta Marathon Boost: The BTN Jakarta International Marathon drew 20,500 runners on day one, with organizers targeting Rp225 billion in economic turnover.

RCEP Expansion Watch: Sri Lanka’s pathway to joining RCEP is gaining momentum, with Indonesia flagging the Indian Ocean logistics potential and export diversification benefits—though the bloc’s rules mean Sri Lanka must adapt its trade and investment system fast. Nickel Investment Tension: Chinese investors are pushing back on Indonesia’s nickel rule changes, warning that higher costs, tighter FX rules, reduced quotas, and tougher enforcement are eroding downstream certainty after years of heavy Chinese smelter and EV-battery investment. Tourism Diplomacy: Indonesia and Saudi Arabia are moving to boost two-way tourism flows, including expanding experiences for Hajj/Umrah travelers and setting up an Arabic language and hospitality center in Lombok to scale workforce readiness. Economic Diplomacy Push: Kadin says stronger economic diplomacy is key to winning foreign investment, pointing to Prabowo’s France visit and a new high-level business council that generated major deal value. Infrastructure & Logistics: Indonesia is expanding its rail network to 10,524 km, aiming to cut logistics costs and congestion while tailoring upgrades across Java, Sumatra, and beyond. Finance in Local Currencies: Bank Indonesia and China’s central bank agreed to deepen local-currency and cross-border payment cooperation, reflecting a broader regional shift toward resilience. Climate & Energy Signals: El Niño has officially returned, raising extreme-weather risks; meanwhile, wind and solar hit a record share in global power generation, underscoring the energy transition’s growing economic relevance. Digital Safety Regulation: Canada’s proposed under-16 social media restrictions add to a global regulatory wave that is already reshaping platform access debates across countries. Capital Markets: Indonesia’s Danantara (sovereign wealth fund) raised US$1.5bn in its debut international bond, drawing strong orders and signaling investor appetite despite tougher global conditions. Student Protests & Macro Pressure: Indonesian students again rallied in Jakarta over fuel-price hikes and budget spending, as the rupiah weakens and economic stress feeds political pressure. Wildlife Crackdown: Indonesia foiled an attempt to smuggle nearly 100 protected birds from Papua, expanding investigations to dismantle the trafficking network.

Sovereign Financing: Indonesia’s Danantara Indonesia (SOE wealth fund) raised US$1.5bn in its debut international bond sale, drawing about US$4.6bn in orders and pricing US$750m 5-year notes at 5.35% and US$750m 10-year notes at 5.95%, a sign investors are still willing to back domestic credit even amid global uncertainty. FX & Capital Flows: After Bank Indonesia’s rate hike, foreign investors reportedly bought Rp19.02tn worth of SRBI and government bonds (plus Rp26.9tn in Danantara-related demand), helping the rupiah firm to around Rp17,865–Rp17,875 per US dollar. Protests & Fiscal Pressure: Hundreds of Indonesian students in Jakarta staged “Heading to Bankrupt Indonesia” rallies against fuel price hikes and flagship spending like free meals and village cooperatives, with police blocking parts of the march. Trade & Compliance: Indonesia launched its first radioactive contamination testing lab for seafood in East Jakarta to meet stricter export standards, aiming to protect market access. Climate Risk: El Niño has officially begun and could intensify into a “super” event, raising the odds of extreme weather that can disrupt agriculture and food prices. Labor Regulation: The ILO adopted a landmark treaty for gig workers in the platform economy, setting binding standards on pay, safety, social security and algorithm-based management. Energy Transition Lens: A policy push argues energy transition must be treated as development policy, or it risks inflation and backlash if costs hit vulnerable groups hardest.

Rupiah Watch: Bank Indonesia’s surprise off-cycle rate hike to 5.5% helped the rupiah rebound back below IDR18,000 per US dollar, with officials citing improving foreign inflows into short- and medium-tenor government bonds. FX Market Policy: Indonesia is also tightening global banks’ FX trading rules to support the currency, while discussions with international banks (PERBINA) reportedly intensified after early-June lows. Immigration Integrity: A major KPK case alleges “systemic” extortion by immigration officials, threatening investor sentiment and Indonesia’s push to attract foreign talent and capital. Energy Security: President Prabowo ordered a rapid shift to alternative energy, prioritising a move from LPG to CNG, alongside updates on mining permits, fuel supply, and electricity readiness. Solar Push: The 100 GW solar plan faces execution concerns, especially around relying on village cooperatives without enough capacity-building. Creative Economy Skills: Indonesia urged UNESCO to link creative-industry growth with skills, social protection, and fair access for creative workers. Aviation & Logistics: AutoFlight secured Indonesia type-certificate validation for its cargo eVTOL, enabling commercial operations for unmanned island resupply and offshore logistics. Tech & Payments: COOCON joined the Agentic AI Foundation to expand agent payments and data interoperability efforts. Education Equity: The government plans to build around 100 Integrated National Schools in 2026 to widen access to top education.

Rupiah & Rates: Indonesia’s deputy finance minister said external and domestic pressures are “manageable” despite the rupiah rout that triggered surprise rate hikes by Bank Indonesia, arguing inflation and the deficit remain within tolerable ranges. Trade Integrity: Danantara Sumber Daya Indonesia (DSI) said it was created to stop export fraud such as transfer pricing and under-invoicing—not to seize control of commodity trade—during a June 1 to Dec 3 transition. Creative Economy Data: Indonesia will implement WIPO’s Creative Economy Data Model to map gaps, measure IP monetization, jobs, and trade performance, aiming for more evidence-based policy. ASEAN Investment Links: ASEAN diplomats visited Bangladesh’s BSEZ, signaling interest in expanding regional industrial and investment cooperation. El Niño Watch: US forecasters say El Niño conditions are present and expected to strengthen, with risks of below-normal rainfall for Southeast Asia and India—raising stakes for Indonesia’s agriculture planning. Digital Safety Policy: Canada moved to restrict social media access for children under 16 unless platforms prove safety, joining a growing global trend that includes Indonesia. Indonesia–Hong Kong FX: BI, Hong Kong Monetary Authority and China’s central bank signed an MoU to enable direct IDR and offshore renminbi settlement for cross-border trade and investment.

Rupiah & Bonds: Indonesia’s bond selloff resumed as investors stayed wary after an earlier surprise rate hike only briefly steadied markets; the 10-year yield rose to 7.43% and the rupiah slipped, with analysts pointing to policy uncertainty and Middle East-driven oil risks that could widen the trade deficit and lift inflation. Sovereign Funding: Danantara, the state wealth fund, kicked off its debut global US dollar bond sale (5- and 10-year tranches, about $500m each) as policymakers scramble to restore investor confidence. Halal Push: Indonesia’s Mandatory Halal policy for October 2026 aims to turn the country into a bigger halal exporter, with SEHATI targeting 1.35m free certifications in 2026 and BPJPH overseeing certification and oversight. Entrepreneur Drive: The government targets 10m new entrepreneurs by 2029, rolling out expo-based support for training, business legality, and financing access. Data Centres in Jakarta: STT GDC expanded its Jakarta campus, adding STT Jakarta 2 (24MW) and advancing Jakarta 3, 5 and 6, lifting a pipeline beyond 360MW to meet AI demand. Trade & Diplomacy: Prabowo and Canada’s PM Mark Carney discussed deepening trade and investment under the ICA-CEPA framework, while Indonesia and Russia signaled broader industrial cooperation within BRICS. Energy & Food Link: Rising oil prices are expected to boost biofuel demand, but experts warn fertilizer constraints could worsen food-price pressure.

Rupiah & Rates: Bank Indonesia’s surprise off-cycle rate hike helped stabilize markets, with the rupiah edging back toward 18,000 per US dollar and the Jakarta benchmark index rising more than 2%, as BI also pushed higher yields to attract foreign funds. Cost of Living: Pertamina raised Pertamax and Pertamax Green prices by about 32% (effective 10 June), adding pressure to inflation concerns even as officials argue the impact will be limited. Payments & Tourism: BI will expand QRIS cross-border payments to Saudi Arabia and India, aiming to ease transactions for Indonesians traveling for umrah/hajj and for Indian tourists visiting Indonesia. AI Infrastructure: A UN report warns AI data centres could consume massive electricity and water by 2030, underscoring the resource strain behind Indonesia’s growing AI and data-centre buildout. Energy & Commodities: China’s commodity trade shows price moves driving flows, while nickel’s stock overhang suggests Indonesia’s nickel recovery hopes may face delays. Industry & Investment: Prabowo urged young entrepreneurs to back nationalism for growth and reiterated Indonesia’s non-aligned stance, while he also pushed back on claims the government is unfriendly to foreign investors. Trade & Regional Links: Indonesia’s RMG export competition theme appears in the week’s coverage, alongside broader regional trade shifts like RCEP discussions involving Sri Lanka.

Rupiah & Rates: Bank Indonesia delivered a surprise 25 bps off-cycle hike to 5.50% after the rupiah slid to record lows, and then briefed foreign and domestic investors on the move as the currency steadied around 18,000 per US dollar. Palm Oil Probe: Indonesia questioned Maybank Indonesia staff over suspected palm export flows tied to Salim Group, focusing on whether goods were invoiced below market prices to hide profits and cut taxes. Fiscal Discipline 2027: Finance Minister Purbaya said the government will keep budget efficiency and refocusing for the 2027 state budget, targeting spending productivity while supporting programs like free nutritious meals and people’s schools. Housing Push: President Prabowo approved expanding the home renovation program through 2027 to convert uninhabitable houses and accelerate subsidized housing delivery. ASEAN Centrality: Foreign Minister Sugiono urged ASEAN unity and centrality amid geopolitical tensions, calling for a whole-of-ASEAN approach. Digital Infrastructure: Indonesia and Singapore discussed optimizing a regional data center hub across the Singapore–Johor–Riau triangle, plus expansion of Batam’s digital parks. Workforce for AI: At the ILC in Geneva, Indonesia highlighted skills training, internships, and worker protections to prepare for AI-driven job shifts. Agribusiness Downstreaming: Maluku’s agriculture ministry approved downstream coconut and cassava processing plans to raise value, create jobs, and reduce reliance on raw-material sales.

Rupiah Defense & Rates: Bank Indonesia raised the BI-Rate by 25 bps to 5.5% to attract foreign portfolio inflows and steady the rupiah, while continuing FX interventions and reserve support. Free Meals Overhaul: President Prabowo reshuffled the National Nutrition Agency (BGN) leadership, aiming to fix SOP, governance and food-quality issues in the MBG program and refocus execution. Palm Oil Export Rules: The Trade Ministry issued Permendag 16/2026, tightening export channels and prioritizing designated state-owned exporters, with a transition period ahead of full enforcement in 2027. MSME Law Revision: The MSMEs minister pushed a revision to streamline fragmented rules and better protect, empower and boost competitiveness for Indonesia’s tens of millions of MSMEs. Digital & Green Cooperation: Singapore and Indonesia agreed to deepen collaboration on digital infrastructure, green energy and industrial supply chains, including a joint study for Batam-Bintan-Karimun’s tech sector. Embodied AI Push: Chinese embodied AI firm AGIBOT held its first partner conference in Indonesia, promoting humanoid robotics deployment and a Robot-as-a-Service leasing model. Retail Expansion: Marks & Spencer signed a franchise deal with MAP and plans to reopen in the Philippines later this year, expanding Southeast Asia growth. Regional Trade Signals: Indonesia and Eurasian partners advanced an agreement to reduce trade barriers under the EAEU framework, supporting wider market access.

Rupiah Shock & Rates: Bank Indonesia delivered an unexpected 25 bps hike to 5.50% to steady the rupiah after it slid past 18,000 per US dollar, citing global volatility and inflation risks. Food Price Shield: Bapanas and the Trade Ministry tightened food-supply and food-safety monitoring to prevent toxic pesticide residue and curb price shocks tied to currency weakness. Manufacturing Push: The Industry Ministry aims to lift manufacturing exports’ share to 30% (from 20%) to balance domestic demand and improve resilience. Digital Sovereignty: Indonesia moves to cut reliance on Singapore by diversifying international internet routes, as AI and data demand strain the current single-hub setup. Health Tech Deal: Actxa and LIF launched a co-branded smart ring with AI glucose scanning, betting on preventive health demand as diabetes risk rises. CIMB Eyes Indonesia M&A: CIMB said it’s open to deals in Indonesia despite investor jitters, pointing to long-term potential. Tourism & Events: The Tourism Ministry backed the BRI Jazz Gunung Series to boost mountain destinations and local MSMEs. Trade & Logistics: ECS Group expanded Asia air-cargo services with more offices and tech focus. Regional Spillover: A 7.8 quake hit the Philippines, with rescuers racing to reach trapped people; tremors were felt in Indonesia’s Sulawesi.

Indonesia–Philippines/ASEAN Connectivity: Maybank unveiled its next-generation Maybank2E platform to streamline regional business banking, cash management, trade finance and FX under one login, targeting SMEs to corporates across borders. Energy & Commodities: Eni and Petronas launched the Searah joint gas venture spanning Indonesia and Malaysia, starting with 300,000 boe/d and aiming for 500,000 boe/d within three years, backed by a $6bn revolving credit facility and $20bn+ investment plans. Trade Policy: The US USTR proposed Section 301 tariffs on imports from 60 economies over forced-labor concerns, with Indonesia included at a proposed 10% or 12.5% rate depending on progress, opening a comment window until July 6. Macroeconomic Pressure: Moody’s warned a stronger US dollar will test South and Southeast Asian corporates, though most rated firms in Indonesia, India and the Philippines still have buffers; the Indonesian rupiah slide remains a key risk channel. Food & Consumer Policy: Indonesia removed Minyakita from the food aid program, shifting distribution to traditional markets while keeping it under the DMO scheme. Sustainability & Environment: Telkomsel rolled out an integrated ESG strategy aligned with Telkom Group’s GoZero net-zero target by 2060, while Norway launched an ASEAN blue-economy collaboration in Jakarta and World Oceans Day highlighted MPAs now covering 10% of oceans. Humanitarian/Disaster: A 7.8 quake hit southern Philippines, killing at least 32 and displacing tens of thousands, with tsunami warnings affecting parts of the region.

Rupiah Pressure & Market Rout: Indonesia’s foreign-exchange reserves fell for a fifth straight month to US$144.9bn in May, the longest decline since 2018, as policymakers stepped up rupiah support while foreign investors kept selling local assets. Currency-to-Industry Spillover: The rupiah’s slide is squeezing manufacturers via higher import costs and a credit crunch, with analysts warning of growing deindustrialisation risk. Policy & Market Stabilisation: Bank Indonesia and the finance ministry pledged to boost investor appetite, including plans to raise remuneration on government deposits to lower borrowing costs. Trade Rules for Commodities: Indonesia issued technical regulations to centralise coal, palm oil and ferroalloy exports through a government-owned firm, requiring exporters to report activity from June 1. Logistics Push: The government targets cutting logistics costs to 12.5% of GDP by 2029 to improve connectivity and distribution. Regional Energy Integration: Sarawak Energy said cross-border power trade across Asean needs clear regulation, grid readiness and long-term investment certainty. Digital Infrastructure Investment: DayOne Data Centers closed a US$4.5bn Series C and plans to expand across Singapore and Indonesia, while Digital Realty announced Malaysia capacity growth—signalling continued data-centre momentum in the region. Disaster Watch: A 7.8 quake hit southern Philippines, triggering tsunami warnings across parts of Asia including Indonesia, with evacuations urged.