AGP Executive Report

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.

Investor Confidence: Luhut Binsar Pandjaitan urged investors not to hesitate, saying Indonesia’s economic fundamentals remain sound despite global uncertainty. The government is targeting 6% growth and says it will tackle business barriers. Trade Links: Bangladesh wants to lift annual trade with Indonesia from about $4 billion to more than $10 billion, while Johor Port and Pelindo are exploring a Belawan–Johor shipping corridor. MSMEs: Indonesia plans to halve e-commerce fees for eligible local small businesses, aiming to widen their access to online markets. Markets and Industry: Foreign-exchange reserves eased in September but remain at $146.3 billion, covering 5.3 months of imports. Indonesia is also considering a pause on new nickel smelters amid oversupply, as its IPO market slows after tougher listing rules. Investment: Nine-month foreign investment disbursement reached a five-year high, even as businesses weigh new labor rules that raise severance benefits.

Markets: Indonesia’s foreign-exchange reserves edged down to US$146.3 billion in September but still cover 5.3 months of imports; the rupiah strengthened to Rp17,887 per US dollar on Wednesday. FTSE Russell also kept Indonesia’s emerging-market status, while continuing to monitor market reforms. Nickel: The government is considering a moratorium on new semi-finished nickel smelters as global oversupply of about 2.5 million tonnes weighs on prices. It may prioritize investment in higher-value finished products. Growth and jobs: Officials are targeting 6% economic growth by 2027 and say they will tackle barriers to private investment. A new labor law has pleased unions but raised business concerns over hiring costs and regulatory uncertainty. Regional trade: Johor Port and Pelindo are exploring a Belawan–Johor corridor to improve cargo flows and supply-chain links between North Sumatra and Malaysia.

Indonesia–Saudi Air Connectivity: Riyadh Air opened ticket sales for a new direct Riyadh–Jakarta route launching 16 Nov 2026, with three weekly flights, boosting business, tourism and religious travel links. Corporate Reshuffle in Consumer Goods: Godrej Consumer Products Indonesia inaugurated the first phase of its Kendal manufacturing facility (IDR 500bn investment), expanding household insecticides output and supporting exports. Aviation Maintenance Deal: Garuda Indonesia plans to take a majority stake in GMF Aeroasia via a rights issue, aiming to align ownership and strengthen in-house MRO economics. Hospitality Expansion: BWH Hotels’ Best Western retained “Best Midscale Hotel Chain” in Travel Weekly Asia awards, citing portfolio growth including Indonesia. Energy Transition & Downstreaming: Indonesia targets 7 GW nuclear capacity for energy security and pushes downstreaming investment through a new ministry and AI-enabled industrial growth. Trade & Market Rules: Vietnam mandates shared access for compatible public EV charging stations from July 2027, a sign of tightening regional infrastructure standards. Environment & Risk: Japanese forestry-linked firms in Indonesia step up fire monitoring as El Niño worsens blazes; Bali study flags ongoing coral decline tied to governance and pollution drivers.

Downstreaming Push: Indonesia targets Rp3,839.9 trillion (US$214.5bn) in downstreaming investment for 2025-2029, with realized Rp300tn in 1H 2026, aiming to lift exports and regional growth beyond Java. EU Trade Deal Deadline: Trade Minister Budi Santoso said Indonesia is pushing to sign I-EU CEPA by end-October 2026 and speed ratification so it takes effect in January 2027 before EU GSP ends. Energy Transition Overhaul: A new Coordinating Ministry for Downstreaming and Energy Transition is set to accelerate clean energy, including phasing out 13 GW of diesel power with solar, while Indonesia also targets 7 GW of nuclear capacity in its energy master plan. AI for Industry: Airlangga Hartarto urged technology-led downstreaming using AI to raise efficiency and productivity, linking the push to growing data center demand. Energy Security Warning: The IEA warned Southeast Asia’s electricity demand is rising faster than solutions, urging power sharing and diversification amid geopolitical risks. State Wealth Enforcement: President Prabowo said the forest area enforcement task force will face resistance from parties benefiting from fraud and corruption. Investment & Finance: Danantara and Energi Mega Persada committed $450m to HighPeak Energy as part of a refinancing, while BTN backs a 6% subsidized mortgage rate for middle-income workers. Food & Nutrition Budgeting: Indonesia’s National Nutrition Agency is reviewing incentives for free-meal kitchens to ensure state funds translate into MBG meals efficiently. Jakarta Disaster Readiness: Jakarta remains vulnerable to floods and fires due to planning gaps, with officials pushing stronger disaster mitigation and emergency response status.

IPO Watch: Singapore-based data centre operator DayOne Data Centers filed for a US IPO, reporting a $77.2m net loss on $512m revenue for the first half of 2026, as higher rates and scrutiny over power and water use shape the listing market. Tech Reset: DealStreetAsia speakers said Southeast Asia’s funding correction is pushing founders toward more durable, operations-led tech businesses rather than “growth at all costs.” Energy Security: The IEA warns ASEAN electricity security is tightening as demand rises (5.4% annually to 2030) and networks face constraints, with Indonesia expected to drive about 40% of growth. Indonesia Holidays: Indonesia released its 2027 national holiday and collective leave calendar (18 national holidays, 8 collective leave days), with essential services arrangements. Aviation Links: Qantas and Jetstar seek new Indonesia routes and more seats under expanded bilateral air services, while Malaysia Airlines, BCA and Novus signed an MoU to deepen travel, payments and digital cooperation. Palm Oil Outlook: Analysts flag 2027 risks for CPO supply as El Niño and the B50 biodiesel push squeeze exportable volumes. Downstream Budgeting: Indonesia’s new Coordinating Ministry for Downstream Industry and Energy Transition will fund operations via a budget reallocation from the ESDM Ministry. Trade & Enforcement: Indonesia-linked areca nut smuggling and money laundering drew major enforcement actions in India, with bank credits reportedly exceeding Rs 1,000 crore.

AI Infrastructure & Cooling Deals: LG Electronics won a long-term contract to supply chillers for 5 gigawatts of AI data center capacity in North America, in phases, under a deal with AIR Control Concept. Trade & Industry: Indonesia’s toy exports rose to US$351.8 million in H1 2026, as the Industry Ministry points to quality upgrades, standardization, and wider market access. Water & Manufacturing Resilience: Global Water Intelligence and Corporate Water Leaders will host an Industrial Water Action Workshop in Jakarta (Nov 16-18) with Nike and the Water Resilience Coalition to turn West Java’s industrial water problems into investable projects. Finance & Stability: Indonesia’s financial sector is seen as stable despite global risks, with OJK citing improved growth outlook but warning of inflation pressure from El Niño and higher-for-longer global rates. Digital Security: Google started enforcing new Android developer verification rules in Indonesia and other APAC markets, adding extra steps and a 24-hour wait for installs from unverified developers. Energy Transition: Indonesia launched the first wave of a 100 GW solar program, with 15 projects already underway and plans for land and floating solar across multiple provinces. Environment & Risk: Environmental groups urged Indonesia to stay vigilant as hotspots fall, warning peatland fires can smoulder underground and flare again. Corporate M&A: AkzoNobel agreed to sell its Southeast Asia decorative paints business to Nippon Paint for about US$1.35 billion. Food & Compliance: Indonesia’s mandatory halal certification from Oct 17 could raise compliance costs for Indian exporters, with potential customs delays or product recalls for non-compliance.

Digital Payments & Currency: Bank Indonesia is pushing the Digital Rupiah to strengthen the rupiah’s role as a monetary anchor while boosting payment efficiency and inclusion, as QRIS use keeps surging (65.77m users and 12.55b transactions in 1H26). Trade & Diplomacy: Indonesia’s envoy says more work is needed to unlock India-Indonesia trade and investment potential, with focus on closer regional partnerships amid global uncertainty. Environment & Fire Risk: Indonesia’s new peatland agency gets expanded powers, but experts warn enforcement and coordination gaps remain key to stopping forest fires. Creative Economy & IP: BI urges stronger copyright protection for East Nusa Tenggara woven fabric motifs to help weavers capture more value and reach wider markets. Shipping & Logistics: Drewry’s Intra-Asia Container Index rose 2% to $1,518 per 40ft as typhoon disruption and port congestion tighten capacity. Energy & Industry: AkzoNobel is nearing a deal to sell its Southeast Asia decorative paints business to Nippon Paint for well over $1bn, including operations in Indonesia. AI & Science Policy: The US and 16 countries back the “Kyoto Vision for a Golden Age of Science,” aiming to expand AI-enabled research and computing access; Indonesia is listed among endorsers.

Indonesia-Russia Digital Talent: The University of Indonesia’s FMIPA and Positive Technologies are exploring cooperation on data science, AI and cybersecurity, with Sakuranesia facilitating—aimed at building real-world skills for Indonesia’s digital security needs. ASEAN Digital Skills Push: ASEAN’s DEFA deal is set to be signed in November, but the big question is whether qualifications and job skills can be understood and matched across borders as AI reshapes roles. Seaweed Downstreaming Drive: Luhut urges faster seaweed downstreaming, arguing Indonesia should build value-added processing using technology and investment—citing nickel as a model and calling for deeper Indonesia-China cooperation. GovTech and AI Research in Bali: Luhut invites Tsinghua University to join AI research at the Kura Kura Bali SEZ to support Indonesia’s GovTech push for more efficient, transparent public services. IEU-CEPA Timing: Coordinating Minister Airlangga says Indonesia targets signing the Indonesia-EU CEPA this year so implementation can start in early 2027, boosting market access and business ties. Data Centre Permits: BDx says it will still target early-2027 service for its 640MW Jatiluhur AI campus despite a halt over outstanding environmental and building approvals. Worker Protection Update: The government expands JKP job-loss insurance, but analysts warn wage-group-based payouts could create protection gaps for workers. Public Safety Disruption: Cable theft hits traffic lights and Whoosh train infrastructure in Bandung Raya, raising safety concerns and prompting police action. Trade and Tourism Signals: Indonesia pushes fast-track I-EU CEPA; separately, Indonesia’s tourism and gastronomy promotion continues, while Jakarta’s sports festival draws about 10,000 participants.

Digital Rupiah & Payments: Bank Indonesia says it has secured a halal fatwa for its Digital Rupiah and has started experimental cross-border testing, but stresses readiness also depends on regulation, data protection, interoperability, and consumer safeguards. Banking & Crypto Policy: A Korea roundtable warns that a bank-led approach to won-backed stablecoins may reduce incentives for new payment infrastructure, as incumbents already have network advantages. Tourism Exports: Indonesia’s Tourism Expo Japan 2026 participation is projected to generate 5,600 tourist visits and about US$7.17m in potential foreign exchange, while the ministry pushes gastronomy tourism via WIG 2026 to turn culinary heritage into business. Creative Economy Push: The Creative Economy Ministry invites Jakarta brands to join WCCE 2026 with a “WCCE identity” requirement, aiming to expand global delegate access. Infrastructure in Papua: The government highlights road upgrades under the IJD program, including the completed Skory–Puay section and bridge repairs, to improve connectivity and local economic activity. Low-Carbon Aquaculture: Planning Ministry promotes low-carbon aquaculture to help Indonesian seafood—especially tilapia—win premium export markets through sustainability and traceability. Banking Sector Roadmap: OJK unveils five priorities for Indonesia’s banking sector through 2030, signaling a policy direction for the financial industry.

EU Trade Talks: Indonesia is pushing to fast-track the Indonesia–EU Comprehensive Economic Partnership Agreement (I-EU CEPA) before the EU’s GSP expires in 2027, seeking smoother Council approval and market access for palm oil derivatives, footwear, textiles and fishery products. G20 Stance on Food: At the G20 Trade Ministers’ Meeting, Indonesia and other members rejected using food as geopolitical pressure, stressing trade cooperation on excess capacity, forced labor and WTO MFN issues. Digital Rights & Telecom Compliance: Indonesia’s communications ministry says some mobile data quota packages still only notify users about remaining quota expiry, after a Constitutional Court ruling—clarifications were held with Telkomsel, Indosat and XLSmart. Road Safety Oversight: The transport ministry is tightening safety management for public transport operators and stepping up checks against overloaded vehicles to cut accidents and fatalities. Tourism & Exports: The tourism ministry is advancing gastronomy tourism via WIG 2026, aiming to turn culinary heritage into travel demand and local economic benefits. Aquaculture for Premium Markets: Bappenas is promoting low-carbon aquaculture to help Indonesian seafood, especially tilapia, regain competitiveness in premium export markets like the US and Canada. Jakarta Governance: Jakarta City Hall opened more access through the Namu Balai Kota program, expanding public-facing services beyond paperwork. Education Innovation: The National Student Research Olympiad (OPSI) saw registrants jump to 39,300, up 47% year-on-year, as schools push research-based problem framing. Policy & Politics: Businesses warn that new special tax refund audits could delay cash flow, while lawmakers debate raising the electoral threshold for 2029.

Indonesia Consumer Shift: As purchasing power tightens, Indonesians are still buying beauty and personal care—but they’re trading down on brands and sizes, and buying less often while chasing better value per gram/ml. Regional Trade & Investment: A new EU-ASEAN sentiment snapshot puts Vietnam as Europe’s top ASEAN expansion target, with Indonesia next, as firms seek growth and supply-chain resilience but flag regulatory complexity. Oil & Energy Watch: OPEC+ has delayed its 2027 oil capacity review to mid-November after war-related disruptions, which could reshape future production baselines. Banking Policy: OJK unveiled five priorities for Indonesia’s banking sector through 2030, signaling a longer runway for regulation and supervision. IDX Corporate Move: Danantara says it may buy up to a 10% stake in the Indonesia Stock Exchange as part of demutualization plans. Downstreaming Politics: Businesses urge policy continuity after Prabowo reshuffled economic posts, with downstreaming and energy transition coordination now more central. Trade Enforcement: Indonesia police arrested suspects over alleged illegal import of used aircraft engines worth about Rp30bn, pointing to missing documents and trade-law violations. Climate & Risk: El Niño-linked impacts continue to raise flood and drought risks, while regional haze from Indonesia’s fires remains a major economic and health headache.

Presidential Appointments: President Prabowo swore in 26 members of the Presidential Advisory Council (Wantimpres), including women’s rights activist Sinta Nuriyah, Quran scholar M. Quraish Shihab, and political analyst Rocky Gerung, as part of a broader cabinet reshuffle push. Trade & Industry: Indonesia reported August export growth, with total exports rising 6.72% y/y to US$26.61bn, led by a 12.48% jump in manufacturing/processing exports, while the new Industry Minister Muhammad Sarmuji pledged continuity plus fresh industrial acceleration. Commodity Oversight: Danantara Sumberdaya Indonesia (DSI) began a pilot for its National Data Intelligence (NADI) platform to monitor palm oil, coal and ferroalloys exports and improve price transparency and prevent leakage. Food Policy: A Constitutional Court ruling backing color-coded nutrition labels for sugar, salt and fat drew support from consumer groups, with calls for an evidence-based system via Health Ministry and BPOM. Environment & Risk: El Niño-linked drought and peatland degradation are worsening water shortages in Borneo, while Indonesia’s wildfires are intensifying and disrupting haze across the region. Compliance in Fisheries: ISSF suspended tuna processor PT Aneka Tuna Indonesia over major non-conformance on species and capture-area labeling, raising pressure on traceability standards. Regional Security & Markets: Asian stocks slipped as oil prices and bond yields spiked on rate-hike expectations, with investors watching US jobs data. Transport Safety: Indonesia named four suspects in the Sept. 13 Java Sea ferry capsizing, with 80 deaths confirmed and 55 still missing.

Manufacturing Momentum: Indonesia’s manufacturing PMI rebounded into expansion in September (52.4), led by faster new orders and export demand, with output and hiring rising. Trade Balance: The trade surplus widened to US$3.55bn in August as manufactured exports and key commodities like CPO and coal grew, while coffee exports fell. Inflation Watch: September inflation ticked up to 3.28% y/y, driven mainly by food prices (chilies, chicken, rice, eggs), adding pressure on Bank Indonesia. Labor Policy Risk: Apindo warned that a more rigid manpower protection bill could raise business costs and deter investment, urging a balance between worker protection and job creation. Climate & Food Security: Experts urged fire risk maps for food estates after reports showed large burned areas, including in Merauke, raising alarms for Indonesia’s food project design. Regional Haze: Legal recourse for cross-border haze remains limited, with Malaysia and Singapore facing hurdles in pursuing cases. Defense & Maritime Presence: Indonesia commissioned the former Italian carrier KRI Sriwijaya to strengthen presence near the Malacca Strait, with costs tied to transfer and refurbishment. Digital Business Leadership: Meta named Dhruv Vohra to lead Southeast Asia business, including Indonesia, with a push for AI-enabled growth for advertisers. Energy Transition Tech: Siemens Energy will supply battery systems for Marco Polo Marine’s CSOV Plus being built in Batam, supporting hybrid and offshore operations.

Cabinet Reshuffle: President Prabowo replaces Foreign Minister Sugiono with career diplomat Arrmanatha Nasir and reshuffles other key posts, including naming Bahlil Lahadalia as Coordinating Minister for Downstreaming and Energy Transition, as Indonesia seeks policy stability after recent economic leadership changes. Trade & Growth Signals: Indonesia’s trade surplus widened to $3.55bn in August, driven by non-oil and gas gains, while the Jan-Aug surplus reached $7.25bn. Digital Economy & Data Centers: West Java’s governor halts a Singapore-owned data centre project in Jatiluhur over permit and environmental assessment issues, highlighting growing local pushback on data centre expansion. Social Protection Rollout: The government will activate 480 SPPGs kitchens for the Free Nutritious Meals (MBG) program across 3T regions starting Oct. 2, targeting areas with high stunting. Regional Climate Pressure: Haze from Indonesian wildfires continues disrupting flights in Palangka Raya as visibility drops, while legal recourse for affected neighbors remains limited. Energy & Investment: Inpex buys 50% stakes in BP-operated Agung I and II offshore blocks in eastern Java, expanding exploration acreage. Business & Media: Meta appoints Dhruv Vohra to lead its Southeast Asia business, covering Indonesia and other regional markets. Food & Tourism: Wonderful Indonesia Gastronomy 2026 spotlights local culinary heritage in Solo and Yogyakarta, while Disney+ and Vidio launch a subscription bundle in Indonesia.