AGP Executive Report

Indonesia–China Strategic Push: President Prabowo met Chinese FM Wang Yi and Defense Minister Dong Jun in Jakarta, praising the 2+2 and Comprehensive Strategic Dialogue and welcoming more Chinese investment while promising a business-friendly environment. Trade & Security Agenda: Indonesia and China agreed to deepen trade beyond $167bn, expand manufacturing and local-currency financial cooperation, and accelerate talks on an East Sea Code of Conduct, alongside stepped-up defence ties. EU Trade Deal Momentum: Coordinating Minister Airlangga called the EU-CEPA a “game changer,” aiming for faster tariff cuts (about 90% to zero on effect) and more European investment. Capital Markets Watch: The IDX’s IHSG rose 1.93% to 6,525 for the week, with higher trading activity and foreign buying on Friday. Creative Economy Jobs: Indonesia’s creative economy is framed as a jobs engine for Gen Z and millennials, with 82% of the unemployed in that group and 1–1.5m entering the sector annually. MSME Identity & Tech: Bank Indonesia urged young MSME players to innovate with technology without abandoning cultural roots. Disaster Logistics: BNPB airlifted nearly 778 tons of quake relief to East Nusa Tenggara, using both military and commercial transport. Geopolitics in the Region: A coalition of Arab and Islamic states, including Indonesia, condemned Israel’s E1 settlement plan and urged sanctions.

Indonesia–EU Trade: Indonesia’s IEU-CEPA is set to deliver the country’s highest tariff commitments, with 98% of tariff lines liberalized and zero tariffs for key exports like palm oil derivatives, textiles, footwear and rubber, while Indonesia cuts duties on major EU goods including wood pulp, aircraft components and fertilizers. Central Banking & Payments: Bank Indonesia launched the domestic Indonesian Credit Card (KKI) for retail QRIS-linked use, but Jakartans appear lukewarm due to its domestic-only limitation and lack of overseas transaction convenience. Bilateral Security & Maritime: China and Indonesia reaffirmed plans to finalize the South China Sea Code of Conduct under ASEAN centrality, while also expanding defense and law-enforcement cooperation through more regular TNI–PLA engagement. Gold Market Finance: Indonesia’s “gold bank” ecosystem is turning idle bullion into productive banking assets, managing about 153–180 tons valued around Rp360 trillion, with gold ETFs and derivatives seen as catalysts for further growth. Tech & Skills Gap: A new look at Southeast Asia’s digital boom flags a widening mismatch between fast tech adoption and slower progress on skills, affordability, infrastructure and trust. Global Markets: Wall Street closed the week higher as Treasury yields stabilized, lifting the Dow and S&P 500 while Nasdaq also gained. Regional Politics: A coalition of Muslim-majority countries, including Indonesia, condemned Israel’s E1 settlement plan as a threat to Palestinian contiguity and a dangerous escalation.

NTT Earthquake Response: Vice President Gibran pledged continued aid delivery for East Nusa Tenggara quake victims, including those outside evacuation centers, while urging residents to register for housing assistance and checking medical tents and shelter conditions. Illegal Fishing Crackdown: Pacific island authorities detained Chinese and Indonesian boats in a regional operation targeting illegal fishing, warning the activity threatens tuna stocks and island economies. Wildfire Management in Kalimantan: Indonesia said it is treating Kalimantan wildfires as a priority after hotspots rose, deploying helicopters, water-bombing, and thousands of personnel across key provinces while also pushing drilled wells to speed firefighting water access. Air Quality Crisis: Palangka Raya’s air quality hit hazardous levels as haze from peatland fires spread, with officials urging businesses and communities to report fires early. Indonesia–EU Trade Push: Indonesia targets an October signing for the IEU-CEPA, aiming to bridge the gap as EU tariff preferences expire, with talks also highlighting EU investor interest in renewables, digital, agriculture, and EV downstreaming. Indonesia–China Strategic Pivot: Indonesia and China launched a new Comprehensive Strategic Dialogue in Jakarta, agreeing to expand trade beyond $167bn, deepen defense cooperation, and coordinate on minerals, energy, AI, satellites, and fisheries. EV Policy Watch: The electric motorcycle industry warned that cutting purchase incentives from Rp7m to Rp3m could slow adoption, stressing the need for regulatory certainty and faster disbursement. Trade Advantage for Seaweed: Indonesia said seaweed and agar-agar gained US market access after exemption from an extra Section 301 tariff, improving competitiveness versus other exporters. Corporate Deal: Chandra Asri agreed to buy Cycle & Carriage’s auto businesses in Singapore and Malaysia, signaling further regional expansion.

Indonesia Earthquake Response: Grocery stores and gas stations reopened in Flores after the 7.7 quake killed at least 70 and injured nearly 1,200; over 40,000 people remain in tents and shelters, while local governments resumed operations to speed recovery. Creative Economy Push: Indonesia’s Creative Economy Ministry is partnering with Indonesia Open Network (ION) to expand global digital market access for creators, covering cross-border trade, financing, IP protection and AI integration. ASEAN Trade & Investment: Indonesia’s investment minister said ties with Singapore will boost ASEAN resilience, citing Singapore as Indonesia’s biggest FDI source across finance and human capital. El Niño & Food Risks: A record-strong El Niño is on track to intensify extreme weather and raise global food-price pressure, with Indonesia already facing dry-season wildfire impacts. Global Trade Shock: Black Sea grain disruptions from Russia-Ukraine attacks are tightening wheat supplies and pushing Asian buyers to seek costlier alternatives. US-Iran Pressure Watch: Trump’s “Economic D-Day” campaign could disrupt oil and trade flows tied to Iran, with China highlighted as a key buyer facing added pressure. Regulation for AI Startups: A Southeast Asia policy scan says Indonesia is still mixing national guidance with sector rules, while Singapore is seen as the closest benchmark for AI readiness.

Indonesia–Australia/New Zealand Diplomacy: Foreign Minister Sugiono will visit Australia and New Zealand next week, starting in Melbourne for the 10th Indonesia-Australia 2+2 on Aug 26, then heading to Auckland for the Indonesia–New Zealand JMC on Aug 28, with talks spanning defense, maritime security, supply-chain continuity and regional security. Food & Drug Supervision Talent: BPOM is partnering with the University of the Republic of Indonesia to build AI-focused vocational training and decision-simulation labs to strengthen drug and food oversight as threats and tech evolve. Bond Market Liquidity: Finance Minister Purbaya said the US Treasury’s expanded government bond buybacks validate Indonesia’s earlier yield-containment approach, aiming to preserve market liquidity and stability. Energy Subsidy Targeting: Indonesia is considering restricting subsidized fuel purchases for households in income deciles 9–10, with potential savings of about 10% of the energy subsidy budget. Solar Push for Industry: Coordinating Minister Airlangga flagged solar as a priority for greener industrial development, including de-dieselization on small islands and a push toward large-scale solar capacity. Payments Infrastructure: Bank Indonesia launched a domestic credit card for retail use, linking it to QRIS and rolling out with major banks as “first movers.” Disaster & Relief: A 7.7 quake in East Nusa Tenggara has left over 80,000 people homeless and nearly 29,000 homes damaged, with government aid allocations announced. Corporate Moves: Sefas Group agreed to take full ownership of Shell’s Indonesia fuel retail business, while Apexindo won a two-year Pertamina rig contract worth about $74.3m. Business & Trade Links: Indonesia is exploring a Batam–Johor truck-and-cargo ferry by mid-2027, but Malaysia says details still need finalization.

El Niño & Commodities: Malaysia’s palm oil futures hit a 4.5-month high as traders price in possible El Niño-linked supply disruption in 2027, keeping the market in contango and supporting firmer forward prices. Indonesia Policy & Energy: Finance Minister Purbaya signals the electric motorcycle subsidy will restart in September, pending the issuance of the legal regulation. Central Banking: Bank Indonesia’s interim governor Destry Damayanti kept the BI Rate at 5.75%, warning of “higher for longer” global rates and the impact of US Treasury yields on Indonesia. Trade & Agriculture: The government allowed 108,000MT of sugar exports (from imported stocks), a move that could lift local prices. Digital Payments: China expands its Authorized Economic Operator (AEO) coverage and mutual recognition to streamline cross-border trade for more firms, including smaller businesses. Regional Business & Mobility: South Korea will test Arctic shipping to Europe, a route that could reshape logistics but may raise diplomatic friction due to Russia permits.

Foreign Capital Flows: Bank Indonesia said foreign portfolio investors logged US$1.8b net inflows in Q3 2026 through Aug. 14, supported by government bond issuance and Bank Indonesia Rupiah Securities (SRBI), while reserves stayed at US$145.3b (about 5.5 months of imports). Rupiah & Policy: The rupiah strengthened to Rp17,855 per US$ on Aug. 18 after BI stabilization measures, as officials stressed external resilience amid global volatility. Mineral Pricing Push: Indonesia is moving to control natural resource commodity prices via a Strategic Mineral and Commodities Exchange planned to start Jan. 1, 2027, aiming to reduce reliance on overseas benchmarks. Gig Economy Regulation: The government is preparing rules to set fares and delivery fees for on-demand services, with a presidential regulation expected in September after consultations with driver groups and platforms. Defense Industrialization: Indonesia’s defense ministry highlighted progress toward alutsista self-reliance after GMF completed heavy maintenance for the Air Force’s C-130H Hercules, supported by a technology transfer with Lockheed Martin. Palm Oil Outlook: Malaysia’s MPOC expects CPO prices to stay firm above RM4,600/ton in September, citing tighter supply and geopolitical disruptions, while noting downside risks from easing logistics and energy prices. SeaBank Results: SeaBank Indonesia’s Q2 net profit more than tripled to 373.7b rupiah as lending income and fee revenue rose, despite higher impairment charges. Public Space Security: BNPT and Australia are drafting an ASEAN training curriculum to strengthen security for crowded public spaces and critical infrastructure. Disaster Response: Indonesia is mobilizing full resources to fast-track recovery after the NTT earthquake, with emergency response and aid efforts continuing.

Indonesia Earthquake Response: Apple will donate to Indonesia’s earthquake relief after the 7.7-magnitude quake, while Indonesian officials and communities are still coordinating support for affected families, including migrant workers abroad. External Debt Watch: Bank Indonesia reported Indonesia’s external debt rose 4.4% y/y to US$453.4bn in Q2 2026, driven by higher public external debt as government securities attracted capital inflows. Energy & Minerals Enforcement: The Energy and Mineral Resources Ministry says it will trace illegal gold smuggling from upstream miners to downstream distributors, including identifying financiers and checking permit legality after customs actions at Soekarno-Hatta. Digital Economy & Trade: A report says ASEAN’s Digital Economy Framework Agreement offers India a blueprint for deeper digital ties, but warns against folding it into goods-focused AITIGA negotiations late in the process. Labour Policy: Indonesia’s finance minister says moving PPPK teachers into central government status won’t disrupt the 2027 deficit target, which remains at 2.4% of GDP. Global Markets: Reuters flagged a broader bond-market selloff pushing long-dated yields to multi-decade highs, pressuring stocks and complicating central bank decisions.

External Debt Watch: Indonesia’s external debt rose 4.4% y/y to US$453.4bn in Q2 2026, driven by higher public external debt as government borrowing grew to US$216.3bn, with capital inflows into SBN supporting investor confidence. Bureaucracy Cleanup: The agriculture minister dismissed 14 ministry officials over alleged financial irregularities involving billions of rupiah, with deactivated staff to be reinstated only if investigations clear them. Disaster Response: Bali earmarked Rp150m for initial relief supplies to earthquake-hit East Nusa Tenggara, while Indonesia’s NTT death toll was reported at 68 as rescue teams continue searches. Tourism Demand Shift: Indonesia’s Tourism Ministry is pushing domestic premium travel via a Luxury Business Networking forum linking 11 tourism firms with at least 25 buyers, banking on rising local trips. Finance Sector Move: UOB appointed Tan Choon Hin as head of ASEAN and Greater China, aiming to deepen cross-border business and FDI advisory support. Mining & Commodities Strategy: MIND ID said a national mineral stockpile could help manage strategic supply risks by controlling when to release and store key raw materials. Regional Business: Indonesia also seeks deeper trade and farm-tech ties with Tanzania to diversify imports amid geopolitical uncertainty.

Banking & Payments: Bank Indonesia launched the Indonesian Credit Card (KKI) for individuals and businesses, enabling credit payments via QRIS Scan/Tap and issued by eight banks (including CIMB Niaga), as BI cites QRIS scale and aims to deepen Indonesia’s inclusive digital economy. Digital Economy & Youth Safety: Discord suspended livestreams in Brazil after regulators raised child-safety concerns, adding to the growing policy push on online protections for minors that also touches Indonesia’s regulatory agenda. Disaster & Resilience: Indonesia marked Independence Day while recovery continues after the 7.7-magnitude Flores earthquake, with the death toll reported at least 68 and thousands displaced; a 14-day emergency was declared in the affected province. Trade & Geopolitics: The White House flagged a “Great Transshipment Scam” tied to Chinese-origin goods and is developing an AI enforcement tool, while China, the EU and Singapore pushed back—raising compliance and logistics risks for regional trade flows. Energy & Climate Risks: El Niño is intensifying fast, with warnings it could disrupt rainfall and food production and feed into global food-inflation risks into 2027. Business & Investment Outlook: A data-center pipeline boom in Asia-Pacific hit a record 26.5 GW in H1 2026, but vacancy rates falling and pre-leasing tightening supply highlight capacity and power constraints for AI growth.

Disaster Finance: Indonesia keeps a Rp5 trillion disaster-management liquid fund ready, with Finance Minister Purbaya Yudhi Sadewa saying extra money can be added quickly if BNPB requests it, while BNPB also has about Rp500 billion on standby for emergencies. Jakarta Economy: Jakarta Governor Pramono Anung said the capital’s economy stayed resilient, growing 5.52% in Q2 2026 and contributing 16.32% to national GDP, with inflation held at 2.5%. Banking & Payments: Bank Indonesia extended a domestic credit card payment system (KKI) for individuals, challenging Visa and Mastercard’s dominance in Indonesia. Banking Leadership: DBS announced Sebastian Paredes will retire as Hong Kong CEO in March 2027, with Ng Sier Han to succeed him. AI & Work: Transform Talent 2026 highlighted that workforce change in Indonesia depends less on tools and more on inclusion, fair flexibility, and using AI to boost employees’ best work. Corporate Restructuring: Modernland Realty is seeking a second restructuring of a US$274.5m bond, proposing maturity extensions and a switch toward perpetual securities. Food & Supply Chain Investment: JBS and Indonesia’s sovereign wealth fund arm Danantara will form a meat-processing JV, with DIM committing US$2.5bn for a 25% stake and potential additional debt financing. Trade & Compliance: EU’s Packaging and Packaging Waste Regulation starts applying, raising compliance pressure for ASEAN food exporters including Indonesia. Regional Business: Cambodia’s ASEAN trade rose 20.7% in Jan–Jul 2026, with Indonesia among its top partners.

Commodity Governance: President Prabowo says a new state export firm will monitor key commodity shipments (palm oil, coal, ferroalloys) to curb under-invoicing, citing $5bn in potential export-proceeds gaps and reporting it has overseen $14bn in exports across 6,500+ monitored transactions in its first two months. Trade Enforcement: A White House report flags a “Great Transshipment Scam,” placing Indonesia among countries with significant integration with China and warning the US will target tariff-dodging via third territories and false origin claims. Minerals & Markets: Indonesia’s 2026 nickel ore output cap (about 250–260mn tonnes) is reshaping the 2026 outlook, with analysts warning of a possible feedstock squeeze for expanding smelters even as refined inventories remain high. Disaster Response: Indonesia declared a 14-day emergency response after a deadly 7.7 quake on Flores, with PLN restoring power and thousands awaiting aid as rescue efforts continue. EV Retail Expansion: VinFast and Indonesia’s Gowa Motor Group sign an MoU to build VinFast’s dealership network, targeting at least 30 showrooms and service centres. Health Supply Risk: Philippines procurement of TB drugs faces an indefinite freeze amid allegations of corruption and FX-related supplier pullouts, worsening an existing drug shortage. Digital Tax Compliance: The Philippines’ e-invoicing rollout nears (Dec 31, 2026), but many businesses still lack clear guidance on structured invoice generation and compliance steps.

Rail Fares Cut: KCIC is selling Whoosh tickets from Rp8,800 for the Jakarta–Karawang route during the Aug. 7–17 Independence Day holiday, with limited daily flash sales and Traveloka coupons. Disaster Response: Indonesia declared a 14-day emergency response in East Nusa Tenggara after the 7.7 quake on Flores, with thousands evacuated, hundreds of homes damaged, and fuel/LPG restoration underway. Energy Security: Pertamina Patra Niaga is gradually reopening Flores gas stations (32 of 52 operating) and restoring fuel distribution while monitoring damaged sites. Aerospace for Healthcare: BRIN is refining the N219 and amphibious N219A ecosystem for Prabowo’s flying ambulance plan, alongside long-endurance drone development for remote missions. EV Materials Push: BRIN is developing artificial graphite from coal waste for lithium-ion batteries to support Indonesia’s EV ecosystem. Trade & Compliance: Indonesia’s OJK is preparing rules for the Strategic Mineral and Commodity Exchange (BMKS), targeting operations on Jan. 1, 2027. MSME Export Drive: Bangka Belitung’s Muntok white pepper push targets 1,200 restaurants in 63 countries via the SAPA UMKM platform. Regional Policy Tension: The US flagged Singapore and other hubs as potential routes for “Great Transshipment Scam” goods, prompting Singapore’s trade ministry to stress strict origin declarations. Fraud Crackdown: India’s DRI dismantled an areca nut network misdeclaring Southeast Asian origin as Bangladesh to claim SAFTA duty benefits, with potential losses above Rs 2,500 crore. Independence Day Commerce: Jakarta’s Monas will host Pesta Rakyat with 1,200 MSMEs and free food packages for an expected 600,000 visitors.

Earthquake Response: A 7.7-magnitude quake off Flores island has killed at least 47 people, with rescuers still searching for survivors amid damaged homes, schools and health facilities; a tsunami warning was lifted and aid is being rushed to temporary shelters. Energy Transition: President Prabowo says Indonesia will add 30 GW of solar capacity and phase out 13 GW of diesel-fired power in 2026, aiming to cut fuel imports and improve electricity access for remote areas. Indonesia Budget Watch: The 2027 Draft State Budget targets 6% growth and 2.5% inflation, with the rupiah pegged at 17,500 per US dollar and a 2.4% deficit plan, as Finance Minister Purbaya flags continued global uncertainty. Investment & Finance Hub: Indonesia is moving ahead with plans for an Indonesia Financial and Investment Center, with Jakarta and Bali set to host IIFC-branded estates first, focused on investment, fintech, and dispute resolution. Trade & Commodities: Indonesia exported 8.2 tons of Muntok white pepper to the Netherlands, showing how MSME clusters are being plugged into international supply chains via major ports. Digital Payments/Policy: BRICS is discussing linking instant payments and digital currencies to lower cross-border transaction costs, with India pushing the agenda as chair. Tech Regulation: Google is rolling out stricter Android sideloading rules in Indonesia and other markets, requiring developer verification to curb scam-prone apps.

Indonesia Quake Response: A 7.7-magnitude earthquake off Flores has killed at least 38 people, injured dozens, and triggered mass evacuations as a tsunami warning was later lifted; rescuers face landslides and damaged roads while PLN and Pertamina restore power and fuel distribution in East Nusa Tenggara. Minerals Market Rules: Indonesia is pushing to finish regulations for its planned Mineral and Strategic Commodities Exchange in 2026, aiming to start operations on Jan 1, 2027, with the exchange set to publish domestic reference prices and reduce reliance on overseas benchmarks. Budget & Growth Targets: President Prabowo’s 2027 draft budget targets 5.8–6% growth with a 2.40% deficit, alongside higher spending for MSMEs, village cooperatives, food security and the free nutritious meals program; a Shadow Cabinet group says the assumptions are overly optimistic. SOE Governance Push: The government says Prabowo’s talk of possible amnesty for state-owned enterprise executives is meant to spur governance reform, not to open an amnesty process yet. Trade Compliance Watch: Singapore’s MTI says firms transshipping through the country must accurately declare origin after a US report flagged tariff-evasion risks, while Malaysia’s PKFZ rejected claims that Chinese-linked cargo presence alone proves fraud. Tourism Demand: Indonesia targets more Australian visitors beyond Bali and Jakarta under its “Go Beyond Ordinary” campaign, aiming for 2.23 million Australian arrivals in 2026.

Minerals & Markets: President Prabowo said Indonesia will set up a Strategic Mineral and Commodities Exchange by early 2027, aiming to bring producers, farmers, exporters, buyers and investors onto a single, tightly regulated trading platform as a next step after the single-gate export policy. Budget & Growth: Indonesia proposed Rp4.09 quadrillion for 2027, targeting 6.0% growth and a 2.40% GDP deficit, with priorities including food sovereignty, energy/water self-sufficiency, education, health, downstreaming and industrialisation. AI Strategy: Indonesia outlined a “full-stack” AI development plan in Yogyakarta built on five layers—energy, infrastructure, chips, talent and applications—so the country can contribute beyond software adoption. Energy & Renewables: Global data showed solar overtook wind in electricity generation for the first time in 2025, with renewables supplying about one-third of world power. Subsea LNG: Bidders are competing for major subsea packages for Inpex’s Abadi LNG project, with tenders under way ahead of a mid-2027 final investment decision. Regional Security: China and Indonesia completed a naval exercise east of Taiwan, drawing renewed US and Taiwan attention. Trade Risks: A US report alleges a “shadow transshipment network” helping China evade tariffs, flagging multiple countries including Indonesia. Data Center Cooling: Malaysia is developing palm oil-based immersion cooling fluid to cut water and energy use in data centers.