AGP Executive Report

Cyber Security & Talent: Indonesia’s Deputy Communications Minister Nezar Patria urged urgent prep for “harvest now, decrypt later” risks as quantum and AI threats grow, pushing post-quantum cryptography and a “security by design” approach while warning the country faces a digital talent gap. EV & Manufacturing: Beijing Automobile Works launched in Indonesia at GIIAS with right-hand-drive EVs (M8, D5, T10 Pro) and plans local knock-down assembly in West Java to serve Southeast Asia. Energy Trade: Singapore’s EMA granted conditional approvals for two firms to import 900 MW of Malaysian solar-plus-battery power, with operations targeted for around 2029 and a possible second interconnection up to 2 GW. Digital Economy & Creative Industry: Indonesia rolled out a “3C” framework (connectivity, catalyst, competency) to grow the game industry, while Sea’s Shopee adds OpenAI-backed AI commerce features across the region. Defense Industry: Indonesia began domestic construction of its first Scorpène Evolved submarine at PT PAL, a step toward building a local defense industrial ecosystem. Food Security: Indonesia said rice output and government reserves are improving its food security outlook despite El Niño risks. Maritime & Compliance: New research warns illegal industrial fishing persists due to weak governance and lagging enforcement, undermining livelihoods and seafood markets. Environment & Disruption: Mount Bromo was closed after a wildfire burned about 520 hectares, with firefighting and access restrictions in place.

Central Banking & Markets: President Prabowo nominates acting Bank Indonesia governor Destry Damayanti as the sole candidate after Perry Warjiyo’s resignation, with parliament set to confirm—watch this for signals on policy independence. Workforce & Industry Matching: Indonesia’s Manpower Ministry upgrades its Labor Market Information System to connect job seekers and employers in real time, aiming to close skills gaps with industry demand. Research-to-Policy Push: BRIN and the Finance Ministry launch “Prima” to fund 177 applied research projects so ministries base decisions on science-driven findings. Energy & SOE Restructuring: Prabowo orders Pertamina and PLN to streamline subsidiaries and layers to speed decisions, alongside progress updates on biodiesel B50 and bioethanol readiness. Agri-Trade & Food Security: Indonesia urges BRICS to expand industrial cooperation into agriculture and says food self-sufficiency stays open to trade with predictable rules. Commodities & Downstreaming: Palm oil futures hit a 4-month high, while Indonesia discusses a minimum import price idea to protect India’s float glass industry from cheap imports. Capital Markets: IDX launches a Sharia-compliant gold ETF, adding a new safe-haven option for investors. Manufacturing & Services: Baker Hughes wins subsea systems work for Indonesia’s Kutei Northern Hub LNG push; Instinct Bio teams with PT PARVA CANDELA to develop Indonesia’s cosmetics market. Trade & Creative Exports: Indonesian art toys pull about US$1m in potential Seoul deals, showing growing IP-protected creative exports.

Indonesia–Thailand Trade: Indonesia and Thailand set a US$20B bilateral trade target by 2030 after a landmark Thai PM visit, with 1H 2026 trade already at US$9.8B—momentum suggests the goal is within reach. BRIN & Nuclear/AI Push: President Prabowo met BRIN researchers to showcase work in energy, food, water, waste and aerospace, with BRIN urging nuclear capability-building ahead of any future PLTN push. Energy Execution Gap: Wood Mackenzie warns Southeast Asia will deliver under one-third of planned gas power capacity by 2030, citing LNG, turbine and financing bottlenecks. Jakarta EV Momentum: Jakarta’s bus electrification is moving from trials to real Transjakarta corridors, with locally built e-buses scaling up. Container Freight: Drewry’s Intra-Asia Container Index ticked up to $970 per 40ft as Middle East uncertainty lifted most lanes. Textiles Sourcing: Yarn Expo Autumn 2026 expands the India Pavilion for traceable cotton and recycled/value-added yarns, signaling continued fiber-origin focus. CSR Spotlight: Indonesia Morowali Industrial Park won ISRA 2026 awards for economic empowerment, healthcare and education programs. Defense Exports Watch: Reports say BrahMos performance is driving new interest, with Indonesia among countries discussed for potential deals.

Manufacturing & Trade: JBS Australia and Danantara have struck a $3.5b stake deal that expands JBS’s Indonesia protein push, aiming to scale acquisitions and greenfield growth across Indonesia, Australia, New Zealand and Southeast Asia. Energy & Waste: Indonesia is promoting pyrolysis alongside waste-to-energy plants, saying WtE capacity will cover only about 22% of waste, while pyrolysis could convert landfill waste into diesel-equivalent fuel and tackle roughly 20% of the waste problem. Defense & Shipbuilding: Indonesia has begun domestic construction of its first Scorpène Evolved submarine at PT PAL in Surabaya, targeting about eight years for delivery and marking a major ASEAN push toward local submarine building. Digital Economy & Games: The communications ministry adopted a “3C” framework (connectivity, catalyst, competency) to grow Indonesia’s game industry, while also preparing to reactivate the Indonesia Game Rating System later this year after a Steam-related suspension. Regional Policy: Indonesia backed BRICS trade outcomes in Jaipur, stressing fair, rule-based trade, MSME financing access and supply-chain resilience. Climate Risk: S&P warns El Nino-driven weather disruption could lift food inflation and strain agriculture and hydropower across Indonesia and the wider Asia-Pacific. Tourism & Services: Indonesia is seeking visa-on-arrival access for Bangladeshi ordinary passport holders to boost tourism and aviation ties.

Indonesia-China Rail Rescue: Indonesia will take over a controlling 60% stake in the USD 7.3bn China-funded Whoosh high-speed rail operator PT KCIC, with a state agency handling loan repayment and completion targeted by mid-September, after land and cost issues. Defense Industry Push: PT PAL cut the first steel for Indonesia’s first Scorpène Evolved submarine under the Scorpène Republik Indonesia program, moving from preparation to hull fabrication with technology partnership from Naval Group. BRICS Trade & Shipping: BRICS trade ministers met in Jaipur to back stronger trade links and MSME support, while UAE’s Thani Al Zeyoudi urged reopening the Strait of Hormuz amid attacks on commercial shipping. BRICS Culture & Heritage Tech: BRICS culture ministers adopted the Bhopal Declaration, boosting cultural and creative industries cooperation and exploring AI-based tools for provenance research and heritage restitution. Aviation Safety Controls: Malaysia Airlines will extend mandatory drug screening to all active pilots and cabin crew after an arrest tied to Indonesia, with Malaysia’s anti-drug agency backing the zero-tolerance approach. Food Price Pressure: UN/FAO data shows global food prices edged up in July as heatwaves and energy costs lifted cereal, sugar and vegetable oil prices. Indonesia-India Cultural Ties: Indonesia and India discussed restoring Prambanan temples and repatriation talks for the Pucangan inscription, alongside broader cultural exchange plans.

Aviation Security: Malaysia Aviation Group is making drug screening compulsory for 1,260 Malaysia Airlines pilots and cabin crew after an arrest in Indonesia, with Indonesia’s National Anti-Drug Agency backing the move and offering cooperation on detection, workplace programs, and cross-agency info sharing. ASEAN Unity: ASEAN leaders marked ASEAN Day in Jakarta, stressing unity and cooperation to handle geopolitical and economic shocks, with energy and food security highlighted as priorities. AI & Industry: Indonesia’s communications ministry says an Indosat-backed AI factory will strengthen the country’s position as a regional AI hub and pull in high-value investment. Maritime & Defense Manufacturing: PT PAL Indonesia has started building a Scorpene-class submarine for the Navy, targeting completion within eight years. Trade & MSMEs: Indonesia’s trade minister urged BRICS members to deepen cooperation and support MSMEs via open, rules-based trade and better financing access. Education Push: Indonesia expands free Sekolah Rakyat facilities to curb school dropouts, with 43,000 street children and dropouts already back in education. Cyber Risk: CISA added a critical Progress Kemp LoadMaster flaw to its KEV catalog after reports of active exploitation, raising urgency for operators to patch. Auto Supply Chains: Indonesia’s finance minister publicly challenged Toyota to shift its regional production base from Thailand to Indonesia with sweeping incentives.

AI & Education Push: President Prabowo told BRIN researchers Indonesia must master science and tech to accelerate development, backing a nationwide gifted-student school network (IB curriculum) and BRIN’s six priority tech areas from semiconductors and AI to nuclear and space. Protein & Capital Markets: JBS will form a joint venture with Danantara, the Indonesian sovereign wealth fund arm, investing $2.5bn to back protein production across Indonesia, Southeast Asia, Australia and New Zealand, with plans for future IPO options. Food Security & Climate Risk: Bappenas says coffee and cocoa support millions of livelihoods, launching a parametric insurance push with Jasindo and ISF to help farmers manage climate shocks and improve productivity, traceability and market access. Trade Finance for MSMEs: BRICS trade ministers in Jaipur agreed to study an invoice discounting mechanism and cash-flow based credit rules for export-focused MSMEs, aiming to narrow a $2.5tn global trade finance gap. Green Industry & Infrastructure: The Social Affairs Ministry formed a team to speed permanent Sekolah Rakyat building delivery after land admin delays threatened closures. Global Food Prices: FAO reported July food prices edged up on higher cereals, sugar and vegetable oils, with palm oil gains tied to biodiesel demand in Indonesia.

Aviation Safety Crackdown: Malaysia Aviation Group (MAG) has started mandatory drug screening for all 1,260 Malaysia Airlines pilots after a Jakarta arrest tied to alleged ecstasy smuggling; pilots who miss the Aug 15 deadline won’t fly, and MAG says it will later extend checks to cabin crew. Energy Trade: Singapore’s EMA granted conditional approvals for two projects to import a total of 900MW of low-carbon power from Peninsular Malaysia (solar plus battery storage), targeting commercial operations around 2029. Mining & Industry: Indonesia resumed mineral exports worth about US$124m after resolving rare-earth rules disputes, clearing shipments of alumina products from West Kalimantan. Downstream Debate: Indonesia’s DEN chief Luhut Pandjaitan urged that downstream benefits be felt fairly by producing regions, with stronger local entrepreneur roles and tougher environmental and workplace safety. Food & Commodities: FAO said global food prices edged up in July, led by cereals, sugar and vegetable oils, while meat and dairy eased. Agri Supply Shock: Rising diesel costs and supply shortages are disrupting Southeast Asian palm harvesting, threatening smallholder output. Corporate Moves: JBS agreed a joint venture with Indonesia’s sovereign wealth fund arm to invest about US$2.5bn in protein production across Indonesia, Southeast Asia, Australia and New Zealand. Halal Trade: Indonesia’s BPJPH and Sweden’s SHC signed a mutual recognition deal to streamline halal certification for cross-border trade. Conservation Risk: A wildfire nearly reached an orangutan rehab center in West Kalimantan, underscoring how El Niño-linked fires are damaging both wildlife recovery and habitat restoration work.

AI Infrastructure Push: Ooredoo is scaling AI compute in Indonesia via a Zankore investment, aiming for 1 GW of NVIDIA DSX AI Factory capacity and betting Southeast Asia’s data-centre demand will grow about 3.5x by 2030, largely driven by AI workloads. Digital Connectivity for Industry: Google and Meta’s Echo subsea cable has landed in Singapore, advancing a route that links Singapore and Jakarta to the US via Guam—another step for faster cross-border data links for Indonesia’s growing tech and logistics needs. Climate-Smart Farming Finance: Mitti Labs raised $9.5M to expand water-efficient rice irrigation in Asia, including Indonesia and the Philippines, using AWD practices to cut water use and methane emissions while monetizing savings as carbon credits. Energy & Research Sovereignty: BRIN says Indonesia is building national tech capabilities across energy, food, health and aerospace, highlighting ANG (adsorbed natural gas) tech that could reduce LPG subsidy burdens by up to Rp26 trillion per year. El Niño Impacts on Food Inputs: Indonesia’s salt farmers in West Java are benefiting from El Niño drought conditions, while paddy farmers brace for heat-driven production risks. Policy Watch for Industry: The US Sec. 232 polysilicon results set a 15% tariff on imported solar components and minimum import prices, signaling higher costs for imported solar panels—relevant for Indonesia’s renewable supply chains.

Copper & Metals: Copper jumped to a six-month high as worries grew over tighter stocks and reduced concentrate supply after the DRC moved to ban copper concentrate exports, while COMEX premiums signaled near-term strain. EV Manufacturing Policy: Indonesia’s Industry Ministry says upcoming EV incentives will target high-value-added domestic products to strengthen local car and motorcycle ecosystems, with technical rules still being aligned with the Finance Ministry. Trade & Logistics: Liebherr delivered a mobile harbour crane to Patimban Global Gateway Terminal to kick off container operations and ease congestion near Jakarta, supporting phased capacity growth. Rail & State Control: Indonesia will take over a 60% stake in the China-funded Whoosh high-speed rail operator, aiming to finish the deal by mid-September as the project faces cost and land issues. E-commerce Tax: Indonesia will start collecting income tax from e-commerce sellers on Nov 1, refunding already collected amounts and re-selecting marketplaces after a second delay. Healthcare Tech: A Singapore-led cross-border team helped RSCM Jakarta complete Indonesia’s first successful implantation of the world’s smallest and lightest LVAD, marking a Southeast Asia first. Energy Innovation: BRIN will present Adsorbed Natural Gas (ANG) as an LPG alternative to President Prabowo, pitching it as a way to improve energy security. Regional Industry Links: East Java explored China shipbuilding and industry cooperation with Chinese naval and consulate delegates, aiming for tech transfer and maritime capacity building.

Indonesia–Saudi Investment Push: Indonesia and Saudi Arabia signed an MoU to boost direct foreign investment and cross-border capital flows, with Indonesia citing Saudi realized FDI of US$126.2m (2021–H1 2026) and both sides pointing to industrialization and Vision 2030 alignment. Indonesia Growth Watch: Statistics Indonesia reported 2Q 2026 GDP growth at 5.29% y/y, led by manufacturing and household consumption, with 1H 2026 growth at 5.45%. Energy Policy: The government guaranteed subsidized Pertalite prices stay fixed through Dec 2026, while non-subsidized fuels were adjusted and the B50 biodiesel rollout was framed as a hedge against global shocks. Aviation Security: Malaysia’s PDRM said it’s ready to strengthen aviation security by involving police in AVSEC teams, aiming to improve intelligence sharing and enforcement coordination. Maritime Safety: A South Korean containership helped rescue four sailors adrift in a life raft after a tugboat capsized in stormy conditions near the Riau Islands. Finance Signals: HSBC posted a 23% jump in first-half profit, driven by wealth management inflows, and said it plans share buybacks up to US$1b. Digital & Cyber Awareness: Kaspersky said APAC consumers are heavy digital users and more aware of cybercrime, with Indonesia among the higher-awareness markets. Global Shipping/Geopolitics: Iran and Oman agreed on new commercial shipping routes through the Strait of Hormuz, but Iran stressed the deal won’t end insecurity without US actions. Infrastructure in Jakarta: MRT Jakarta is investing over Rp300bn in the Dukuh Atas pedestrian deck to connect MRT, LRT, KRL and Transjakarta.

Indonesia GDP Watch: Indonesia’s Q2 2026 GDP grew 5.29% y/y, led by manufacturing (up 4.52%) and household consumption (up 5.06%), with growth also rising 3.73% q/q. Skills-First Jobs: The government is pushing a skills-first labor market to match fast-changing industry needs, with closer industry-government cooperation. Energy Security & Gas: Indonesia is expanding household natural gas networks, targeting 119,379 new connections in 2025-2026, and is preparing a long-term crude oil import contract with Russia to keep fuel stocks steady. Digital Infrastructure: CoreWeave is expanding into Indonesia with AI data centers totaling 360 MW of contracted IT power, aiming for 2028 operations. Food & Farming: A National Cassava Center was inaugurated to boost productivity and farmer welfare, as cassava prices have jumped sharply. Maritime Safety: A ferry fire off Madura raised alarms over maritime safety oversight after reports of weak evacuation guidance. Cross-Border Crime: Semarang deported four Chinese fugitives tied to a transnational “love scam,” warning Indonesia must not become a base for such networks. El Niño Risk: The WFP warns El Niño could push nearly 49 million more people into acute hunger risk by end-2027.

Biofuel Financing: Indonesia’s ESDM is preparing a dedicated funding scheme to cover the price gap for E10 bioethanol rollout, using reference prices for corn, cassava and sugarcane to stabilize farmer returns and protect domestic producers when crude prices fall. Palm Oil Downstreaming: The agriculture minister calls CPO downstreaming a “strategic weapon,” citing 7.32% growth in first-half 2026 CPO and derivative export values and pushing more processing to lift export value and farmer welfare. Energy & Shipping Risk: With Strait of Hormuz tensions still volatile, oil prices slid as markets weighed possible Iran-Oman steps, while shipping disruptions keep trade and logistics uncertainty in focus. Digital Child Safety: Indonesia removed about five million under-16 accounts from digital platforms under PP Tunas via a risk-based approach targeting high-risk features. AI Infrastructure Push: CoreWeave plans three Indonesia data centers totaling 360MW of AI computing capacity, aiming for operations in 2028. Automotive Investment Incentives: Finance Minister Purbaya signals incentives for Toyota if it relocates main vehicle production from Thailand to Indonesia and expands local supplier industries. Mining Human Capital: Nickel Industries and UNHAS welcomed a third scholarship cohort for Morowali students, funding 10 more undergraduates across mining and related fields.

EV Incentives Push: Finance Minister Purbaya says President Prabowo will unveil new EV stimuli in the next 2–3 weeks, including full luxury goods tax exemption and 40% VAT coverage for eligible pure EVs (likely excluding hybrids), aiming to boost downstreaming and domestic production. Auto Demand Snapshot: At GIIAS, Indonesia reported June car sales up 32.9% yoy and cited broader signals like cement sales and electricity consumption growth, reinforcing resilient household demand. Rare Earth Exports Unblocked: Indonesia clarified that rare earth “byproducts” in mineral shipments can be exported, easing port delays caused by unclear testing rules. Trade Platform for Manufacturers: Kadin launched “We Buy From Indonesia” to map Indonesian suppliers and connect them with global buyers, targeting more manufactured exports beyond commodities. Food Security Angle: Indonesia’s agriculture ministry points to an FAO forecast of lower global rice output and says Indonesia could export if domestic supply stays secure. El Niño Readiness: BMKG and planning officials outlined a cross-sector policy brief with four response clusters, including drought and fire prevention, as El Niño strengthens. Maritime Drills: SEACAT 2026 began in Singapore with 16 Indo-Pacific partner nations, expanding integrated maritime operations and senior leader coordination. Digital Infrastructure: A report warns Southeast Asia data centers must be planned like public infrastructure, with power and water as the key constraints.

Indonesia–Thailand Trade Push: Indonesia and Thailand adopted a Strategic Partnership Roadmap 2026–2030, targeting US$20 billion bilateral trade by 2030 and agreeing to hold their first Joint Trade Commission to cut barriers, while also expanding food security cooperation across agriculture, logistics, processing and supply chains. Aviation & Tourism Connectivity: New direct routes—Jakarta–Bangkok and Denpasar–Phuket—are set to boost people-to-people ties, with Thailand’s tourism authority and Indonesian carrier TransNusa backing the expansion, including wellness, cruise and MICE travel. Energy Transition Financing: Indonesia’s ESDM is preparing a financing scheme to bridge the cost gap for E10 bioethanol rollout, using reference prices for corn, cassava and sugarcane to protect farmers and domestic producers. Oil & Gas Mega-Project: Eni–Petronas JV cut first steel for the Kutei North Hub FPSO at Saipem’s Karimun yard, a major US$11.9B gas project aimed at start-up in Q4 2028. Maritime Security Watch: The ICC-IMB reports global piracy/armed robbery incidents fell in H1 2026, but risk is shifting toward more volatile, high-impact hotspots—relevant for shipping and logistics planning.

Indonesia Trade & Industry: Indonesia’s exports rose 4.13% in H1 2026 to US$140.81bn, while imports jumped 18.69%, keeping the trade surplus under pressure. Rare Earth Rules: Indonesia is refining rare-earth export regulations, clarifying the export ban applies to primary rare-earth products, not associated elements in derivatives—aiming for smoother mineral trade during a transition. Central Banking & Credit: Bank Indonesia wants commercial banks to shift from parking liquidity in BI securities toward more lending, cutting reserve requirements for banks that keep less than 19% in government bonds/SRBI. Markets & Commodities: Copper climbed on falling inventories and easing demand fears; oil slid on Iran-talk hopes. Finance & Resilience: Indonesia’s financial system stayed stable in Q2 despite global volatility, with policy coordination cited by KSSK. AI in Investing: Pluang launched a limited AI-assisted trading beta, but every trade still needs human confirmation. Maritime & Green Shipbuilding: PT PAL Indonesia and BRIN will develop green shipyard tech and low-emission maritime solutions. Circular Food Program: The environment ministry backs circular-economy practices for Indonesia’s free meal (MBG) program, including waste-to-feed and used cooking oil recycling. EV & Auto Moves: Leapmotor entered Indonesia with KD assembly plans via Indomobil, while Indonesia’s inflation eased to 2.88% in July.