AGP Executive Report

Coal & Energy Markets: Asia’s thermal coal imports are set for their strongest May in months, with prices edging up even as Iran-war crude and LNG shocks stay front and center—China’s weaker domestic output is a key driver. Oil & Stocks: Oil slipped and Asian equities rose on hopes of a US-Iran deal to reopen the Strait of Hormuz, though negotiators are still “not to rush.” Indonesia Enforcement: Indonesia arrested a suspect over a 3-ton pangolin-scale smuggling attempt to Cambodia via Tanjung Priok, using fake export paperwork. Digital Governance: Indonesia blocked Polymarket, calling it illegal online gambling after bets tied to Prabowo’s presidency drew attention. Power & Infrastructure: Batang Toru hydropower in North Sumatra is still operating while tower relocation permits are processed after late-2025 floods. E-commerce Rulemaking: Indonesia is finalising revisions to e-commerce regulations to tighten oversight of marketplaces and fees. Hydropower Push: Construction has started on a 300-MW hydropower plant in East Kalimantan to boost energy self-sufficiency.

Hajj Under Tension: The annual Hajj has kicked off in Mecca with 1.5M+ pilgrims arriving as Iran-war worries and regional uncertainty hang over the pilgrimage. Digital Governance: Indonesia’s deputy communications minister Nezar Patria warns algorithm dominance could fuel “digital colonialism,” misinformation, and polarization—urging stronger digital literacy for youth. Banking Deal: SMBC Indonesia is selling a pensioner and pre-pensioner retail loan portfolio worth IDR19.93T (~$1.13B) to BTN, reshaping liquidity and mortgage exposure. Commodity Export Overhaul: Indonesia’s new centralized export agency, Danantara Sumberdaya, is moving from setup to rollout—officials say market updates are coming in weeks as palm oil, thermal coal, and some nickel exports shift under tighter control. AI in Agri-Tech: Malaysia’s VentureTECH backs Pacton’s FishSpeak platform to scale AI/IoT aquaculture management across ASEAN, including Indonesia. Markets Watch: Oil slid to two-week lows on hopes for US-Iran Hormuz talks, lifting Asian stocks.

Commodity Control Shock: Indonesia’s Prabowo is pushing centralized control of key commodity exports under Danantara, a move that could ripple into regional energy security—especially for coal-dependent grids like the Philippines—just as Middle East tensions keep oil and gas markets jumpy. Energy Stress Test: Sumatra’s mass blackout is under police and PLN review, with officials pointing to weather-linked transmission failures and ordering faster upgrades to 500kV/275kV lines. Nickel Split Intensifies: The nickel market is bifurcating into “Class 1 vs Class 2” supply, with low-grade availability and “green” premium claims becoming the new battleground for miners and investors. Cyber as Real-World Harm: A fresh warning reframes hospital ransomware as coercion that can delay care and cost lives, not just “data incidents.” Digital Governance Pushback: Indonesia’s plan to fold ride-hailing into marketplace-style regulation is drawing industry resistance over one-size-fits-all rules. SOE Talent Pipeline: Indonesia launches a Presidential Future Leaders Program to train the next SOE managers, starting with 400 participants.

Food Security & Trade: Bulog is finalizing a $452m Malaysian bid to buy 500,000 tonnes of Indonesian premium rice at Rp 16,000/kg, with delivery options via Sarawak ports or overland through Entikong. Energy Transition: Pertamina teamed up with ERIA to back Indonesia’s “dual growth” push—boosting fossil operations while accelerating low-carbon research and policy work. Consumer Tech Demand: Smartphone imports surged to record levels in Nepal, signaling continued regional appetite for higher-priced devices. Farm Support: Indonesia’s ministry plans assistance for rubber farmers to raise productivity and income, targeting smallholders across Sumatra and Kalimantan. Commodities Watch: Copper prices eased on geopolitics and demand worries, while analysts warn 2026 could bring a structural supply gap that reshapes mining risk. Regional Industry Moves: Malaysia and Indonesia approved an asset transfer into a new Petronas–Eni joint venture, with operations expected to start July 1. Power Reliability: PLN apologized after a severe Sumatra outage hit multiple provinces, triggered by a transmission-line failure.

Crypto crackdown: The US is offering up to $10M to help seize and recover money tied to Burma’s Tai Chang crypto scam network, as Washington steps up enforcement against Southeast Asia-based fraud schemes. Maritime security: Somali pirates are again escalating attacks with more aggressive tactics, and an Indonesian-flagged vessel is among those affected. Food & fisheries push: President Prabowo toured Kebumen’s modern shrimp farms, backing a nationwide expansion of productive aquaculture to strengthen food security and jobs. Coastal resilience: Indonesia is refining plans for a massive Giant Sea Wall along Java’s north coast, aiming for a more mature blueprint by 2027. Tourism & industry: Indonesia is promoting sports tourism via the Geopark Run Series (Aug 2026–Apr 2027) and pitching the Batang SEZ as a “ready now” investment hub for foreign manufacturers.

Infrastructure Push: Indonesia is accelerating its 575-km giant sea wall along Java’s north coast, split into 15 segments, to fight land subsidence and rising seas, with monitoring through 2026 and further progress expected by 2027. Growth Beat: The economy grew 5.61% in Q1 2026—its fastest since Q3 2022—driven by consumption, investment, and more efficient government spending. Disaster Recovery: After Sumatra flash floods, the government is prioritizing rebuilding bridges and dams, but river changes are forcing redesigns and slowing some Aceh cleanup work. Currency Pressure: A weaker rupiah is already disrupting household plans, especially for families paying foreign-currency education and other overseas-linked costs. Regional Trade & Diplomacy: Indonesia is also staying active on multilateral fronts, including APEC-related cultural and trade engagement, as regional economies look to keep growth steady amid global uncertainty.

Giant Sea Wall Watch: Indonesia is still refining the 575-km Java North Coast Giant Sea Wall plan, splitting the shoreline into 15 segments and pushing cross-regional coordination so construction can move faster in 2027. Disaster Recovery in Sumatra: After Aceh floods, the government is prioritizing dams and redesigned permanent bridges as rivers widened and shallowened, aiming to stop wood and debris from piling up again during heavy rain. Aviation Upgrade: Thales delivered the first two GM403 long-range radars to the Indonesian Air Force, with the rest of the 13-unit order due over the next year. Education Rollout: The tuition-free Sekolah Rakyat program is targeting June completion for 88 of 93 sites, though some contracts run into July or even October. Energy Security Tension: Indonesia’s plan to import 150 million barrels of Russian oil is hitting regulatory and logistics hurdles, with only one cargo reportedly delivered so far. EV Push: BYD introduced DM PHEV-dedicated tech in Indonesia to expand multi-scenario NEV options.

Commodity Shock & Policy Push: Indonesia’s rupiah stays near record lows and Jakarta stocks brace for their worst week since COVID as investors fear the government’s plan to tighten control of coal and other commodity exports could disrupt sales and earnings. Central Banking Ripple Effects: Indonesia’s surprise rate hike is echoed across the region, with the Philippines’ central bank governor saying an off-cycle move is on the table, while India’s RBI signals it prefers inflation-focused tools over more rate hikes. Trade & Industry Overhaul: Malaysia and Indonesia are also watching maritime and supply-chain risks—Malaysia is urged to tighten Strait of Melaka waste controls as traffic rises, while Indonesia’s commodity takeover narrative keeps spreading. Energy Security: Analysts say Indonesia’s coal gasification push is being accelerated to reduce exposure to volatile LPG imports amid Middle East-driven fuel stress. Tech & Skills: Indonesia backs workforce readiness via a National Internship push, while AI voice interaction gets a boost through FinVolution’s global competition.

Food Security Clampdown: Indonesia tightens rice distribution oversight, boosting inspections of fortified rice and nutrient claims as Bulog rice reserves sit at 5.3m tons and production is projected to outpace demand. Markets & Policy Shock: The JCI slid 3.54% as investors react to a planned centralization of key commodity exports under state entities, with Danantara’s role spooking private profitability expectations. Rupiah Pressure & Rates: Indonesia’s surprise 50 bps rate hike targets rupiah stability amid global energy stress. Connectivity Upgrade: Matrix NAP Info activates coherent tech to expand Batam–Jakarta submarine capacity, pushing higher bandwidth for data centers. Halal Trade Push: BPJPH signs halal assurance recognition deals with Morocco, Italy, France, South Korea and China to speed cross-border acceptance. Human Capital: Kadin launches an AI Academy to close skills gaps for MSMEs and the workforce. Energy Outlook: Prabowo targets up to 6.5% growth next year while keeping the fiscal deficit under 2.4% of GDP.

Commodity Export Overhaul: Indonesia’s President Prabowo has ordered exports of strategic resources—including palm oil, coal and ferroalloys—to run through state-owned enterprises, aiming to curb under-invoicing and transfer pricing and tighten price-setting, with implementation starting in June and expanding in phases. Currency Pressure Response: With the rupiah under strain, Bank Indonesia delivered a surprise 50 bps hike to 5.25% and Indonesia is now lining up a yuan “Panda bond” debut in June to secure cheaper funding. EV Momentum, Oil Shock Link: Record petrol prices are pushing EV demand higher, with an IEA report pointing to rapid EV growth in Indonesia and the region. VinFast Localization Push: VinFast rolled out its VF MPV 7 from the Subang plant and is sweetening early orders with cashbacks and free charging, while Vietnam’s VinFast debt-shift plan abroad is raising governance “red flags.” Market Sentiment Watch: Investors are also reacting to the export-control shake-up, with Indonesia-linked equities feeling the hit as regional capital looks for safer liquidity.

Commodity Control Shock: President Prabowo has ordered exports of palm oil, coal and iron alloys to be handled by state-owned enterprises as sole exporters, aiming to curb under-invoicing, transfer pricing and export-proceeds diversion—an overhaul already rattling markets and raising fears of supply disruption and reduced transparency. Central Bank Tightens: Bank Indonesia hiked its key rate to 5.25% as the rupiah slid to fresh lows and inflation risks climbed. Palm Oil Fallout: Indonesia’s export-control plan is spilling into edible-oil pricing, with traders watching whether buyers shift demand toward Malaysia. Driver Rules Change: GoTo and Grab will scrap motorcycle-taxi driver subscription schemes ahead of an 8% commission cap. Food Exports Push: Indonesia is expanding Nile tilapia production for rising US and Europe demand, backed by new cultivation and pond restoration. Tech & Planning: PT Globalindo Intimates adopted Coats Digital’s GSDCost to improve costing and capacity planning. Regional Security: Indonesia joined India’s PRAGATI 2026 counter-terror drill with 12 nations.

Food Security: Indonesia says rice reserves hit a record 5.37 million tons as Bulog absorbs 2.8 million tons by May 18, aiming to carry supplies through a dry season expected to peak in August. Energy & Policy: The minister insists B50 biodiesel won’t disrupt cooking oil supply, pointing to rising palm output and a claimed 1-million-ton surplus after allocations. Markets & Investor Mood: Indonesia’s stock market keeps slipping as MSCI’s recent purge removes 19 firms, while economists warn fuel subsidies and rupiah weakness are tightening fiscal pressure. Capital Markets: Singapore is now Southeast Asia’s biggest stock market by value, and foreign firms are increasingly eyeing Hong Kong listings as IPO momentum returns. Digital Trade Push: Indonesia urges ASEAN to fast-track the Digital Economy Framework Agreement to keep the region competitive amid protectionism. Culture & Media: Indonesia-linked VR drama “Yellowfin” made waves at Cannes’ Immersive Competition, spotlighting fishing communities and environmental stress.

Volcano Tourism Watch: A week after the Mount Dukono tragedy, avid mountaineer Andyn Kadir says he’ll still climb Bali’s active Mount Batur for a trail race because authorities cleared it—while organisers say they’ll evacuate in extreme injury, illness or severe weather and monitor seismic activity. Trade & Food Exports: Indonesia secured US$60.3m in seven trade deals at China’s SIAL food expo, with processed foods like CPO derivatives, frozen durian, seaweed and dried tempeh—plus no complaints reported from Chinese partners. Creative Industry Push: Indonesia’s animation sector is said by BRIN to have reached globally competitive standards, with IP revenue growth marking a new creative-economy era. Policy & Energy Mix: The Energy Ministry says Indonesia will keep developing its DME project even as CNG trials expand, aiming to diversify LPG substitutes. Market Mood: Indonesia’s rupiah weakness and global oil pressure continue to rattle regional sentiment.

Markets Hit by Rupiah Shock: The IDX Composite slid further at the open as investors digested MSCI rebalancing effects and a broader risk-off mood tied to bond selloffs and inflation fears. Currency Pressure Builds: The rupiah stayed under heavy strain, with Bank Indonesia facing growing calls to defend it—rate-hike bets are rising ahead of the next policy decision. Energy & Geopolitics: PLN is pushing into renewables with a 495 MW solar project in Bangladesh, while the region watches Strait of Hormuz disruption risks after US-Iran tensions eased slightly. Digital & Space Moves: PSN’s Nusantara 5 satellite has officially started operations, boosting Indonesia’s connectivity push. Food Costs Watch: Chili prices climbed sharply even as some staples eased. Regulatory Relief: OJK extended PSAK 117 reporting deadlines for insurers to 30 June 2026. Industrial Expansion: Aster Chemicals approved a $102.4m Singapore ethylene expansion to double export capacity.

Defense Upgrade: President Prabowo says Indonesia will keep building deterrence as he hands over six French Rafale jets plus Falcon 8X aircraft, an A400M transport plane, and new radar and missiles—part of a $8.1bn Rafale deal signed in 2022. Rupiah Pressure: Indonesia’s stocks slid about 4% at the open as the rupiah briefly hit a record low near 17,601 per dollar, with analysts pointing to a stronger US dollar, foreign outflows, and higher oil prices. ASEAN Power Trade: Sarawak is stepping up cross-border electricity exports, targeting Brunei talks and a potential Singapore supply up to 1,000MW, while already shipping power to West Kalimantan and Sabah. Energy & Industry: Pertamina reported initial output from the LLA-6 well offshore West Java, while Rept Battero pushes localized BESS production in Indonesia. Sports Infrastructure: Bogor’s national sports center is set to cover 500 hectares with international-standard facilities and athlete training schools.

Rupiah Shock Meets MSCI Hit: Indonesia’s rupiah slid to a fresh record low as stocks plunged and oil prices jumped on US-Iran deadlock, with Jakarta tumbling and the central bank stepping in to defend the currency; President Prabowo played down day-to-day impact, saying villagers don’t use dollars. Middle East Spillover: Asian markets extended losses as the Strait of Hormuz stayed “meaningfully closed,” pushing crude higher and lifting yields—an energy-and-finance double hit. Insolvency Watch: India’s NCLAT upheld separate insolvency tracks for Videocon Industries and Videocon Oil, underscoring how sector differences can reshape creditor outcomes. AI & Media Push: NeuGenM launched LLM advertising across India, South Asia and Southeast Asia via the Thrad network, aiming to place brands inside AI conversations. Energy Transition Funding Gap: A Bain report warns Southeast Asia’s green capex is only partly “deployable,” with over a third at risk due to project readiness and policy friction. Local Economy: Prabowo inaugurated 1,061 Red and White Village Co-ops in East and Central Java to act as rural off-takers and distribution hubs.