AGP Executive Report

Solar Delivery Challenge: Prabowo’s push for 100 GW solar in 2–3 years is getting attention, but delivery capacity looks thin: only about 1,000 village cooperatives are operating and none has installed solar yet, raising big questions about institutions and rollout machinery. Carbon Market Governance: Indonesia launched the national Carbon Unit Registry System (SRUK), a unified database tracking carbon units end-to-end and integrated with the carbon exchange, aiming to boost transparency and green investment confidence. EV Ecosystem Signals: Hyundai unveiled the Neira Concept, a locally produced 7-seat electric minivan planned from end-2026, closely aligned with Kia’s Clavis EV platform—another sign Indonesia’s EV manufacturing base is expanding. Remittance Costs Under FX Stress: Topremit added Rate Alert and Multiple Recipient features to help Indonesian senders manage rupiah volatility and reduce exchange-rate guesswork when transferring money abroad. Fisheries Welfare Push: Indonesia’s Red and White Fishermen Village (KNMP) program targets lifting the Fishermen Exchange Rate from 103 to 120 by 2027 by shortening distribution chains and improving storage and handling. Climate Risk for Food Security: UN warns strengthening El Niño is “adding fuel to a planet already on fire,” with extreme heat, drought and rainfall risks extending into 2027—an immediate concern for agriculture and supply chains.

Energy Transition: Japan’s ASEAN envoy said coal still anchors the region’s energy mix and urged a gradual, long-term shift balancing energy security, affordability and sustainability. Foreign Policy: President Prabowo reiterated Indonesia’s free-and-active, non-aligned stance, saying Jakarta won’t join any military bloc even as tensions rise. Digital Media & Trust: Indonesia’s communications ministry warned that algorithm-driven personalization and AI-generated content can spread misleading information, making professional journalism more important. Fashion & Exports: Indonesia Fashion Week 2026 opened in Jakarta, spotlighting traditional textiles and business matching with trade reps from 32 countries. Biopharma Deal: Mabwell signed a GCC licensing deal with Saudi’s SVAX for its aflibercept biosimilar 9MW0813, targeting registration, manufacturing and commercialization in the Gulf. Mining & Biodiversity: Greenpeace said three nickel licence applications are still being processed in UNESCO-listed Raja Ampat, renewing pressure over environmental safeguards and indigenous impacts. Auto Aftermarket: ZF appointed Indonesia’s MKN as sole distributor for TRW, aiming to expand the independent aftermarket with nationwide delivery coverage. Food Security Jobs: Indonesia’s Waingapu integrated shrimp farming project in East Sumba is projected to create about 7,000 jobs and produce 52,000 tons annually. EV & Manufacturing Showcase: VinFast brought its expanding EV lineup to GIIAS 2026, pitching “Drive Worry Free” ownership programs.

Philippines Energy M&A: Energy Development Corp. (EDC) said it will consider Barito Group’s unsolicited $5bn bid to buy the geothermal power firm, but stressed there are “no discussions yet,” keeping the focus on renewables expansion and drilling links. Power & Grid Services: EGP Energy raised about $30.6m in its Singapore Exchange debut, planning to expand power transmission/distribution services and push into Malaysia and Indonesia. El Niño Food Risk: Indonesia’s dry-season stress is already showing up in agriculture, with warnings that El Niño impacts can ripple from farms to processors and utilities. Wildfire Hazard: Central Java reported a sharp rise in wildfire incidents, with sugarcane fields hit and one fatality recorded, as authorities urge residents to stop open burning. Green Industrial Estates: Indonesia’s environment minister urged industrial estate operators to go greener, including tree planting and carbon-trading potential, as the government prepares a large-scale tree program. Shipping Industry Push: President Prabowo ordered acceleration of domestic shipbuilding to reduce reliance on foreign-flagged vessels, targeting more cargo under the Indonesian flag. Creative Jobs: Indonesia’s creative economy minister said Gen Z and Millennials dominate unemployment and could be absorbed faster through creative-industry growth. Waste-to-Energy Momentum: West Java is moving ahead with waste-to-energy projects as part of broader waste cleanup efforts. Palm Oil Watch: Palm oil prices in Malaysia edged up on firmer crude and rival oils, while Indonesia’s biodiesel allocation for 2026 was highlighted as supportive demand.

Industrial Policy & Investment: Indonesia’s Industry Minister Agus Gumiwang Kartasasmita says industrial estates must be judged by occupancy and performance, not just land supply, as a new Industrial Estates Bill aims to turn estates into ecosystem operators and cut barriers to investment. EV Manufacturing Push: The government will prioritize incentives for domestically branded electric cars and motorcycles, with plans to support 100,000 units each this year. Carbon Market Governance: Indonesia strengthens carbon market oversight via a national Carbon Unit Registry System (SRUK) to improve transparency and prevent double counting. Apparel Supply Chain: Tariff gaps are reshaping apparel sourcing, with multi-country platforms letting brands shift production to where rules and costs fit best. Palm Oil & Energy Link: Palm oil prices track crude and rival edible oils; Indonesia also raises 2026 biodiesel allocation to support demand. Human Rights & Environment: Human Rights Watch alleges Indonesia is prosecuting environmental and Indigenous defenders, including through heavy-handed tactics tied to mining, plantations, and “food and energy estates.” Skilled Labor & Training: Indonesia highlights skilled worker training models to support construction-sector migration and workforce readiness. Agribusiness Resilience: Mars and Save the Children launch a $3m program to empower women cocoa farmers and expand climate-smart, financially inclusive farming.

Palm Oil Supply Chain: BPDP says smallholders run 41% of Indonesia’s oil palm area, producing over 16 million tons annually and employing about 16.5 million people across plantations and logistics. Refined Sugar Protection: Indonesia will tighten refined sugar imports and require importers to develop domestic cane plantations to shield farmers after oversupply crushed prices and state producers’ finances. Capital Markets Outlook: OJK expects resilient 2026 fundraising, targeting Rp250 trillion; by June 30, Rp125.7 trillion had been raised, with an active pipeline of IPOs, PUTs, bonds and sukuk. AI & Industry Policy: WAICO’s new global AI cooperation push and Indonesia’s own AI guideline work underline how AI governance is becoming a strategic industrial issue, not just tech. Energy & Downstreaming: Indonesia logged a US$2.3bn coal-to-methanol investment aimed at 2 million tons/year, while also pushing waste-to-energy projects and renewable expansion. Environment & Risk: FireWatch detected 96,000+ hotspots by July 27, with El Niño fears adding pressure on land management and enforcement.

Indonesia Energy & Water Security: BRIN is pushing a Virtual Power Plant model for Nusantara (IKN) to hit the 2045 net-zero goal by pooling clean generation across clusters instead of relying only on fossil-based central plants. Food Security Infrastructure: Indonesia is accelerating 15 dam projects to irrigate 200,000+ hectares and cut drought/flood risks tied to El Niño and heavy rains, with Rp32.8 trillion earmarked for the works. Waste-to-Energy Push: The Legok Nangka waste-to-electricity (PSEL) project in West Java is set to tackle daily waste overflow while generating cleaner power, as Indonesia still leaves a large share of waste inadequately managed. Industrial Investment: SAIL and Krakatau Steel plan up to $350 million for a stainless steel slab plant in Indonesia (500,000 tons/year), feeding SAIL’s Salem rolling operations. Defense & Aviation: Indonesia has ordered 12 Leonardo M-346F Block 20 light fighters for delivery starting 2030, aiming to modernize lead-in fighter training. Renewables Scale-Up: Indonesia says it has 3,687 GW renewable potential and is preparing 69.5 GW of new capacity plus major transmission buildout to close the gap between potential and installed generation. Regional Trade/Commodities: Malaysian palm oil futures rose on bargain buying and crude oil rebound, supported by stronger July export estimates, while gains were capped by higher production estimates and Indonesia’s B50 biodiesel allocation absence. Geopolitics Impacting Shipping: Iran rejected Oman’s proposal for joint regional management of the Strait of Hormuz, saying it has “no chance” and insisting control must stay with Iran and Oman.

Strait of Hormuz Shipping Rules: Oman has proposed a Gulf-backed plan with Iran for joint management of the Strait of Hormuz, using “voluntary fees” for ships—modeled on the Strait of Malacca approach—while the US again rejects any tolls or fees and warns against Iranian control. Cybercrime & Trafficking: The UN’s IOM says forced online scam trafficking is surging across Asia, with victims from dozens of countries—including Indonesia—lured by fake job ads, then trapped in guarded scam compounds. Indonesia Policy for Industry: Indonesia aims to pass a new Cooperatives Law this year and is preparing fiscal incentives for green industrial estates, as it pushes downstream and industrial transition efforts. Energy & Commodities Watch: Asia’s thermal coal imports keep rebounding for a third month as power demand rises and LNG supply tightens, with China leading arrivals. Regional Growth Outlook: AMRO raised Asean+3 2026 growth to 4.1%, citing stronger AI-driven trade demand that offsets Middle East headwinds. Aviation Safety: The US FAA is moving to inspect hundreds of Boeing 737 MAX jets over improperly installed track-mounted seats that could disengage in emergencies.

US Tariff Shock for Southeast Asia: Philippine business groups warned the US’s new 12.5% forced-labor tariff could put ₱825bn in annual exports at risk, arguing Indonesia and Malaysia face lower 10% duties and the policy is hurting jobs across manufacturing, processing and agriculture. Indonesia Downstreaming Spotlight: UNIDO flagged Indonesia’s downstreaming push as a best-practice model in its 2026 Industrial Development Report, citing progress in critical minerals processing and the EV ecosystem. Drought and El Niño Preparedness: President Prabowo reviewed measures to manage extreme weather and drought risks, with agencies tasked to strengthen water security and wildfire mitigation ahead of likely El Niño impacts. Agriculture Supply-Chain Overhaul: Indonesia will cut farm supply-chain stages from eight to three via Red and White Village Cooperatives, aiming to boost farmers’ earnings and bring subsidized fertilizer distribution closer to villages. Banking and Cyber Risk: Bank of Baroda said it’s investigating a suspected business email compromise after claims of a 1TB data leak, while Indonesia also tightens safety rules for app-based transport drivers. Workforce for AI: Indonesia’s Manpower Ministry partnered with Microsoft, Binus University and GreatNusa to expand AI-focused job fairs and training through nationwide centers and online platforms. Energy and Trade Tensions: Oil prices slid on hopes around Hormuz talks, while ASEAN ministers urged stronger cooperation to tackle Middle East spillovers and cross-border online scams.

EV Policy Reset: Indonesia is reviewing how to align EV incentives with a national car and motorcycle program, with a target of 100,000 EV cars and 100,000 EV motorcycles and an estimated Rp5m per electric motorcycle subsidy, while final details are still being worked out. Trade & Tariffs: Indonesia is asking the US for a phased exemption for palm oil exports after Section 301 forced-labor tariffs, arguing Indonesia is “relatively compliant” versus other assessed countries; meanwhile, Asia’s apparel exporters are bracing for a new tariff map and a “textile mechanism” that could shift sourcing decisions. Mining & Downstreaming: Amman has completed construction of its West Sumbawa copper smelter after force majeure delays, moving the project into long-term operations and backing Indonesia’s downstream push. Energy & Industry: Cargill highlighted productivity, responsible sourcing and innovation at the 9th Indonesia International Cocoa Conference in Yogyakarta, pointing to strong regional demand for cocoa ingredients. Cybersecurity: Bank of Baroda says a cyber breach tied to a compromised employee email exposed about 1TB of customer and internal data, though core banking systems were not accessed. Regional Security: The US deployed a carrier strike group in the South China Sea amid renewed Philippines-China tensions.

Geothermal Finance: Pertamina Geothermal Energy (PGE) secured a $75m unsecured, non-cash trade facility from Mizuho Bank Indonesia to fund operations and expansion, supporting Indonesia’s net-zero push. Rare Earth Downstreaming: Indonesia is trying to fix mineral export bottlenecks tied to rare earth content rules, with the presidential staff office urging clearer guidance so shipments aren’t blocked. Central Banking Shock: Bank Indonesia Governor Perry Warjiyo resigned unexpectedly; Destry Damayanti steps in as interim governor, raising concerns over rupiah stability and policy direction. Energy & Commodities: Indonesia Energy Corporation began drilling its K-29 well on Sumatra’s Kruh Block, while oil markets steadied after a US-Iran strike pause, lifting risk sentiment. Fire Preparedness: South Kalimantan boosted wildfire readiness for the dry season with equipment checks, trained community brigades, patrols, and response posts. Food & Inflation Logistics: Bali, NTB, and NTT are tightening cross-province food supply coordination to curb inflation amid connectivity and tourism-driven volatility. AI & Industry: APEC backed responsible AI cooperation across the region, while Indonesia’s rare-earth ecosystem push highlights the drive to build local industrial value chains.

Rare-earth checks hit exports: Indonesia’s metal shipments are facing delays as customs requests extra testing for rare earths and radioactive elements, affecting alumina and nickel pig iron while officials say exports aren’t being arbitrarily halted. US tariff pressure on regional trade: The Philippines says only 34.28% of its $6.25B exports to the US are covered by the new 12.5% forced-labor tariff, while about $11.98B is exempt—an outcome exporters across the region will watch closely. Coal export rules under review: The Philippines’ Semirara coal auction is pushed back as the Department of Energy revises terms to prioritize domestic use, targeting a higher local share to reduce reliance on imported Indonesian coal. Aviation cost relief: Indonesia grants duty-free import for aircraft spare parts and LPG under its 2H 2026 economic stimulus, aiming to cut MRO and petrochemical input costs. Energy infrastructure leap: Indonesia starts the $15B Makassar Strait North Hub ultra-deepwater gas project, targeting first gas in Q4 2028. Maritime industry push: PT Danantara urges PT PAL Indonesia to strengthen governance and technology to accelerate Indonesia’s shipbuilding ecosystem.

Energy & Infrastructure: Indonesia has started construction of the $15bn Makassar Strait North Hub, an ultra-deepwater gas project combining Geng North and Gehem fields and Indonesia’s first FPSO (Bahtera Haluan Lestari), targeting first gas in Q4 2028 and up to 8,000 local jobs during buildout. Green Industry: PLN Energi Primer Indonesia (PLN EPI) is building an integrated green hydrogen ecosystem for heavy industry (fertilizer/ammonia, refineries, petrochemicals, steel, chemicals) and plans to move into electro-SAF for sustainable aviation. Environment & Food Security: Indonesia’s marine minister says mangrove rehabilitation must go beyond planting to restore ecological functions and protect food security; Jakarta also planted 21,060 mangroves across five coastal sites. Forestry Enforcement: Indonesia’s Forestry Ministry shut down illegal gold mining in North Sulawesi’s Mobungayom forest area, detaining operators and expanding investigations to financiers and equipment owners. Trade & Currency Pressure: Japanese manufacturers in Indonesia expect profit declines this year as rupiah weakness raises import costs and logistics burdens. Labor Cooperation: Indonesia and Türkiye adopted a 2026-2027 joint action plan covering labor policy, digital services, and workplace safety.

Energy & Ports: Indonesia has started building the Makassar Strait North Hub, a $15bn ultra-deepwater gas project off East Kalimantan, with first gas targeted for Q4 2028. Finance & Capital Markets: Jakarta issued $1.03bn in yuan-denominated Panda Bonds on China’s onshore market, oversubscribed 2.4x, signaling deeper investor appetite for Indonesia’s funding needs. Industrial Policy & Supply Chains: Investment minister Rosan Roeslani says Indonesia wants Chinese firms to co-build supply chains and technology ecosystems, citing progress in mineral downstreaming, EV batteries, digital infrastructure and renewables. Maritime Logistics: Patimban Global Gateway Terminal welcomed MSC’s first weekly regular container service, boosting West Java’s links to regional transshipment hubs. Food Security: Indonesia’s food affairs minister claims surpluses and reduced import dependence across rice, corn, sugar, eggs, meat and fish as protectionism rises. Digital Identity: Indonesia hit 10m facial-recognition SIM verifications since July 1 and signals broader rollout to existing subscribers. Environment & Communities: Mangrove experts urge community-led conservation as coastal protection and livelihoods depend on ecosystem survival.

Energy Infrastructure: Indonesia has started construction of the $15bn Makassar Strait North Hub, with SKK Migas saying the ultra-deepwater gas project will use a new FPSO (Bahtera Haluan Lestari) to boost energy security and target 2029-2030 production. Digital Economy & Jobs: Bank Indonesia data shows digital payments and QRIS usage surging, but a separate analysis highlights a hard gap: most workers remain informal, raising the stakes for inclusive growth. Tourism & Local Industry: The Tourism Ministry launched domestic open-trip sales in Yogyakarta to lift affordable travel demand, while Indonesia also pushes the Samota SEZ in Sumbawa as a marine tourism and fisheries-linked investment platform. Trade & Tariffs Shock: US forced-labour tariffs under Section 301 are reshaping export competitiveness across the world, with Indonesia repeatedly named among affected labour-intensive exporters. Governance & Compliance: VP Gibran urged fast passage of Indonesia’s Asset Forfeiture Bill to recover stolen corruption proceeds, including via non-conviction-based mechanisms. Investment & Manufacturing: China offered to help Indonesia deepen downstream value from minerals, aiming to plug into Indonesia’s processing agenda. Workforce Cooperation: Indonesia and Türkiye adopted a 2026-2027 joint action plan covering labor policy, digital services, and workplace safety.

US Forced-Labour Tariffs: The Trump administration imposed new Section 301 duties of 10%–12.5% on imports from 60 trading partners, replacing the expiring temporary 10% global tariff and stacking on top of existing levies for many goods. Indonesia Tariff Response: Indonesia said it will keep consulting the USTR to secure more competitive treatment after the US set a 10% rate on Indonesian products, noting exemptions for some items and ongoing work on a separate excess-capacity probe. Textiles Under Pressure: India’s textile lobby warned the US move could disadvantage Indian exporters, while Bangladesh, Cambodia, Indonesia and Malaysia get tariff-rate quotas tied to US cotton inputs—raising sourcing shifts across Asia. Bank Jago Growth: GoTo-backed Bank Jago reported Q2 net profit up 54% as lending and deposits grew, with loans up 24% and non-performing loans staying low. Indonesia Energy Governance: The Philippines’ DOE said Indonesia assured steady coal supply even as Jakarta overhauls export rules via a designated state enterprise framework. Indonesia Telecom Consumer Ruling: Indonesia’s Constitutional Court ordered providers to keep unused internet data quotas active and usable without extra fees, reshaping how packages must protect consumers.

US Tariff Shock for Asia’s Trade: The US imposed new 10%–12.5% Section 301 tariffs on 60 economies, including Indonesia, citing forced-labour enforcement gaps—raising fresh uncertainty for exporters and supply chains. Indonesia–Philippines Energy Fallout: The Philippines is seeking assurances from Jakarta as Indonesia centralizes coal exports via state-backed Danantara, warning it could disrupt power supply for coal-dependent grids. Indonesia–China Economic Push: Indonesia and China expanded cooperation across trade, investment, industry, education and the digital economy, including Indonesia’s WAICO membership and deeper automaker investment. Fishing Crew Protections: Indonesia ratified ILO Work in Fishing Convention 188, aiming for safer conditions, fairer pay and better healthcare—also seen as a boost for seafood export credibility. Maritime Security: Indonesia condemned Red Sea attacks on commercial vessels as violations of international law and a threat to shipping and regional stability. Industrial Expansion in Indonesia: LiuGong broke ground on an electric heavy equipment factory in Karawang, targeting 2027 output for domestic and export markets. Energy Mega-Project: Indonesia started construction of the US$15bn North Hub gas project in Karimun, with an FPSO planned to process up to 1 BSCFD. Cybercrime Takedown: Authorities dismantled Kratos, a phishing platform tied to about 15,000 monthly campaigns, with Indonesian arrests and server shutdowns. Wildlife Enforcement: Indonesia moved to prosecute a pangolin smuggling suspect in Central Java, linked to large-scale seizures across transit ports. MSME Financing Approach: Bank Indonesia urged an ecosystem-based model for MSME development and financing, pushing large firms to integrate MSMEs into supply chains.