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View all search resultsFirms fear contract, trade risks in commodity export plan
The new policy signals a shift toward tighter state control over trade, and experts warn that, if not implemented carefully, it could undermine the goal stated by the government, which is to boost state revenue collection by preventing invoicing fraud.
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Nickel smelters spew emissions into the air on July 7, 2024, above the Indonesia Weda Bay Industrial Park in Lelilef, North Maluku. (AFP/Azzam Risqullah)
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government plan to centralize key commodity exports through a state-owned enterprise (SOE) in a bid to increase state revenue carries execution risks, businesses warn, raising concerns over trade arrangements and buyer confidence.
“For coal, this is not a simple shift. There are existing contracts, permits, documentation, shipping schedules and legal responsibilities already in place,” Indonesian Coal Mining Association (APBI) executive director Gita Mahyarani told The Jakarta Post on Thursday.
Coal exports involve multiple players across the supply chain, from producers, transportation and sales permit holders to traders, overseas buyers, banks, surveyors, shippers, ports and regulators, she said, adding that businesses are seeking clarity on the newly established SOE’s role in the export chain and how transactions would be handled.
Read also: Govt mandates coal, CPO exports through state agency
President Prabowo Subianto announced on Wednesday that exports of certain commodities would be channeled through a single SOE to tighten oversight and prevent state revenue losses from fraudulent export practices.
The government has established PT Danantara Sumberdaya Indonesia (DSI) under state asset fund Danantara to take over export contracts, shipments and payments as a full-fledged trading entity starting next year.
A trial period beginning on June 1 will initially cover coal, ferro-alloys and crude palm oil (CPO), commodities in which Southeast Asia’s largest economy is a top global exporter.
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