Indonesia plans state export body for key commodities, President tells Parliament

Indonesia plans to establish a state-backed body to oversee exports of key commodities, including coal and palm oil, President Prabowo Subianto said in an address to Parliament on May 20, as part of efforts to strengthen state control over natural resources and lift government revenue.

In a parliamentary speech broadcast live on the Presidential Secretariat's YouTube channel, Prabowo said Indonesia must ensure its natural resource wealth is managed in line with the constitution for the benefit of all citizens.

"The government of the Republic of Indonesia that I lead will issue a regulation on the governance of natural resource commodity exports," he said. "This is a strategic step to strengthen the governance of our natural resource commodity exports."

The policy aims to strengthen oversight and monitoring, while combating under-invoicing, transfer pricing, and the flight of export earnings overseas. Export under-invoicing over the 1991-2024 period reached $908 billion, he said.

Indonesia is the world's largest exporter of thermal coal and palm oil, and any shift toward centralized export controls could affect global commodity flows and pricing, market sources told Platts, part of S&P Global Energy.

The policy will be rolled out in two stages. Between July and August, export transactions and overseas contracts will gradually be transferred to the designated state firm. Starting Sept. 1, all export and import transactions with foreign buyers will be handled entirely through the state-owned enterprise, according to Prabowo. Under the planned system, export proceeds would still be passed on to the companies managing the operations, while the appointed state firms would act as what he described as a "marketing facility."

Separately, Energy and Mineral Resources Minister Bahlil Lahadalia said on May 20 that the new policy would not affect existing export contracts or overseas buyers. Companies, he said, could continue their current transactions as usual, while coordinating and synchronizing data with firms appointed by Danantara, the country's sovereign investment agency.

Lahadalia also said contracts that had already been agreed for this year would remain valid.

He stressed that the policy would eventually be expanded to cover all mineral exports through Danantara, although the initial phase would focus on coal, iron ore, and several semi-processed mineral products.

The President said Indonesia had long failed to maximize state revenues despite being one of the world's largest commodity exporters,

According to figures cited by Prabowo, palm oil exports generated $23 billion in foreign exchange earnings in 2025, while coal exports contributed $30 billion, and ferro-alloys added another $16 billion. Combined export earnings from the three commodities exceeded $65 billion annually, he said.

Despite that, Prabowo said Indonesia's state revenue-to-GDP ratio remained among the lowest in the Group of 20 major economies, at around 11% to 12% of GDP. He compared that with Mexico's 25%, India's 20%, the Philippines' 21%, and Cambodia's 15%.

Indonesia has in the past rolled out policies to raise coal export prices, the most recent being a reduction in miners' overall production quotas for 2026. According to S&P Global Commodities at Sea data, Indonesia exported 520.7 million mt of thermal coal in 2025, down from 555.7 million mt in 2024. As of May 20, 2026, exports stood at 174 million mt.

The recent geopolitical tensions in the Middle East have also disrupted energy markets, increasing demand for coal as buyers sought alternatives to LNG amid supply uncertainties. Rising demand from Southeast Asia and constrained domestic production have also raised prices. Platts assessed the key Indonesian-origin 4,200 kcal/kg GAR grade at $64.25/mt FOB on May 19, just shy of the previous peak of $65.95/mt FOB recorded on May 26, 2023.

Thermal coal market participants expect the transition to the centralization of exports to be challenging, with an Indonesia-based producer indicating that the new export process could significantly complicate export activities. A Singapore-based trader said thermal coal prices could rise sharply, while buyer uncertainty about fixing vessels could result in lower freight rates.

While Indonesia is the world's largest vegetable oil producer and exporter, followed by Malaysia, the Malaysian crude palm oil futures contract on the Bursa Malaysia Derivatives exchange is seen globally as the benchmark for palm oil prices.

Following the announcement, Indonesian local palm oil tender prices fell by around 10% in a daily market auction conducted by PT Perkebunan Nusantara, the Indonesian government-owned plantation holding company.

An India-based analyst said that Indonesian traders are now panic-selling before the new policies come into effect.

The Malaysian CPO contract for August delivery was up marginally at MR 4,590/mt during afternoon trade, easing from a 1.92% surge in price during the morning trading session on May 20.

Palm oil buyers' attention may now shift to Malaysia until more is known about how the export mechanism in Indonesia will be implemented, Parmalingam Supramanium, director at Malaysia-based vegetable oil brokerage Penlindung Bestari, said on May 20. Platts assessed June-loading CPO FOB Indonesia at $1,220/mt on May 19, up 0.8% day over day.