AGP Executive Report

Energy Deals: Pertamina and Medco agreed to acquire Eni stakes in East Kalimantan’s Kutei Basin, expanding Indonesian ownership in producing gas fields and major developments. Trade and Investment: Indonesia and Egypt plan a joint investment fund and are targeting $5 billion in bilateral trade by 2030. Business Climate: A government task force says it has resolved 135 of 190 business complaints, involving more than Rp625 trillion in investment and the potential for 31,000 jobs. Industry: Indonesia aims to lift manufacturing productivity per worker 18.7% by 2029, while BRIN warns that weak links between research and business keep innovations from reaching the market. Transport and Fuel: The government plans to bring motorcycle ride-hailing under public-transport law and is mapping local feedstock for E10 fuel, while assessing capacity for a possible E50 blend. Agriculture: Indonesia showcased processed local foods at an FAO exhibition in Rome, aiming to open markets and raise value for farmers.

Digital Investment: Indonesia’s data-centre industry is pressing for clear, coordinated permits as it seeks to attract investment. A broader strategy debate warns that infrastructure must help spread productivity beyond Java, not simply reinforce existing economic concentration. Energy Finance: New energy businesses across Asia face a shortage of equity, even as power demand grows. Regional firms say progress on the Asean Power Grid could encourage investment, but clearer rules are needed to make projects viable. Trade and Investment: Indonesia and Egypt are pursuing an economic partnership agreement and joint investment fund, with leaders targeting $5 billion in bilateral trade by 2030. Household Demand: Chicken prices rose 7.8% in the first nine months of 2026, outpacing wage growth of 4.9%. Bank Indonesia also reported weaker consumer confidence and slower retail-sales expectations.

Trade & Investment: Indonesia and Egypt are pursuing an Economic Partnership Agreement and joint investment fund, with leaders targeting $5 billion in bilateral trade by 2030, up from $2.38 billion in 2025. Markets: Indonesia’s benchmark bond yields have risen at least 100 basis points this year, part of a global surge that is unsettling investors. Jobs: East Java labor unions estimate 50,000 formal-sector workers could face layoffs in 2026, with manufacturing and labor-intensive industries most exposed. Industrial Policy: The government is considering National Strategic Project status for more industrial parks to accelerate downstream processing, attract investment and create jobs. Local Business: Mandalika’s MotoGP weekend lifted sales for local vendors; one food seller reported daily revenue above Rp2.5 million.

Investment & Development: Foreign capital inflows to Indonesia reached US$7.33 billion year to date, while Jakarta is seeking stronger Asian Development Bank support for human capital and digital infrastructure. Egypt Ties: President Abdel Fattah al-Sisi arrived in Jakarta for talks with Prabowo Subianto, with cooperation agreements expected in areas including fisheries and statistics. Industry Push: Indonesia has begun exporting EV batteries and aims to lift manufacturing above 20% of GDP, as it targets Rp3,839 trillion in downstream investment through 2029. Trade Outlook: Global trade reached a record US$35 trillion in 2025, but UNCTAD expects global growth to slow to 2.6% in 2026; Indonesia remains among the economies forecast to grow fastest. Business Rules: The government has ruled out delaying mandatory halal certification, keeping compliance requirements in focus for businesses.

Investment Flows: Foreign capital inflows into Indonesia’s financial markets reached Rp131.1 trillion ($7.33 billion) year to date, led by government bonds; equities, by contrast, saw Rp84.2 trillion in net outflows. Food Industry: The government plans three egg- and meat-processing plants, each requiring an estimated Rp200 billion, to expand markets for livestock and support price stability. Village cooperatives are also being linked with meal-program kitchens to supply processed fish. Energy Partnerships: Indonesia and Azerbaijan are pursuing five cooperation projects, including oil and gas exploration, production and trade involving Pertamina, SOCAR and Minarak Brantas Gas. Business Rules: Mandatory halal certification remains set to begin October 18, with tailored provisions planned for some small businesses and imports. Tourism: All ticket categories for this weekend’s Mandalika MotoGP have sold out, including premium seats.

Market Support: Danantara says it could intervene during market selloffs if asset valuations are attractive. Whoosh Restructuring: The government is drafting a decree to transfer the Jakarta–Bandung rail consortium’s shares to the Finance Ministry, aiming to restructure liabilities while keeping services running. Industrial Push: Indonesia has exported its first EV batteries and aims to raise manufacturing’s share of GDP above 20%; a new partnership with Airbus is also set to strengthen the aerospace sector. Growth Outlook: UNCTAD forecasts Indonesia’s economy will grow 5.2% in 2026, even as global growth slows to 2.6%. Agriculture and Tourism: The government plans to replant 9,000 hectares of coconut plantations in 2027, while Indonesia’s tourism competitiveness has improved in the latest WEF index.

Food Security: Indonesia’s rice procurement reached 4.11 million tonnes by Oct. 8, beating Bulog’s 4-million-tonne annual target and setting a record as the agency works to support farmers and stabilize grain prices. Public Finances: Non-tax state revenue rose 41.7% year on year to Rp492.3 trillion through September, boosted by Bank Indonesia’s surplus, forest-area fines and higher commodity prices. Industry and Technology: The government wants manufacturing to grow from about 19% of GDP to 20–25%, while prioritizing AI, semiconductors and digital skills as new engines of productivity. Growth Outlook: UNCTAD projects Indonesia’s economy will expand 5.2% in 2026, even as global growth slows to 2.6%. Household Resilience: The government is developing support for the pressured middle class, including better access to productive jobs, skills, financing and wider markets for small businesses.

Digital Competition: Meta has barred ByteDance and TikTok-linked ads on its platforms in Indonesia and six other markets, intensifying the fight for advertisers. Energy Investment: Indonesia is seeking U.S. data-analysis technology to help raise oil output toward 1 million barrels a day by 2030. Its 100-GW solar ambition, industry leaders say, depends on faster permits, clearer procurement rules and grid upgrades. Downstreaming: President Prabowo launched 11 North Maluku projects worth US$10.2 billion. Downstreaming accounts for 30% of national investment, while the government is considering a pause on new nickel smelters amid oversupply. Growth and Markets: Indonesia is targeting Rp13,000 trillion in investment to support 8% growth and aims to lift manufacturing’s share of GDP above 20%. FTSE has kept the country’s secondary emerging-market status.

Downstreaming and Investment: Prabowo launched 11 industrial projects worth US$10.2 billion in North Maluku, alongside Indonesia’s first EV-battery exports. Downstreaming made up 30% of first-half investment, while the Weda Bay park has attracted US$20 billion and employs more than 100,000 people. Fiscal Discipline: Finance Minister Suahasil Nazara ordered ministries to cut remaining travel budgets by 30% and freeze non-essential spending to keep the 2026 deficit below the 3% legal ceiling; the latest estimate is 2.85% of GDP. Industrial Estates: Danantara plans to merge 23 state-owned parks into one 35,000-hectare operator and waive land rent from next year, shifting revenue toward utilities and investor services. Gig Economy: A new regulation caps ride-hailing platform fees at 8%, but drivers question whether the rules will actually lift their income. Markets: FTSE Russell kept Indonesia’s emerging-market status unchanged, while continuing to review market reforms.

Investor Confidence: Luhut Binsar Pandjaitan urged investors not to hesitate, saying Indonesia’s economic fundamentals remain sound despite global uncertainty. The government is targeting 6% growth and says it will tackle business barriers. Trade Links: Bangladesh wants to lift annual trade with Indonesia from about $4 billion to more than $10 billion, while Johor Port and Pelindo are exploring a Belawan–Johor shipping corridor. MSMEs: Indonesia plans to halve e-commerce fees for eligible local small businesses, aiming to widen their access to online markets. Markets and Industry: Foreign-exchange reserves eased in September but remain at $146.3 billion, covering 5.3 months of imports. Indonesia is also considering a pause on new nickel smelters amid oversupply, as its IPO market slows after tougher listing rules. Investment: Nine-month foreign investment disbursement reached a five-year high, even as businesses weigh new labor rules that raise severance benefits.

Markets: Indonesia’s foreign-exchange reserves edged down to US$146.3 billion in September but still cover 5.3 months of imports; the rupiah strengthened to Rp17,887 per US dollar on Wednesday. FTSE Russell also kept Indonesia’s emerging-market status, while continuing to monitor market reforms. Nickel: The government is considering a moratorium on new semi-finished nickel smelters as global oversupply of about 2.5 million tonnes weighs on prices. It may prioritize investment in higher-value finished products. Growth and jobs: Officials are targeting 6% economic growth by 2027 and say they will tackle barriers to private investment. A new labor law has pleased unions but raised business concerns over hiring costs and regulatory uncertainty. Regional trade: Johor Port and Pelindo are exploring a Belawan–Johor corridor to improve cargo flows and supply-chain links between North Sumatra and Malaysia.

Indonesia–Saudi Air Connectivity: Riyadh Air opened ticket sales for a new direct Riyadh–Jakarta route launching 16 Nov 2026, with three weekly flights, boosting business, tourism and religious travel links. Corporate Reshuffle in Consumer Goods: Godrej Consumer Products Indonesia inaugurated the first phase of its Kendal manufacturing facility (IDR 500bn investment), expanding household insecticides output and supporting exports. Aviation Maintenance Deal: Garuda Indonesia plans to take a majority stake in GMF Aeroasia via a rights issue, aiming to align ownership and strengthen in-house MRO economics. Hospitality Expansion: BWH Hotels’ Best Western retained “Best Midscale Hotel Chain” in Travel Weekly Asia awards, citing portfolio growth including Indonesia. Energy Transition & Downstreaming: Indonesia targets 7 GW nuclear capacity for energy security and pushes downstreaming investment through a new ministry and AI-enabled industrial growth. Trade & Market Rules: Vietnam mandates shared access for compatible public EV charging stations from July 2027, a sign of tightening regional infrastructure standards. Environment & Risk: Japanese forestry-linked firms in Indonesia step up fire monitoring as El Niño worsens blazes; Bali study flags ongoing coral decline tied to governance and pollution drivers.

Downstreaming Push: Indonesia targets Rp3,839.9 trillion (US$214.5bn) in downstreaming investment for 2025-2029, with realized Rp300tn in 1H 2026, aiming to lift exports and regional growth beyond Java. EU Trade Deal Deadline: Trade Minister Budi Santoso said Indonesia is pushing to sign I-EU CEPA by end-October 2026 and speed ratification so it takes effect in January 2027 before EU GSP ends. Energy Transition Overhaul: A new Coordinating Ministry for Downstreaming and Energy Transition is set to accelerate clean energy, including phasing out 13 GW of diesel power with solar, while Indonesia also targets 7 GW of nuclear capacity in its energy master plan. AI for Industry: Airlangga Hartarto urged technology-led downstreaming using AI to raise efficiency and productivity, linking the push to growing data center demand. Energy Security Warning: The IEA warned Southeast Asia’s electricity demand is rising faster than solutions, urging power sharing and diversification amid geopolitical risks. State Wealth Enforcement: President Prabowo said the forest area enforcement task force will face resistance from parties benefiting from fraud and corruption. Investment & Finance: Danantara and Energi Mega Persada committed $450m to HighPeak Energy as part of a refinancing, while BTN backs a 6% subsidized mortgage rate for middle-income workers. Food & Nutrition Budgeting: Indonesia’s National Nutrition Agency is reviewing incentives for free-meal kitchens to ensure state funds translate into MBG meals efficiently. Jakarta Disaster Readiness: Jakarta remains vulnerable to floods and fires due to planning gaps, with officials pushing stronger disaster mitigation and emergency response status.

IPO Watch: Singapore-based data centre operator DayOne Data Centers filed for a US IPO, reporting a $77.2m net loss on $512m revenue for the first half of 2026, as higher rates and scrutiny over power and water use shape the listing market. Tech Reset: DealStreetAsia speakers said Southeast Asia’s funding correction is pushing founders toward more durable, operations-led tech businesses rather than “growth at all costs.” Energy Security: The IEA warns ASEAN electricity security is tightening as demand rises (5.4% annually to 2030) and networks face constraints, with Indonesia expected to drive about 40% of growth. Indonesia Holidays: Indonesia released its 2027 national holiday and collective leave calendar (18 national holidays, 8 collective leave days), with essential services arrangements. Aviation Links: Qantas and Jetstar seek new Indonesia routes and more seats under expanded bilateral air services, while Malaysia Airlines, BCA and Novus signed an MoU to deepen travel, payments and digital cooperation. Palm Oil Outlook: Analysts flag 2027 risks for CPO supply as El Niño and the B50 biodiesel push squeeze exportable volumes. Downstream Budgeting: Indonesia’s new Coordinating Ministry for Downstream Industry and Energy Transition will fund operations via a budget reallocation from the ESDM Ministry. Trade & Enforcement: Indonesia-linked areca nut smuggling and money laundering drew major enforcement actions in India, with bank credits reportedly exceeding Rs 1,000 crore.

AI Infrastructure & Cooling Deals: LG Electronics won a long-term contract to supply chillers for 5 gigawatts of AI data center capacity in North America, in phases, under a deal with AIR Control Concept. Trade & Industry: Indonesia’s toy exports rose to US$351.8 million in H1 2026, as the Industry Ministry points to quality upgrades, standardization, and wider market access. Water & Manufacturing Resilience: Global Water Intelligence and Corporate Water Leaders will host an Industrial Water Action Workshop in Jakarta (Nov 16-18) with Nike and the Water Resilience Coalition to turn West Java’s industrial water problems into investable projects. Finance & Stability: Indonesia’s financial sector is seen as stable despite global risks, with OJK citing improved growth outlook but warning of inflation pressure from El Niño and higher-for-longer global rates. Digital Security: Google started enforcing new Android developer verification rules in Indonesia and other APAC markets, adding extra steps and a 24-hour wait for installs from unverified developers. Energy Transition: Indonesia launched the first wave of a 100 GW solar program, with 15 projects already underway and plans for land and floating solar across multiple provinces. Environment & Risk: Environmental groups urged Indonesia to stay vigilant as hotspots fall, warning peatland fires can smoulder underground and flare again. Corporate M&A: AkzoNobel agreed to sell its Southeast Asia decorative paints business to Nippon Paint for about US$1.35 billion. Food & Compliance: Indonesia’s mandatory halal certification from Oct 17 could raise compliance costs for Indian exporters, with potential customs delays or product recalls for non-compliance.

Digital Payments & Currency: Bank Indonesia is pushing the Digital Rupiah to strengthen the rupiah’s role as a monetary anchor while boosting payment efficiency and inclusion, as QRIS use keeps surging (65.77m users and 12.55b transactions in 1H26). Trade & Diplomacy: Indonesia’s envoy says more work is needed to unlock India-Indonesia trade and investment potential, with focus on closer regional partnerships amid global uncertainty. Environment & Fire Risk: Indonesia’s new peatland agency gets expanded powers, but experts warn enforcement and coordination gaps remain key to stopping forest fires. Creative Economy & IP: BI urges stronger copyright protection for East Nusa Tenggara woven fabric motifs to help weavers capture more value and reach wider markets. Shipping & Logistics: Drewry’s Intra-Asia Container Index rose 2% to $1,518 per 40ft as typhoon disruption and port congestion tighten capacity. Energy & Industry: AkzoNobel is nearing a deal to sell its Southeast Asia decorative paints business to Nippon Paint for well over $1bn, including operations in Indonesia. AI & Science Policy: The US and 16 countries back the “Kyoto Vision for a Golden Age of Science,” aiming to expand AI-enabled research and computing access; Indonesia is listed among endorsers.