AGP Executive Report

Presidential Appointments: President Prabowo swore in 26 members of the Presidential Advisory Council (Wantimpres), including women’s rights activist Sinta Nuriyah, Quran scholar M. Quraish Shihab, and political analyst Rocky Gerung, as part of a broader cabinet reshuffle push. Trade & Industry: Indonesia reported August export growth, with total exports rising 6.72% y/y to US$26.61bn, led by a 12.48% jump in manufacturing/processing exports, while the new Industry Minister Muhammad Sarmuji pledged continuity plus fresh industrial acceleration. Commodity Oversight: Danantara Sumberdaya Indonesia (DSI) began a pilot for its National Data Intelligence (NADI) platform to monitor palm oil, coal and ferroalloys exports and improve price transparency and prevent leakage. Food Policy: A Constitutional Court ruling backing color-coded nutrition labels for sugar, salt and fat drew support from consumer groups, with calls for an evidence-based system via Health Ministry and BPOM. Environment & Risk: El Niño-linked drought and peatland degradation are worsening water shortages in Borneo, while Indonesia’s wildfires are intensifying and disrupting haze across the region. Compliance in Fisheries: ISSF suspended tuna processor PT Aneka Tuna Indonesia over major non-conformance on species and capture-area labeling, raising pressure on traceability standards. Regional Security & Markets: Asian stocks slipped as oil prices and bond yields spiked on rate-hike expectations, with investors watching US jobs data. Transport Safety: Indonesia named four suspects in the Sept. 13 Java Sea ferry capsizing, with 80 deaths confirmed and 55 still missing.

Manufacturing Momentum: Indonesia’s manufacturing PMI rebounded into expansion in September (52.4), led by faster new orders and export demand, with output and hiring rising. Trade Balance: The trade surplus widened to US$3.55bn in August as manufactured exports and key commodities like CPO and coal grew, while coffee exports fell. Inflation Watch: September inflation ticked up to 3.28% y/y, driven mainly by food prices (chilies, chicken, rice, eggs), adding pressure on Bank Indonesia. Labor Policy Risk: Apindo warned that a more rigid manpower protection bill could raise business costs and deter investment, urging a balance between worker protection and job creation. Climate & Food Security: Experts urged fire risk maps for food estates after reports showed large burned areas, including in Merauke, raising alarms for Indonesia’s food project design. Regional Haze: Legal recourse for cross-border haze remains limited, with Malaysia and Singapore facing hurdles in pursuing cases. Defense & Maritime Presence: Indonesia commissioned the former Italian carrier KRI Sriwijaya to strengthen presence near the Malacca Strait, with costs tied to transfer and refurbishment. Digital Business Leadership: Meta named Dhruv Vohra to lead Southeast Asia business, including Indonesia, with a push for AI-enabled growth for advertisers. Energy Transition Tech: Siemens Energy will supply battery systems for Marco Polo Marine’s CSOV Plus being built in Batam, supporting hybrid and offshore operations.

Cabinet Reshuffle: President Prabowo replaces Foreign Minister Sugiono with career diplomat Arrmanatha Nasir and reshuffles other key posts, including naming Bahlil Lahadalia as Coordinating Minister for Downstreaming and Energy Transition, as Indonesia seeks policy stability after recent economic leadership changes. Trade & Growth Signals: Indonesia’s trade surplus widened to $3.55bn in August, driven by non-oil and gas gains, while the Jan-Aug surplus reached $7.25bn. Digital Economy & Data Centers: West Java’s governor halts a Singapore-owned data centre project in Jatiluhur over permit and environmental assessment issues, highlighting growing local pushback on data centre expansion. Social Protection Rollout: The government will activate 480 SPPGs kitchens for the Free Nutritious Meals (MBG) program across 3T regions starting Oct. 2, targeting areas with high stunting. Regional Climate Pressure: Haze from Indonesian wildfires continues disrupting flights in Palangka Raya as visibility drops, while legal recourse for affected neighbors remains limited. Energy & Investment: Inpex buys 50% stakes in BP-operated Agung I and II offshore blocks in eastern Java, expanding exploration acreage. Business & Media: Meta appoints Dhruv Vohra to lead its Southeast Asia business, covering Indonesia and other regional markets. Food & Tourism: Wonderful Indonesia Gastronomy 2026 spotlights local culinary heritage in Solo and Yogyakarta, while Disney+ and Vidio launch a subscription bundle in Indonesia.

Data Center Permits: West Java suspended BDx Data Centers’ Jatiluhur project after concerns over environmental impact and missing permits, with the AI data center’s first 120MW unit targeted for early 2027. Digital Economy: ASEAN’s digital economy is valued around $300bn in 2025 and could reach $1tn by 2030, led by e-commerce and supported by policy and investment—Indonesia remains the biggest market. Energy & Exploration: Eni boosted its Indonesia deepwater footprint by taking 100% in the Sapukala Block in the Kutei Basin, adding to a gas-condensate cluster expected to support future supply growth. Finance & Trade Risk: Indonesia’s trade deficit eased as imports and exports peaked, while BI and the government moved to strengthen coordination to support the rupiah. SME Focus: Mastercard launched its Dreamonomics report, saying SMEs are prioritising stability over fast growth, and rolled out a business card benefits package. Public Sector Health: Indonesia plans further injections into BPJS Kesehatan to cover cash-flow gaps as the insurer faces persistent deficits. Tourism Demand: Malaysia saw a 160% jump in travel searches ahead of the Bahrain F1 race, with visitors from Singapore, China and Indonesia driving demand. Identity & Security Tech: A new push for governance around agentic AI is emerging, with startups pitching identity and permission controls as enterprises expand automation.

Rupiah & Current Account: Bank Indonesia and the government are tightening policy coordination as Indonesia’s Q2 2026 current account deficit widened to US$12.5bn (3.3% of GDP), aiming to stabilize the rupiah via export push and tighter import FX management. Trade & Industry Tech: The Trade Ministry will debut AI services at TEI 2026, letting overseas buyers order AI-based products and services from Indonesian talent. Solar Push: With US tariffs on solar panels up to 114%, Indonesia sees a chance to boost domestic demand; the 100 GWp solar program is rolling out 15 plants in six provinces, targeting major budget savings and green jobs. Social Protection Shift: Government is moving social aid and subsidies from in-kind to direct cash transfers using digital data collection, with GovTech rollout planned from Oct 2026. Energy Infrastructure: Pertagas is urged to expand the gas network to households to cut LPG imports, FX outflows, and subsidy costs, while inter-island grid links prioritize Sumatra–Java and support Batam data centers. Tax Collection System: Indonesia’s Foreign Digital Transaction Tax Collection System (SPP TDLN) is live since Sept 25, with ongoing tweaks but no delay. Indonesia–China Trade Talks: Indonesia and China will expedite IDC-CEPA preparations to broaden market access, with China still the top non-oil/gas export destination. Sports Tourism: Mandalika MotoGP is credited with nearly Rp5tn in economic impact, as the government targets 145,000 spectators.

Health Insurance Funding: Indonesia will inject IDR20tn (about $1.11bn) into BPJS Kesehatan to cover its 2026 cash-flow deficit, with staged disbursements in October and November to keep claims flowing. Energy & Inflation Shield: The government says Pertalite and other subsidized fuels will not rise even as global oil hits $107/bbl, while non-subsidized prices will track market moves. Jakarta Mobility: Transjakarta is set to adjust fares in 2027, adding to the year’s push to recalibrate public transport costs. Fiscal Policy: Lawmakers passed the 2027 state budget bill into law, with the finance ministry stressing a prudent design to buffer global risks and tighter global financial conditions. Maritime & Fisheries Investment: Indonesia allocates Rp1.2tn to upgrade Bali’s Pengambengan Fishing Port into a modern integrated fisheries and maritime hub. Carbon Markets: Indonesia is offering carbon market incentive schemes for green projects, including low-emission rice, waste-to-energy and blue carbon, as it streamlines carbon trading governance. Digital Economy & Crime: Indonesia will strengthen cross-border cooperation with Cambodia to tackle online scams and online gambling, including faster coordination on victims. AI in Logistics/Banking: Flexport launched an AI “MCP server” to let freight agents track, quote and book; GoTyme rolled out AI root-cause analysis on AWS to cut incident diagnosis time to about 10 minutes. Tourism Safety: Indonesia’s tourism ministry urges risk management for volcano tourism, pushing operators to follow official activity status and safety SOPs.

BPJS Kesehatan Funding: Indonesia will inject Rp20 trillion into BPJS Kesehatan in two tranches (Rp10 trillion in October and Rp10 trillion in November) to plug a cash-flow deficit and keep hospital claims flowing, while the finance ministry urges tighter premium collection and more accurate targeting of subsidized members. Budget & Fiscal Outlook: The House passed the 2027 state budget bill into law, setting spending at Rp4.1 quadrillion and revenue at Rp3.4 quadrillion, with the deficit held at 2.4% of GDP and a free-meals program allocation of Rp240 trillion. Monetary Policy & Rupiah: Bank Indonesia kept its benchmark rate at 5.75%, leaning on investor hedging incentives rather than rate hikes as the rupiah weakens amid stronger USD, higher oil prices, and external fiscal risks. Power & Clean Energy Investment: The updated 2025–2034 RUPTL is projected to unlock Rp2,133.7 trillion in power investment, with renewables and grid expansion leading; the government is also revising plans to push solar to 100 GWp and expand transmission by nearly 47,758 km. Trade & Industrial Policy: IEU-CEPA is expected to cut a 10% tariff gap on Indonesia’s labor-intensive exports to Europe, improving competitiveness versus Vietnam, but execution hinges on faster investment realization. Halal Cooperation: Malaysia and Indonesia agreed to form a joint halal council to align certification standards and expand mutual recognition, with the first meeting set for October. Business & Markets: Jakarta climbed to 140th in the Global Cities Index 2026 on transit and governance improvements; meanwhile, Asia’s port congestion could take 7–10 months to ease as China volumes stay high.

Jakarta Mobility & Public Transport: Transjakarta’s new fare scheme is getting a generally positive reception in user satisfaction checks, but the operator is still urged to fix lingering service issues and roll out socialization more gradually. Rupiah & Monetary Policy: Bank Indonesia kept its policy rate at 5.75%, while the rupiah slid back toward the 18,000 per US dollar level as oil prices rose and US-Iran tensions lifted global yields; BI also signaled heavier use of hedging and reduced costly spot FX interventions. Capital Markets: The IDX removed the Rp 50 stock price floor to Rp 1, triggering sharp drops in low-priced shares including GoTo, as the exchange aims for better liquidity and price discovery. Food Security & Agriculture: The government earmarked about Rp 17 trillion for an integrated livestock ecosystem (feed, DOC, farms, and dairy) with initial sites targeted for completion next year; meanwhile sugarcane farmers challenged fresh raw sugar imports, arguing they could depress prices during harvest season. Digital Finance & Identity: IFC backed a $700m risk-sharing push to scale digital payments in emerging markets, while OpenID announced certified digital ID providers for verifiable credential and presentation interoperability. Trade & Policy: The EU said its trade agreements are strengthening export access and economic security; separately, the US exempted certain speciality drugs from tariffs, including Indonesia. Environment & Heritage Risk: Nickel mining is flagged as a growing threat to Central Halmahera’s Bokimoruru Cave and Indigenous heritage.

IDX Market Shock: Indonesia’s JCI slid 1.51% to 6,147 in its first session after the exchange removed the Rp 50 minimum price floor, with GoTo among the biggest movers as its shares hit the lower auto-rejection limit. Rupiah Defense: Bank Indonesia kept the policy rate at 5.75% while preparing monetary, macroprudential and payment strategies to cushion the rupiah from a stronger US dollar and global inflation. Online Fraud Push: BI urged faster, clearer online scam response across stakeholders, focusing on information sharing, rapid incident handling, and defined accountability. Coal Export Governance: Indonesia tightened coal export rules to improve supply certainty and licensing, citing rising export value and the goal of being a “reliable energy partner.” Food Supply Glitch: West Java retailers reported premium rice stocks at about 8,000 outlets falling 50–70% and lasting only 2–3 days, blamed on distributor supply drops. Used Train Import Stalled: Indonesia’s transport ministry said it has not received an official proposal to import used Japanese KRL sets, with trade rules still pending. Wildfire Fallout: Fires continue to worsen haze across Indonesia and the region, with satellite estimates showing hundreds of thousands of hectares burned. Regional Trade Training: Indonesia ran a 10-day trade policy training for six African countries to expand export development and investment ties.

Fiscal Policy Watch: Indonesia is weighing a long-standing 3% GDP deficit cap, with Prabowo pushing for more borrowing room to accelerate growth—critics warn it could lift borrowing costs and unsettle investors. Digital Payments for Tourism: Bank Indonesia is expanding cross-border QRIS connectivity to boost foreign tourist spending, adding more markets beyond current links with Singapore, Thailand, Malaysia, Japan, South Korea and China. Resource Enforcement: Indonesia has enlisted an ex-BHP engineer to police “value leakage” in coal, nickel and palm oil exports by monitoring shipments and contracts. Halal Trade Systems: Nigeria is developing a QR-based halal certification framework to let buyers scan and trace products to the factory of origin—an approach that could reshape export competitiveness. Smart Building Tech: Planon was named a Frost Radar “Visionary Leader” for smart building software, highlighting integrated operations, workplace, energy and sustainability processes. Energy Trade Uncertainty: Indonesia’s plan to export renewables to Singapore by 2035 faces regulatory uncertainty, with projects waiting on electricity export rules and domestic allocation guidance. Wildfire Fallout: Indonesian Borneo wildfires are worsening haze and health impacts, tied to years of land clearing for cash crops.

MSME Export Push: Indonesia’s quarantine agency Barantin set up an export clinic in Palu to help MSMEs meet overseas standards, handle quarantine and certification, and tap local commodities like cocoa, cloves and fishery products. MSME Support Framework: The MSME ministry backed the push with plans to sign an MoU with Barantin and highlighted its SAPA UMKM platform as a one-stop digital gateway for verification, financing, certification and bookkeeping. Toll Payment Upgrade: Public Works Minister Dody Hanggodo is expediting the second trial of the Multi-Lane Free Flow cashless toll system before a semi-commercial rollout, after the first trial was deemed inconclusive. 2027 Fiscal Debate: Indonesia’s planned excise tax on packaged sweetened beverages is back in focus for the 2027 budget, with industry warning it could add cost pressure as the government targets about Rp1.6 trillion from the measure. Growth Target Watch: The government is preparing policies to hit a 6% growth target for 2027, stressing stable inflation, stronger social protection, faster downstreaming in mining, and digitalization plus legal certainty. Digital Payments Benchmark: India’s UPI was flagged as the world’s largest retail fast-payment system by transaction volume, with IMF-linked reporting noting India is even considering merchant charges to keep the system sustainable long term. Climate Risk: Forecasters warn a developing “Super” El Niño could intensify drought and food insecurity across Asia, while also driving floods and heat extremes. Regional Health Agenda: Future Health convened global health leaders at UNGA to shift systems toward prevention and earlier intervention, with Indonesia among participating countries. Maritime Tragedy: The Java Sea ferry sinking death toll rose to 64, with search operations extended for dozens still missing.

Village Finance Push: Indonesia will start repaying bank loans behind the “Red and White” village cooperative programme, with the first instalment due Friday; Finance Minister Suahasil Nazara said repayments will follow verification that funds were used as intended, including cooperative store construction across thousands of villages. Cross-Border Payments Boost: Bank Indonesia reported 17.8 million inbound cross-border QR transactions worth Rp6.2 trillion through August 2026, driven by QRIS Antarnegara links with Singapore, Thailand, Malaysia, Japan, South Korea and China, as it expands payment rails to lift tourism and SME spending. Halal Economy Drive: BI urged Indonesia to strengthen its sharia value chain and Islamic finance offerings to compete globally, highlighting modest fashion and halal food strength while warning that stricter rules and limited sharia financial product variety are holding back progress. Energy/EV Supply Chain: Hyundai said it will not use nickel sourced from Indonesia’s Raja Ampat for its EVs, following renewed public pressure over mining impacts on sensitive ecosystems. Disaster Update: Indonesia’s Java Sea ferry sinking death toll rose to 64 as search efforts continue for dozens still missing. Sports Media Deal: Malaysia’s RTM and YTL will broadcast five selected FIFA ASEAN Cup 2026 matches live, including games involving Indonesia and Malaysia.

Domestic Industry Push: Indonesia’s Industry Ministry says wider use of local products can boost capacity, supply chains, investment and jobs, citing that each Rp1 spent on domestic goods can generate Rp2.2 in economic impact. Creative Economy Digitization: The Creative Economy Ministry is rolling out QRIS Star, a Michelin-style ranking to help consumers and foreign tourists identify higher-quality creative economy businesses. Tourism Payments Upgrade: Bank Indonesia launched the Indonesia Travel Pack 2026, letting foreign visitors plan, pay digitally, and connect with local MSMEs before arrival. Food Security Watch: Bulog says national rice reserves sit at about 4.8 million tons, enough for year-end while supporting food aid and market-stabilizing releases. Cybersecurity Talent: Luhut calls for stronger cybersecurity skills as AI-driven threats rise, citing a sharp jump in cyberattacks. Halal Trade Diplomacy: Indonesia and Malaysia set up a joint halal council aimed at paving the way for an ASEAN halal council and expanding global market access. Climate & Risk: Indonesia urged UN action on sea-level rise, warning that even millimeter-level increases threaten livelihoods and legal maritime borders. Energy/Inflation Pressure: A report on fuel price hikes highlights how higher energy costs can collide with persistent inflation, squeezing households.

Climate Risk & Food Prices: A “super El Niño” is intensifying, with forecasts of up to 451,000 excess heat deaths by February and knock-on effects like drought, floods and crop losses—raising new pressure on Indonesia’s agriculture and commodities, including coffee supply chains. Energy Transition Finance: Indonesia’s 100 GWp solar push is moving from ambition to investable projects, with forums in New York highlighting the need for bankable pipelines and blended finance to unlock global capital. Solar Investment Mechanics: Discussions stressed that concessional funding must change deal economics, while policy alignment is still key because solar competes with coal. Retirement Readiness: Many Indonesians—especially freelancers and informal workers—lack old-age savings, underscoring gaps in the pension ecosystem as the country ages. Cross-Border Payments: A Mastercard-Bain survey says 91% of internationally active SMEs plan to switch cross-border payment providers within two years, favoring fintechs for faster, more transparent transfers—an opening for Indonesia’s digital finance players. Trade & Industry Diversification: Airlangga urged Indonesia’s furniture exporters to diversify beyond the US, where about 60% of exports are concentrated, to reduce exposure to global shocks. Halal Trade Push: Malaysia and Indonesia will set up a joint Halal Council, starting with halal certification facilitation to streamline bilateral trade. Marine Conservation: Indonesia is proposing two large-scale marine protected areas in the Banda Sea and off Sumatra to protect biodiversity and sustain fisheries. Corporate Deal: STLL agreed to acquire controlling stakes in Advent Coal Resources and Sainik Mining for ₹922.5 crore, expanding its integrated coal and logistics platform.

Forest-Fire Crackdown: President Prabowo warned plantation and forestry firms to strictly follow fire-prevention rules, saying legal loopholes will be closed and non-compliant companies will face enforcement. Marine Planning Push: Indonesia’s fisheries ministry is strengthening four pillars of marine spatial planning in Sumatra—central-regional synergy, integration of planning and use, tighter control, and better guidance—to reduce spatial conflicts and protect ecosystems. Used KRL Imports: The Trade Ministry said used electric commuter train sets from Japan must get technical approval from relevant ministries and can’t be older than 20 years, positioning imports as a transitional step while domestic capacity grows. IDX Market Liquidity: The Indonesia Stock Exchange will cut the minimum stock price from Rp50 to Rp1 starting Sept. 28, aiming to boost liquidity and price discovery for long-stuck shares. Halal Support for SMEs: The Industry Ministry expanded halal-certification backing for small firms via its inspection and facilitation network, targeting 12,171 recipients in 2026. Pension Funds Abroad: OJK is preparing rules to let domestic pension funds invest overseas only as a tightly controlled secondary option, with digital monitoring to keep oversight strict. Food Security Enforcement: Bapanas and partners said illegal rice trade losses reached Rp90 trillion, with 102 suspects named and enforcement actions including recalls and license revocations. Digital Product Diplomacy: A deputy trade minister said technology can help Indonesian businesses market globally through storytelling, using examples like region-branded coffee. Wildfire Safety Compliance: Prabowo also demanded stricter wildfire safety compliance from firms amid worsening haze risks. Marine Disaster Risk: Indonesia ranked among the world’s highest disaster-risk countries in the 2026 World Risk Index, underscoring exposure and vulnerability.

Fiscal Discipline Under Pressure: Lawmakers are pushing to revise Indonesia’s 3% fiscal deficit cap as investors and rating agencies watch spending plans, while the rupiah weakens after the Fed’s rate hike and BI holds rates steady. Digital Finance Debate: A proposed Rp11tn plan to open bank accounts for 200m+ Indonesians is being questioned as potentially wasteful given financial inclusion is already high, with critics urging tighter targeting. Grab’s Lending Bet: Grab will buy a 60% stake in Atome Financial for $1.49bn, aiming to scale BNPL and consumer lending across Indonesia, the Philippines and Thailand. Labor Policy Balancing Act: Stakeholders discuss the Employment Protection Bill, arguing worker safeguards must coexist with competitiveness and flexibility for firms. Education Push Faces Feasibility Questions: Prabowo’s plan to make education free at 160,000+ state schools and waive tuition at state universities raises funding and rollout concerns. Agrarian Reform Moves Forward: DPR and government approve the Agrarian Reform Regulation into law, but analysts warn implementation gaps could leave land inequality intact. Energy & Climate Context: Studies link the Iran war and El Niño to tougher energy and climate risks, while Indonesia’s renewable push continues amid grid and financing constraints. Halal Meets AI: Indonesia’s trade officials say AI can speed halal certification, but human inspection remains essential for variant-by-variant verification. Crypto & Security: Chainalysis shows Asia dominates grassroots crypto adoption, while Bitget confirms a $351.6m breach and suspends withdrawals. Regional Trade Signals: Bangladesh advances toward RCEP accession via an ad hoc working group, keeping the bloc open and inclusive.