AGP Executive Report

Digital Finance Security: Indonesia’s OJK urged banks and fintechs to harden digital transaction security as cybercrime rises, citing ransomware and AI-enabled fraud; digital payments hit 14.82 billion transactions in Q1 2026, up 37.69% year-on-year. Mobile Fraud Crackdown: From July 1, Indonesia will require face biometrics for new mobile number registrations, with data encrypted before transfer to Dukcapil and operators barred from storing it. Rupiah Pressure on Industry: The rupiah’s slide past Rp18,000 per US dollar is already pushing firms to delay expansion, cut non-essential spending, freeze hiring, and rely more on local inputs—especially in textiles, chemicals, electronics and automotive. Energy Transition Progress: Indonesia’s renewable energy share reached 17.89% of the electricity mix in April 2026, exceeding the 16.46% target, though coal still dominates generation. Electrification Milestone: Electrification rose to 99.832% in Q1 2026, with Bali and Jakarta at 100% and village electrification programs driving the final push. Trade & Payments Workarounds: Indonesia and the Philippines are preparing a barter scheme to ease exchange-rate stress, with contract signing planned for June 12.

Rupiah Under Pressure: Indonesia’s rupiah slid to a record low, breaching the 18,000 per US dollar level as oil-price shocks from the Iran conflict tighten dollar liquidity and widen the trade surplus gap, putting Bank Indonesia intervention and rate moves back in focus. Commodity Policy Impact: Indonesia’s commodity export overhaul is already reshaping palm oil flows, with traders flagging that buyers may keep shifting toward cheaper Indonesian supplies as Malaysia’s exports face fresh pressure. Mining Supply Shock: Eramet’s Weda Bay Nickel in Indonesia halted production after a steep 2026 quota cut left it unable to continue, underscoring how quota changes can quickly disrupt downstream processing hubs. Food Security Risk: Hot, dry weather tied to El Niño is damaging crop planting across Asia, with Indonesia’s palm plantations also cited as facing production stress that could ripple into food and input costs. US Trade Headwind: The US proposed forced-labour-related tariffs up to 12.5% on dozens of economies including Indonesia, raising new compliance and export-cost risks for regional manufacturers. Blue Economy Push: Papua is doubling down on fisheries downstreaming to raise value for coastal communities, calling for ports, processing facilities and distribution networks to make the sector work beyond capture fishing.

US Tariff Shock for Indonesia: The Trump administration’s USTR has proposed new Section 301 tariffs of 10% to 12.5% on imports from 60 economies, including Indonesia, citing failures to effectively enforce bans on goods made with forced labor—an approach partners say is unjustified and likely to raise compliance and cost pressures for exporters. El Niño Watch for Food and Water: Global agencies warn El Niño is developing with high odds through mid-2026, with “super” scenarios raising risks of drought, floods, heatwaves and knock-on impacts for water, forests and food systems. ASEAN Energy & Grid Debate: Malaysia’s energy dialogue argues nuclear could be a practical baseload complement to renewables for stable power—an issue that matters across the region as data centers and high-tech demand surge. Indonesia’s AI Power Build-Out: BDx Data Centers secured 1.2GW of power commitments from PLN across Jakarta and West Java, underscoring how reliable electricity is becoming the bottleneck for Indonesia’s AI infrastructure race. Climate Tech in ASEAN: Malaysia highlights CCUS as needing whole-of-nation coordination and stronger regional collaboration to scale carbon capture across industries. Rare Bird Rediscovery: Indonesia’s Blue-fronted Lorikeet was photographed again after decades, a win for biodiversity monitoring in remote highlands.

US Tariff Pressure on Indonesia: The Trump administration proposed new Section 301 duties of 10% or 12.5% on imports from 60 economies, citing failures to curb goods made with forced labour—Indonesia is named in the 10% group, with the plan now heading to a public comment period. Currency and Market Stress: Indonesia’s rupiah hit another record low and the Jakarta Composite Index slid to a five-year low as oil prices stayed elevated, while May inflation rose to 3.08% y/y. Energy Output Watch: Indonesia reported January–May crude oil production of 576,200 barrels per day and natural gas output of 6,550 million standard cubic feet per day. Security and Resources: Indonesia’s navy and partners intercepted vessels in Riau Islands waters carrying 390 tonnes of raw minerals linked to illegal rare earth metals and radioactive elements. Defense Industry Deal: Republikorp and Qatar’s Barzan Holdings signed a joint venture to build weapons systems, including firearms, unmanned vessels and mini submarines. Halal Food Compliance: BPJPH said halal certification for SPPG kitchens under the Free Nutritious Meals program helps ensure halal compliance and quality. Trade Diplomacy: Türkiye’s FM Hakan Fidan arrived in Jakarta to push cooperation across infrastructure, energy, digitalization, AI, high tech and halal industries. Climate Risk: The UN’s weather agency warned El Niño could return with drought, heavy rain and heatwave risks, including for Indonesia.

El Niño Watch: The UN weather agency (WMO) says El Niño is developing with ~80% odds for June–August and near-90% odds by November, warning Indonesia and other countries to brace for drought, heavy rain, and heatwaves. Commodity Export Overhaul: Indonesian business groups back Prabowo’s plan to centralise exports via Danantara Sumberdaya Indonesia (DSI) and require proceeds in state banks, but ask for clear technical guidance to avoid contract and shipping/insurance confusion. Food & Farming Resilience: Indonesia reports 82.73% physical completion of its irrigation upgrade program (19,760 hectares targeted) to strengthen food self-sufficiency. Palm Oil Talent Push: Indonesia will fund 5,000 palm-oil scholarships this year through BPDP, aiming to build plantation professionals for productivity and sustainability. Dairy Supply Gap: Indonesia says it needs 1.4 million more dairy cows to reach milk self-sufficiency, with current herd at about 540,657. Construction Trade Shield: Philippines imposes safeguard duties on cement imports from China and Indonesia, a reminder of how regional building-material trade rules can quickly shift.

Food Safety Harmonisation: APFRAS’ 4th summit in Seoul (with Indonesia among members) pushed beyond information-sharing toward broader food safety regulatory harmonisation to make trade smoother across the Pacific. Macro & Prices: Indonesia’s May inflation rose to 3.08% y/y from 2.42% in April, with core inflation at 2.59%, as Bank Indonesia’s rate hike and a weaker rupiah keep pressure on food and transport costs. Energy & Commodities: Coal exports fell 6.7% y/y in Jan–Apr to 114.54m tonnes; meanwhile, oil palm farmers in Bengkulu and beyond are bracing for volatility after new export rules, though officials say fresh fruit bunch prices may recover as the single-channel policy beds in. Workforce Skills: Indonesia’s MagangHub internship program now offers 15 competency certification tracks via BNSP to improve employability in areas from web development to health & safety. Digital Commerce & Retail: Google expanded virtual try-on across key APAC markets including Indonesia, aiming to make search more “dressing-room” friendly for fashion and footwear. Solar Manufacturing: SEG Solar announced a third U.S. module assembly facility, lifting planned domestic module capacity to 10.6 GW/year, reinforcing the region’s clean-energy industrial push. AI & Enterprise: Singapore’s ATxEnterprise/ATxE 2026 highlighted Southeast Asia’s shift from AI experimentation to enterprise deployment, with Indonesian participation among regional policy and industry speakers. Currency Risk for Health: A weaker rupiah is raising insurer concerns about higher health insurance claim costs as imported medical supplies and equipment get pricier.

Indonesia’s Food Security Watch: India’s government says edible oil, fertiliser and foodgrain supplies are stable despite West Asia risks, citing regular imports (including palm oil from Indonesia and Malaysia) and adequate central stocks. ASEAN Investment Outlook: A Malaysian economist calls Indonesia a “scale and commodities” magnet for long-term ASEAN capital, while flagging Vietnam’s manufacturing pull and Malaysia’s LNG/semiconductors strengths. Livestock Feed Trade: The U.S. Grains & BioProducts Council sent a delegation to Indonesia to assess dairy and feedlot demand for U.S. corn co-products like DDGS, aiming to boost feed efficiency. Inflation Pressure: Foreign banks warn inflation may overshoot central bank targets as price freezes fade and food costs feed through, with Indonesia among markets flagged. Digital Travel Identity: Indonesia’s Digi Yatra moves toward cross-border deployment after an IATA trial validated interoperable digital identity and biometric checks. Solar Manufacturing Push: SEG Solar plans a third U.S. module assembly plant in Texas (10.6GW total capacity) and is planning upstream ingot/wafer work in Indonesia. Forest Fire Readiness: Riau puts 11 regions on forest-and-land fire emergency alert ahead of the dry season to speed coordination and response. Wealth Management Expansion: DBS will open 18 new wealth centers across Asia, including Indonesia, as affluent demand grows. Bigger Supply Chain Signals: OECD says China’s industrial sectors got far more state support than competitors, shaping global market share gains.

Pancasila-Driven Economic Overhaul: President Prabowo warned that Indonesia’s economic transformation will face resistance from groups benefiting from corruption, smuggling, and illegal practices, urging tougher decisions that protect long-term public welfare. Centralised Commodity Exports: Indonesia began a transition to a single state-led export system for coal, palm oil, and ferroalloys, with Danantara Sumberdaya Indonesia pledging transparency and price benchmarking to curb under-invoicing and keep proceeds onshore. Solar Push: Indonesia plans a 100 GW solar expansion worth about $71bn, signaling a major scale-up in renewables investment. Digital Infrastructure & AI: ZTE says it’s targeting overseas growth by helping build an “open digital rainforest,” citing data center demand and stricter data security rules; DBS also plans to expand its wealth centres across Asia, including Indonesia. Trade & Manufacturing Pressure: Indonesia’s textile and apparel sector is bracing for tougher global conditions and is pushing export diversification and new trade partnerships. Regional Business Links: Indonesia expands fishery export access to China, while Mastercard rolls out an ASEAN travel campaign across Indonesia and neighbors.

Defense & Trade: India’s Defence Secretary Rajesh Kumar Singh says the BrahMos supersonic cruise missile deal is signed with Vietnam and Indonesia talks are in the “final stages,” signaling a new phase for India’s defense exports in Southeast Asia. Fisheries Exports: Indonesia expands access to China’s market after GACC approved eight more fish processing units, bringing approved facilities to 638; Indonesia ships 1,080 fishery product types and logged $1.04bn in 2025 exports to China. Capital Markets: The IDX lists PT Transcoal Pacific Tbk under the High Shareholding Concentration category after 94.1% of shares are held by certain shareholders, while the exchange notes this doesn’t automatically mean a rule breach. Tourism & SMEs: Indonesia accelerates halal certification for MSME products in 1,500 tourism villages, reporting 31,548 certificates across 1,116 villages. Energy Policy: Finance Minister Purbaya Yudhi Sadewa offers up to 0% income tax incentives for exporters that comply with placing natural-resource export foreign exchange proceeds domestically. Industry & Food: Indonesia’s coconut oil exports show value growth despite lower volumes, driven by price rises amid raw-material limits and El Niño impacts.

Port & Trade Connectivity: Indonesia’s Belawan New Container Terminal (BNCT) will link with Penang Port and Perlis Inland Port via a new MoC, aiming to speed cross-border cargo flows and create an alternative ASEAN–East Asia corridor for Indonesian commodities like palm oil, coffee, cocoa and tea. Defence Exports: India’s Defence Secretary Rajesh Kumar Singh says a BrahMos missile deal with Vietnam is already signed, while Indonesia’s pact is in the final stages—another step in India’s push to sell advanced systems to ASEAN partners. Regional Security Drills: Multinational Exercise PRAGATI 2026 wrapped up in Meghalaya, with 400+ troops from 13 countries (including Indonesia) running counter-terrorism and interoperability drills. Industrial Chemicals: BASF started up a new 2-ethylhexyl acrylate (2-EHA) storage tank in Merak to improve supply reliability and shorten lead times for downstream paints, coatings and adhesives. Aquaculture Industrialisation: Indonesia’s BUBK shrimp farming model in Kebumen expands into a technology-backed, wastewater-managed industrial ecosystem to reduce environmental harm and improve yields.

Indonesia–France Deals: President Prabowo’s Paris visit delivered four commercial pacts worth US$3.5bn, spanning energy security, trade and defense, alongside a new France-Indonesia High-Level Business Council to deepen investment and research ties. Fuel Subsidy Watch: Indonesia will keep subsidized fuel prices unchanged through year-end despite a rupiah slump, with officials citing safe stockpile levels. Defense & Security: At the Shangri-La Dialogue, US Defense Secretary Pete Hegseth urged Indo-Pacific allies to lift defense spending to 3.5% of GDP, warning China against regional hegemony and praising Indonesia’s growing cooperation. Data Center Risk: A Sumatra blackout is raising alarms for Indonesia’s data center push, with industry calling for PLN transparency, grid upgrades, and stronger reliability commitments. Food & Trade: Bulog says rice exports to Malaysia will be priced above Indonesia’s domestic ceiling to protect farmers and state revenue. Halal & Regional Trade: Malaysia again topped the Global Islamic Economy ranking, while Indonesia’s halal trade ecosystem keeps expanding through cross-border business platforms. Energy Transition: Indonesia is moving ahead with wind energy groundwork, including key facilities for its first wind project.

Renewables & Industrial Buildout: Indonesia inaugurated key facilities in Batam for its first wind-to-electricity project, supporting the Tennet 2GW HVDC plan and targeting thousands of local jobs during construction. Circular Economy for SMEs: Aceba and EABC launched an ASEAN circular economy partnership, rolling out a “circular business check” tool in Indonesia, Philippines and Thailand with EU Switch-Asia backing. Energy Transition Planning: Indonesia is preparing 24,000 hectares on Java for the 100 GW solar program, with early focus on 17 GW plus large-scale battery storage. Defense & Maritime Industry: PT PAL began preproduction for the Scorpene Evolved submarine project with Naval Group, aiming to boost Indonesia’s submarine-building capability. Palm Oil Policy Clarity: Indonesia’s government said PT Danantara Sumberdaya Indonesia won’t profit from the centralized CPO export policy, easing concerns during a June–Aug transition. Currency Pressure: Indonesia and India intervened to stabilize currencies amid oil-price shocks tied to the Iran war. ASEAN Fraud Response: The Global Signal Exchange took centre stage at an ASEAN fraud summit, bringing governments and major platforms together to disrupt online scams faster. SME/Water Tech Funding: Singapore’s SG Enviro closed Series A to scale water treatment and recycling across Singapore, Malaysia and Indonesia. Geopolitics & Trade Talks: Putin said EAEU-India trade liberalisation talks have intensified, with Indonesia cited as a recent EAEU trade agreement partner. Prediction Markets Crackdown: Kalshi sued Minnesota over a law criminalizing prediction markets, as Indonesia and other countries continue bans. Rescue Update: Laos rescuers freed one of seven men trapped in a flooded cave, with others still unaccounted for.

Energy Transition Pressure: Iran-war-linked LNG worries are pushing parts of Asia back toward coal, with Taiwan resuming coal-fired electricity purchases and Japan/South Korea easing coal limits to protect power supply. Gold & Capital Markets: UBS trimmed its end-2026 gold forecast to $5,500/oz as rate-cut hopes fade, but investors still expect bullion upside. Indonesia Bonds: Foreigners returned to Asia bond markets in April, buying about $3.1b of Indonesian bonds, mainly short-term IDR instruments after Bank Indonesia lifted yields. Education & Tourism: President Prabowo ordered French language learning at all school levels with France; VP Gibran said the government will keep upgrading tourism quality on sustainability, safety, comfort, and authentic experiences. Palm Oil Export Rules: Indonesia’s palm oil firms are waiting for implementing details after a new natural resource export governance policy named a sole exporter. Labour Rights: A landmark ICJ advisory opinion backs the right to strike under UN and ILO conventions, relevant to Indonesia and 158 ratifying countries. Mining & Finance: Merdeka Gold plans a Hong Kong IPO to raise $500m. Halal Food Expansion: Paris Baguette secured official halal certification in Indonesia, supporting broader Southeast Asia retail growth.

EV Supply Chain Push: Indonesia is pulling automotive component SMEs into the electric vehicle ecosystem, with the Industry Ministry and Investment Ministry mapping EV component demand and partnerships in Cikarang, West Java. Renewables Manufacturing: Indonesia backs its first wind energy conversion project in Batam, aiming to turn the city into a fabrication hub for offshore wind components. Energy Distribution Ahead of Eid: Pertamina Patra Niaga adds nine million subsidized 3-kg LPG cylinders nationwide to keep supplies stable during the extended Eid al-Adha period. Digital Economy vs Water: Indonesia warns that AI, data centres and digital infrastructure could strain water resources as demand for computing and mineral inputs for devices keeps rising. Trade, Finance & Growth Capital: The ADB approved at least $50 million into a Southeast Asia-focused private equity fund targeting mid-sized firms across Indonesia and the region. Tourism Dealmaking: Indonesia Travel Fair 2026 targets Rp60 billion in transactions, bringing together airlines, hospitals and travel partners to boost tourism and health tourism. Disaster Recovery: Indonesia says Sumatra’s post-flood and landslide recovery is now in the permanent phase, with rehabilitation and reconstruction planned through 2028.

Tourism & Retail: Zus Coffee has opened its first Indonesia store in Jakarta’s Puri Indah Mall via Kapal Api Group, betting on app-led ordering and localized drinks as it scales across Southeast Asia. Livestock & Food Demand: Idul Adha livestock farmers in Indonesia report sales down sharply—one goat farmer in East Jakarta said orders fell up to 60% year-on-year as purchasing power weakens. Digital Economy & Skills: Indonesia’s Transmigration Ministry says it’s ready to supply job-ready talent for Batam’s Rp88 trillion AI data center investment, linking growth to community welfare and workforce integrity. Energy & Finance Spillovers: Indonesia’s rupiah has hit record lows as the US-Iran conflict pushes investors toward short-term debt; Bank Indonesia has expanded SRBI issuance to attract inflows, while Thailand leans on short-term notes too. Commodities & Industrial Policy: Indonesia’s export-centralization push is set to reshape global supply chains for coal, crude palm oil and minerals, with regulators targeting suspected under-invoicing and offshore trading. Environment & Wildlife: Two elephants and a tiger were found dead in Bengkulu’s production forest, raising alarms about habitat loss and ongoing threats to Sumatran wildlife. Media & Business Services: Publicis Groupe Indonesia acquired Inter Pariwara Global and iLab Indonesia, adding about 150 media professionals under Spark Foundry to deepen local capabilities.

Eid al-Adha Oversight: Indonesia’s Agriculture Ministry deployed 8,633 veterinary officers nationwide to monitor animal health, halal compliance and slaughter standards ahead of the holiday, as officials cite a livestock surplus (3.2 million available vs 2.4 million demand). Telecom-Fraud Shift to Indonesia: Chinese authorities say telecom-fraud networks displaced by crackdowns in Cambodia and Myanmar are expanding into Indonesia, with a Batam raid detaining 210 foreign suspects after police seized computers. Palm Oil Diplomacy: Indonesia and Malaysia held a joint palm oil engagement programme in Serbia to address consumer concerns tied to new warning labels, aiming for balanced, science-based messaging. Tourism Boost: South Korea will start a temporary visa-free entry for Indonesian group tourists (3+ people) for up to 15 days, targeting higher inbound spending. Energy & Trade Context: Indonesia’s foreign minister stressed adherence to international law and multilateralism in UN debate on Palestine, including respect for maritime shipping lanes. Wellness Travel: WITT expanded in Asia, with Indonesia’s Bali resorts earning certification as wellness-focused tourism demand accelerates.