AGP Executive Report

Trade and Investment: Trade Expo Indonesia opened with 168 export MoUs worth US$13.2 billion, as the government targets US$17.5 billion in total transactions. Downstreaming: Indonesia is aiming for US$618 billion in downstream industry value by 2040, spanning minerals, energy, forestry, fisheries and agriculture. Technology Supply Chains: A proposed strategic trade framework would set clearer rules for sensitive goods as Indonesia seeks a bigger role in semiconductors, AI, data centres and aerospace. Manufacturing Pressures: Falling export orders and rising costs are driving closures and layoffs in textiles, garments and footwear. Energy and Logistics: A Batam blackout disrupted industrial supply chains, while fuel shortages have spread to Bali and other regions. Regional Partnerships: Indonesia and Serbia agreed to pursue cooperation in downstreaming, food and energy security, including potential links to Indonesia’s EV supply chain.

Energy & Resources: Pertamina and Medco have agreed to buy 10% stakes each in Eni-led Indonesian gas projects, subject to regulatory approval. Indonesia is also seeking discounted Saudi crude as it works to shore up energy security. Clean Power & Infrastructure: The government is seeking more green investment and plans a national team to support data-center development. But water shortages in Batam highlight the pressure new facilities can place on local resources. Industry & Agriculture: Indonesia plans a centralized poultry-breeding hub in Malang and has permanently banned lobster-larvae exports. Forest Fires: Authorities aim to contain fires within a month as haze spreads across Sumatra, Kalimantan and Papua, raising risks for communities and businesses. Insurance: AM Best kept its stable outlook for non-life insurers, citing premium growth, while warning that claims costs and tougher capital rules could squeeze weaker players.

Energy and Investment: Indonesia is seeking green capital for clean energy, low-emission industries and sustainable transport, while the government says subsidized fuel prices will not rise despite September crude prices jumping to $112.81 a barrel. Housing and Construction: A new land-data system aims to resolve site uncertainty and speed the government’s three-million-home program. Forests and Climate: Officials say rice self-sufficiency means Indonesia no longer needs to expand rice farming in forests, but plans’ fate remains unclear as fires spread haze across Sumatra, Kalimantan and Papua. Food Security: The government has allocated Rp3 trillion to build a national poultry breeding hub in Malang, intended to supply farms across the country. Industry and Trade: Indonesia’s iron and steel exports fell 4.9% year on year to $17.8 billion in January–August amid global trade barriers and cheaper imports. Marine Industry: A permanent ban on lobster-larvae exports is intended to shift value-adding into domestic cultivation, alongside a task force to tackle smuggling.

Aviation: Qantas and Jetstar have applied to add daily Indonesia routes, including Perth–Jakarta and services to Bali, as an expanded air agreement opens more capacity; approval is still pending. Gas and Investment: Pertamina and Medco will each take 10% stakes in Eni-operated Indonesian gas projects, including major developments in East and South Kalimantan. The assets include discoveries holding more than 10 trillion cubic feet of gas. Clean Energy: Indonesia’s SEDAYUSolar and China’s Yude Solar plan to develop solar projects, targeting industrial, mining and data-centre customers. Industry and SMEs: The government has introduced four measures to widen MSME participation in energy and mining, while Indonesia is targeting an 18.7% rise in factory productivity by 2029. Digital Infrastructure: Data-centre expansion is facing scrutiny over water use: Batam residents report prolonged shortages, and West Java has halted an AI data-centre project amid green-compliance concerns.

Energy Deals: Pertamina and Medco will each take over Eni’s 10% stakes in offshore Kutei Basin assets, strengthening Indonesian ownership of producing gas fields and major developments. Fisheries: Indonesia has permanently banned clear lobster-seed exports and launched a multi-agency task force to pursue smuggling networks and their financiers, steering seed supplies toward domestic aquaculture. Manufacturing: The Industry Ministry targets an 18.7% rise in factory-worker productivity by 2029, with vocational training aligned to industry needs. Investment Climate: A government task force says it has resolved 135 business complaints linked to more than Rp625 trillion in investment and potential employment for 31,000 workers. Indonesia–Egypt Ties: The countries plan a joint investment fund for strategic projects as they seek to deepen trade and economic cooperation.

Digital Infrastructure: Indonesia’s data-center industry wants clear, coordinated rules for permits, water and energy as investors face uncertainty over project approvals. A separate analysis argues that digital investment should strengthen growth beyond Java, not simply follow existing business hubs. Regional Energy: Indonesian businesses are among the most optimistic about the Asean Power Grid: 84% say meaningful progress would make them more willing to invest. But high energy costs are pushing many regional firms to delay decarbonisation plans. Trade and Investment: Indonesia and Egypt are pursuing an economic partnership agreement and joint investment fund, targeting $5 billion in bilateral trade by 2030 and expanded manufacturing cooperation. Technology Industry: Indonesia is positioning Bali’s Kura-Kura special economic zone as a base for AI and semiconductor research, using international partnerships to build local capabilities. Industrial Growth: Recent downstream projects and Indonesia’s first EV battery exports signal an effort to move more mineral processing and manufacturing at home.

Trade and Investment: Indonesia and Egypt are pursuing an Economic Partnership Agreement and joint investment fund, with a target to lift bilateral trade from $2.38 billion in 2025 to $5 billion by 2030. Industrial Growth: The Industry Ministry backs giving more industrial parks National Strategic Project status to accelerate downstreaming and spread investment; separately, Indonesia has launched 11 downstream projects worth $10.2 billion in North Maluku. Manufacturing Jobs: East Java unions warn that about 50,000 formal-sector workers could face layoffs, with textile, garment, footwear, electronics and other labor-intensive industries especially exposed. Halal Exports: Indonesia is using mandatory certification and overseas recognition deals to shape global halal standards and encourage more local processing and manufacturing.

Energy Investment: Indonesia is courting capital in oil and gas and renewables, while five planned projects with Azerbaijan include East Java exploration and cooperation between Pertamina and SOCAR. Industrial Expansion: The government wants manufacturing to exceed 20% of GDP. A proposed pause on new nickel smelters responds to oversupply, even as Indonesia marks its first EV battery exports. Aviation and Logistics: GMF AeroAsia and Oman’s Mach Aerospace plan about RO25.4 million in aviation maintenance, training and aircraft-component manufacturing. A new Belarus–Jakarta freight service via Vladivostok promises door-to-door delivery in 30 days or more. Food Supply Chains: Fisheries officials are linking village cooperatives with free-meal kitchens; two agreements will supply ready-to-cook catfish. Rice procurement has reached 4.11 million tonnes.

Food Industry: Indonesia plans three egg- and meat-processing plants to strengthen livestock supply chains, while village cooperatives are being linked with fish buyers, including free-meal kitchens. Energy Partnerships: Jakarta says five projects with Azerbaijan cover oil and gas exploration, production and trade, including cooperation between Pertamina and SOCAR. Manufacturing & Investment: Indonesia aims to raise manufacturing’s share of GDP above 20%; it has exported its first EV batteries and is considering a pause on new nickel smelters amid oversupply. Business Compliance: Mandatory halal certification remains scheduled to take effect on October 18, with tailored support planned for micro and small businesses and some imports. Transport: Indonesia plans 14,000 kilometres of new or reactivated railway by 2045.

Downstream Investment: Indonesia launched 11 projects worth US$10.2 billion in North Maluku, while downstreaming now accounts for 30% of national investment. Danantara also plans to bring 23 state-owned industrial estates under one group. Manufacturing and Exports: Indonesia has shipped its first EV batteries and aims to raise manufacturing above 20% of GDP. Food and Farming: A rice surplus has ended plans to clear forest for new paddies; the government also plans to replant 9,000 hectares of coconut plantations in 2027 to supply processors. Growth Outlook: UNCTAD forecasts Indonesia’s economy will grow 5.2% in 2026 as global growth slows to 2.6%, while tighter trade and investment barriers could make it harder for developing economies to enter strategic industries.

Food Supply: Bulog procured 4.11 million tonnes of rice from local farmers by Oct. 8, beating its 2026 target and setting a record. State Revenue: Non-tax revenue rose 41.7% to Rp492.3 trillion through September, lifted partly by energy and mineral prices and forest-area enforcement. Digital Industry: Indonesia is backing AI, semiconductors and digital skills as growth drivers; AirNav and Telkom University are also developing AI tools for aviation operations, with safety decisions remaining under human control. Manufacturing: The government wants manufacturing to reach 20–25% of GDP, up from about 19%, and says the sector must grow faster than the wider economy. Downstreaming: Prabowo launched 11 projects in North Maluku worth US$10.2 billion, part of a broader push to capture more value from Indonesia’s resources.

Downstreaming: President Prabowo launched 11 Chinese-backed projects worth US$10.2 billion in North Maluku, alongside Indonesia’s first EV battery exports. The Weda Bay industrial park has generated more than 100,000 jobs, with further expansion planned. Oil and Gas: Indonesia is seeking US technology, including supercomputing and geological data analysis, to lift crude output toward 1 million barrels a day by 2030. Solar Power: Industry groups say the 100-GW solar ambition is achievable, but faster licensing, clearer procurement rules, investment certainty and grid upgrades are needed. Industrial Estates: Danantara plans to merge 23 state-owned industrial parks, while the government considers waiving land rents to attract investors. Nickel: Indonesia is weighing a pause on new semi-processed nickel facilities amid concerns about oversupply.

Downstreaming: Prabowo launched 11 projects worth US$10.2 billion at Weda Bay, alongside Indonesia’s first EV battery exports. Four projects are starting operations and seven are breaking ground; the industrial park has attracted about US$20 billion and employs more than 100,000 people. Industrial Estates: Danantara plans to merge 23 state-owned parks into one 35,000-hectare operator, waive land rent from 2027 and earn revenue from utilities and services to draw investors. Investment: Downstreaming made up 30% of first-half investment, while the Islamic Development Bank set a US$2.56 billion financing envelope for Indonesia through 2030, including support for industrial upgrading and connectivity. Nickel Watch: Indonesia is weighing a pause on new nickel smelters amid oversupply, raising questions about the pace of further processing investment. Fiscal Policy: The finance minister ordered 30% cuts to remaining travel budgets and a freeze on non-essential spending to help keep the 2026 deficit below the 3% legal ceiling.

Industrial Strategy: Indonesia is considering a pause on new nickel smelters amid oversupply, while targeting Rp3,839 trillion in downstream investment through 2029. A new ministry is set to speed up value-added industry projects. Infrastructure: The government plans 14,000 kilometres of new or reactivated rail lines by 2045, while Belawan and Johor ports are exploring a trade corridor to strengthen regional supply chains. Manufacturing: Godrej Consumer Products opened the first phase of a new Kendal facility, and KT&G has started up a new Indonesian plant to expand production. Energy and Agriculture: Indonesia is scaling up sugarcane for its E20 bioethanol goal and aims to become the world’s top seaweed processor; 100-gigawatt solar plants could save up to Rp73 trillion.

Nickel Policy: Indonesia is weighing a moratorium on new plants producing semi-finished nickel as a global surplus of about 2.5 million tonnes weighs on prices. The government says it wants to prioritize higher-value finished products. Clean Energy: A planned 100-GWp solar buildout could cut electricity subsidies by up to Rp73 trillion, with 14 plants among the first projects. Trade Links: Johor Port and Pelindo are exploring a Belawan–Johor corridor to improve cargo flows and supply-chain links between North Sumatra and Malaysia. Growth and Investment: The government is targeting 6% economic growth by 2027 and says it will tackle barriers to private business and investment. Manufacturing: Godrej Consumer Products has opened the first phase of a new Kendal facility, while tobacco group KT&G has launched a new Indonesian plant, adding to the country’s manufacturing base.

Jakarta Concert Push: Kanye West’s only South-east Asian show in Jakarta was won less by money and more by a pitch built around Indonesia’s music and culture, plus the city’s ability to stage a 77,000-seat production. Pharma Talent-to-Market: Daewoong Pharmaceutical ran a joint Korean-Indonesian program to craft a go-to-market plan for its painkiller brand EzN6 Eve, training 80 pharmacy students on distribution and marketing for Indonesia. Paint Industry Deal: AkzoNobel agreed to sell its Decorative Paints business across seven SE Asia markets (including Indonesia) to Nippon Paint for about $1.35bn, while keeping coatings and global services. Consumer Manufacturing Boost: Godrej Consumer Products Indonesia inaugurated the first phase of a Kendal plant (household insecticides) under a $250m-ish investment push to deepen local production and exports. Aviation Maintenance Ownership: Garuda Indonesia plans to retake majority control of GMF Aeroasia via a rights issue, aiming to tighten the airline–MRO link after pandemic-era losses. Energy & Downstreaming Signals: Indonesia’s sovereign wealth fund Danantara invested $250m in US oil firm HighPeak Energy, targeting upstream expansion in the Permian. Food Security & Climate: Indonesia will halt forest clearing for new rice fields after reaching rice self-sufficiency, aligning with net carbon sink goals. Stablecoin Adoption Watch: Visa survey results show rising interest in stablecoins for spending and cross-border transfers across Asia Pacific, but trust and understanding gaps remain. Tourism Reef Warning: A Bali study says coral reefs at Sanur keep declining despite restoration, blaming governance gaps and unaddressed runoff and wastewater drivers.