AGP Executive Report

El Niño Watch: The US Climate Prediction Center says El Niño conditions are already present and set to strengthen into 2026–27, with likely below-normal rainfall risks for Southeast Asia and India—pushing Indonesian rice farmers to accelerate planting schedules. Creative Economy Data: Indonesia is adopting WIPO’s Creative Economy Data Model to map strengths and gaps, track IP monetization, jobs, and trade, and guide evidence-based policy. Indonesia–South Korea Creative Ties: Indonesia and South Korea plan a High-Level Creative Industries Cooperation Committee and a new MoU to expand co-productions, talent exchanges, and digital game development. AI Security Partnership: FIOR signed a Southeast Asia reseller deal with PT Digital Solusi Prima to deploy its AI Gateway for identity-based security and governance in finance, telecom, critical infrastructure, industry, and government. Biofuel vs Food Pressure: With oil prices near $100 amid Strait of Hormuz disruption, forecasts flag a sharp rise in biofuel demand and renewed food-price stress as blending mandates expand. Environment Court Move: Walhi intervened in the government’s lawsuit seeking damages and restoration against pulpwood firm PT Toba Pulp Lestari, arguing key orangutan and tiger habitat impacts must be addressed. Renewables & Energy Projects: Deputy Home Affairs Minister Ribka Haluk backs faster rollout of South Papua’s National Food, Energy, and Water Production Hub via regional spatial planning and coordination.

Automotive Manufacturing Push: Indonesia plans a national car hub in West Java with a 300,000-vehicle annual capacity, starting with 50,000 units in phase one and targeting an integrated ecosystem. Food Security & Logistics: The government will build 100 new Bulog rice warehouses (about Rp5 trillion) to preserve rice quality for at least two years, boosting national stock resilience. Halal Trade Drive: Indonesia’s Mandatory Halal policy (from Oct 2026) expands certification via BPJPH, including SEHATI for micro and small firms. Energy Transition Risk: A Zurich Insurance study flags about US$165bn of ASEAN renewable assets exposed to climate hazards by 2030, urging resilience spending. AI Talent Focus: Indonesia is prioritizing AI workforce development to support Golden Vision 2045 and close the public understanding gap on AI’s jobs impact. Trade & Investment Signals: Prabowo says Indonesia remains open to foreign investors; leaders also discussed post-ICA-CEPA cooperation with Canada and deeper industry ties with Russia under BRICS. Market Watch: Global freight forwarding hit €208.1bn in 2025 and is forecast to grow steadily to €233bn by 2030 as firms shift toward tech and value-added services.

Fuel & inflation pressure: Indonesia’s Pertamina lifted Pertamax (92 octane) by 32% to Rp16,250/l and Pertamax Green by 31.8% to Rp17,000/l, as Bank Indonesia’s surprise rate hike and higher subsidy costs keep cost-of-living concerns in focus. AI power and water strain: A UN report warns AI data centres could consume 945TWh of electricity and 9.3trn litres of water annually by 2030, raising new resource-stress questions for Indonesia’s growing digital buildout. Indonesia’s AI infrastructure push: ST Telemedia Global Data Centres expands its Jakarta campus, adding STT Jakarta 2 (24MW) and starting STT Jakarta 5 and 6 (40MW each), targeting 360MW+ of AI-ready, greener IT capacity. Energy industry dealmaking: Eni and Petronas formed the 50:50 Searah JV in Indonesia and Malaysia, backed by a $6bn revolving credit facility and a $20bn-plus five-year investment pipeline. Manufacturing & logistics: Indonesia reviews its National Car Project in Subang, aiming for a 300,000-vehicle annual hub to deepen local supply chains. Commodities watch: Nickel’s oversupply hangover remains heavy, with exchange stocks still signaling dampened recovery hopes. Trade & compliance: Bangladesh’s RMG exports to the US fell 11.24% in Jan–Apr 2026, while the US crab meat ban hits Philippine exporters hard—both underline how market access rules can swing industry fortunes.

Philippines Earthquake Response: Rescuers in Mindanao kept searching ruined buildings after a 7.8 quake killed at least 37 and displaced 32,000+ as officials warned more inspections were needed for collapsed structures and possible survivors. Indonesia–Singapore Digital Infrastructure: Indonesia and Singapore are exploring how to optimize a regional data center hub in the Singapore–Johor–Riau triangle, with Batam’s Nongsa Digital Park and other industrial zones in the plan. Palm Oil Trade Scrutiny: Indonesia questioned Maybank staff over suspected palm oil export flows tied to the Salim Group, focusing on whether goods were invoiced below market prices to reduce taxes. Agribusiness Downstreaming in Maluku: Indonesia’s agriculture minister approved coconut and cassava downstreaming projects in Maluku to shift farmers from raw sales to local processing and jobs. Workforce for AI and Automation: Indonesia told the ILC in Geneva it’s expanding internships and vocational training while pushing stronger worker protections as AI reshapes jobs. Energy Security & Tech Ties: Indonesia and South Korea flagged energy, AI, advanced tech, and skills as anchors for the next phase of cooperation. Housing Delivery: Prabowo approved expanding Indonesia’s home renovation program through 2027 to improve access to decent, affordable housing.

Rupiah Watch: Bank Indonesia unexpectedly hiked its policy rate by 25 bps to 5.5% to defend the rupiah, which slipped back under IDR 18,000 per US dollar as energy costs and Middle East-driven volatility keep pressure on inflation. Food & Nutrition Governance: Indonesia’s National Nutrition Agency (BGN) leadership was reshuffled to tighten the Free Nutritious Meals (MBG) program, with a push to refocus beneficiaries and improve kitchen management, especially for remote 3T areas. Retail Expansion: Marks & Spencer signed a new franchise deal with MAP to reopen in the Philippines, with the first store planned in Glorietta before end-2026—another Southeast Asia growth step for the fashion-to-food retailer. Digital + Green Industrial Ties: Singapore and Indonesia agreed to deepen cooperation on digital infrastructure, green energy and industrial development, including a joint study to grow the Batam-Bintan-Karimun tech sector. Automation Push: AGIBOT launched its embodied AI partner conference in Jakarta, pitching humanoid robotics and a Robot-as-a-Service model for Indonesian industries. Regional Risk: Moody’s said the Philippines is relatively less exposed to China’s export shift than peers, while Indonesia faces higher-risk manufacturing segments. Disaster Update: A 7.8 quake in the Philippines left thousands displaced and dozens dead, with rescue efforts hampered by damaged roads and aftershocks.

Food Safety Crackdown: Indonesia’s Bapanas and the Trade Ministry are tightening oversight of fresh food to curb toxic pesticide residues, using mobile lab vehicles for faster market testing. Agri Resilience: With El Niño risks rising, farmers in West Java are being pushed to adjust planting schedules to protect rice output. Plantation Push: The government plans to distribute about 280 million cocoa and coconut seedlings, backed by Rp9.5 trillion, to revive plantation productivity and rural incomes. Manufacturing Exports: The Ministry of Industry wants manufacturing’s export share to rise from 20% to 30% while still meeting domestic demand. Palm Price Enforcement: Indonesia is intensifying monitoring and probes into palm commodity pricing to prevent unfair practices and stabilize supply chains. Preventive Health Tech: Actxa and LIF launched a co-branded smart ring with AI glucose scanning, aiming to expand preventive health adoption in Indonesia. Logistics & Connectivity: ECS Group expands Asia air cargo services with tech and feeder networks, while AYMP advised KETR on a bond shelf program to fund submarine cable deployment. Energy/Infrastructure: JGC Holdings was selected for engineering services on Mozambique’s Coral Norte LNG project, underscoring continued EPC demand in the region. Regional Shock: A 7.8 quake in the Philippines has killed dozens and displaced tens of thousands, with tsunami warnings and ongoing rescue operations affecting regional logistics and risk planning.

Philippines Disaster Response: A 7.8 quake off Mindanao killed at least 35 people, injured 200+ and triggered tsunami waves and landslides, with Indonesia reporting smaller impacts—prompting renewed safety warnings for aftershocks. Retail Expansion in SEA: Marks & Spencer is shifting its Philippines growth to Indonesian partner MAP via a new franchise deal, with fashion, home, beauty and food set to return by end-2026. Food Security & Policy: Indonesia’s National Nutrition Agency will refocus the Free Nutritious Meals program on budget efficiency and tighter kitchen capacity planning, while Trade Minister Budi Santoso says Minyakita is pulled from food aid and routed through traditional markets. Energy & Industry Moves: Eni and Petronas launched the Searah gas joint venture spanning Indonesia and Malaysia, targeting 500,000 boe/d within three years after a $20bn-plus investment plan. BRIN Innovation Push: BRIN is developing nuclear-tech applications for food irradiation and crop gains, and also backs plastic-waste-to-fuel tech for fishermen to cut diesel dependence. Trade & Compliance: The US USTR proposed Section 301 forced-labor tariffs that include Indonesia, with public comments due early July. Halal Business Linkages: Indonesia and Bangladesh highlighted halal opportunities beyond food, pointing to the D-8 Halal Expo in Jakarta in July.

Rupiah Shock: Indonesia’s rupiah slid to a record low above IDR18,000 per US dollar and the Jakarta stock index dropped as investors sold local bonds and shares, raising fears of a squeeze on manufacturers via higher rates and tighter credit. Logistics Push: The government targets cutting national logistics costs to 12.5% of GDP by 2029, aiming to improve inter-regional connectivity and speed goods distribution. Energy & Industry Deals: TotalEnergies ENEOS finished Phase 2 of a rooftop solar expansion at chocolate maker PT Ceres in Bandung, adding 1.4 MWp and covering about 12% of power needs. Regional Power Trade: Sarawak Energy says Asean power exchange is feasible if governments, regulators and utilities align on grid readiness and long-term investment certainty. Food Security Warning: The UN agency chief warned that the Strait of Hormuz disruption could trigger a food crisis as fertiliser and fuel costs hit planting decisions. Disaster Watch: A 7.8 quake off Mindanao, Philippines, killed at least 12 and injured 200+ while triggering tsunami warnings across the region, including Indonesia.

Aviation Policy: Indonesia is finalizing a policy to exempt aircraft spare parts from import duties, aiming to cut airline costs and improve efficiency, while also refining the fuel surcharge mechanism to respond faster to jet fuel price moves. Regional Security & Maritime: Japan and Indonesia have started working-level talks on transferring retired JMSDF Asagiri-class destroyers to the Indonesian Navy, including sustainment, crew training, and integration planning. Trade & Diplomacy: India and Indonesia, via their 8th Joint Commission Meeting in New Delhi, reviewed cooperation across defence, maritime security, digital connectivity, trade, fintech, health, fertilisers, critical minerals, and people-to-people ties ahead of PM Modi’s Jakarta visit. Creative Economy: Indonesia’s gaming and esports sector is being positioned as a jobs-and-growth engine for the creative economy, with government-industry collaboration to build digital talent and expand innovation. Environment & Coastal Resilience: Mangrove forests are showing signs of recovery globally since 2010, driven by stronger protections and natural regeneration—good news for storm protection and blue-carbon goals. Shipping Risk: A container vessel chartered by Samudera Shipping sank en route from Singapore to Pasir Gudang; crew were evacuated and a replacement vessel is being arranged.

Education & Human Capital: Indonesia’s Public Works Ministry says Phase II People’s Schools construction is on track for the 2026/2027 school year, with 222 nutrition kitchen units (SPPGs) for the Free Nutritious Meals (MBG) program completed across 30 provinces and handover reviews underway. Disaster Recovery: The disaster recovery task force urges ministries to speed budget allocation and disbursement for post-flood and landslide rehabilitation in Aceh, North Sumatra and West Sumatra, targeting completion by 2028. Skills for Industry: A deputy higher education minister pushes vocational universities to produce job-ready tech talent and boost domestic technological self-reliance. Infrastructure & Transport: Indonesia invites Russian firms to join Trans-Sumatra, Trans-Sulawesi and Trans-Kalimantan rail corridor projects, including rolling stock, safety standards and low-carbon rail. Aviation Compliance: The transport ministry steps up aviation rules ahead of an ICAO audit in late 2026 or early 2027. Food Security & Agriculture: The agriculture minister calls for universities to drive downstreaming and innovation to sustain food self-sufficiency. Commodities Watch: Copper prices slide on a stronger dollar and rate-hike fears, while analysis flags a potential structural copper deficit risk.

Nickel Market Outlook: Indonesia is shifting nickel policy toward “value over volume,” using quotas and a moratorium on new smelters to act more like an “OPEC-style” manager, while a “green premium” and EU CBAM reshape pricing. Port & Logistics: Indonesia’s finance minister wants tighter rules on how long cargo can sit at Tanjung Priok, citing congestion and a backlog of thousands of documents and containers, after businesses complained about longer dwelling times. Energy & Infrastructure: Jakarta is pushing HR development as the core of becoming a global city, while Highland Papua confirms Jayapura–Wamena road construction continues under a long-term PPP. Renewables & Climate Risk: The environment ministry backs a hybrid approach for northern Java—seawall plus groundwater control, spatial planning, and mangrove restoration—to cut abrasion and tidal flooding. Trade & Investment: Canada’s PM Mark Carney met President Prabowo, highlighting CEPA and sectors like clean tech, agri-food, infrastructure, critical minerals, and finance. Education & Skills: Indonesia invites investors to build a tourism vocational school in Labuan Bajo to lift hospitality skills, with a Mandarin learning center idea for growing Chinese arrivals.

Waste-to-Energy Push: Indonesia is accelerating waste-to-energy (PSEL) facilities, with 3 sites set for groundbreaking soon and 12 more moving into partner selection, targeting operations in 2028 and cutting landfill pressure. Ecological Repentance: The environment ministry is urging “ecological repentance” as waste tops 51 million tons annually and most waste still goes unmanaged, including calls to separate organic and inorganic trash at source. Biodiversity Risk to Finance: New research warns biodiversity loss could raise sovereign borrowing costs and trigger debt stress, pushing nature-related risks into credit ratings. Trade Bloc Momentum: Indonesia’s push to join the world’s largest trading bloc RCEP is moving forward, with governments working through compliance steps. Customs & Excise Revenue: Indonesia’s customs and excise collections hit $6.85bn by end-May, with import duties rising and export duties easing as manufacturing improves. Digital Finance Security: OJK is urging stronger transaction security as cyber threats and AI-enabled fraud rise alongside booming digital payments. Energy Outlook: SKK Migas expects higher oil and gas lifting in 2027, supported by drilling and upstream projects.

Cigarette Control: Indonesia’s Health Ministry is drafting rules for standardized plain packaging for cigarettes and e-cigarettes, keeping graphic health warnings and allowing limited brand names, with up to a 12-month transition. Food Security & Supply: Indonesia’s agriculture deputy minister says chicken eggs could be added to the government’s food aid to absorb farm output when prices fall, linking it to the MBG nutrition program. Palm Oil Policy Shock: Palm oil prices slid as traders digested Indonesia’s new centralised export system for strategic commodities, starting June 1 with full rollout next year, while Dalian oil weakness weighed sentiment. Energy & Drilling: Conrad Asia Energy’s Natuna unit booked a jack-up rig for six Mako gas development wells, targeting Q2 2027 start—another step in Indonesia’s offshore gas push. Commodities & Markets: Indonesia’s rupiah weakness and policy moves are in focus as regional investors watch currency defense and trade risks. Environment & Enforcement: NGOs urge stronger action against illegal mercury trade after Indonesia seized liquid mercury smuggled via port and airport routes. Climate Risk Lens: A Reuters-cited study warns biodiversity loss could raise sovereign borrowing costs, flagging nature-linked debt stress that matters for emerging markets.

Indonesia E-Commerce Overhaul: Trade Minister Budi Santoso signed the updated PMSE regulation, explicitly bringing ride-hailing and Online Travel Agents under the e-commerce framework—regulating the sale of goods/services via platforms, not the transport itself. US Tariff Relief Bid: Indonesia’s Airlangga Hartarto says the USTR plans to grant 18 Section 301 tariff exclusions and that a proposed 10% duty plus exemptions could boost manufacturing competitiveness, with copper cathode exports from Freeport Indonesia expected to be considered for relief. Energy Transition Push: Indonesia will mandate E5 gasoline (5% bioethanol) from the second half of 2026, starting in Java, while preparing a nationwide B50 biodiesel blend rollout from July 1, 2026. Markets Under Pressure: The JCI slid 2.53% in Friday’s first session as the rupiah edged up slightly to around IDR18,038 per US dollar, reflecting investor caution. Copper Supply Focus: Freeport-McMoRan set Q2 2026 copper sales targets as it ramps Grasberg underground operations in Papua, amid ongoing global tightness concerns. Climate Risk to Food: Asia braces for El Niño-driven dryness that is already disrupting planting—from Indonesia’s palm oil areas to rice and wheat belts—raising food price worries.

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.