JAKARTA, June 1 : Indonesia pledged transparency in the state company that will become its sole exporter of important commodities, as a transition period to a centralised export system started on Monday with coal, palm oil and ferroalloys.President Prabowo Subianto on May 20 announced resource-rich Indonesia would centralise control of exports of all of its strategic commodities through a new state company, Danantara Sumberdaya Indonesia (DSI) , that will be overseen by sovereign wealth fund Danantara.The policy is aimed at improving tax revenues by tackling under-invoicing and transfer pricing, while also making sure proceeds are kept onshore to bolster U.S. dollar supplies, particularly after the rupiah hit its historic lows multiple times this year.Danantara's chief operating officer Dony Oskaria told a press conference on Sunday that DSI would operate transparently and accountably, including on the benchmarking of commodity prices during the transition.
"We will ensure that this company will be run transparently and can be monitored by everyone in Indonesia," Oskaria said.Indonesia is the world's largest exporter of thermal coal, palm oil and nickel, and its exports of these commodities topped $65 billion last year.Danantara has said it would honour long-term contracts but would review prices to make sure they are not below market levels.INDUSTRY CAUGHT OFF GUARDThe sudden announcement of the policy caught the business community off guard and pressured the stock market amid fears profit margins might be squeezed. Some rating agencies have also warned the plan could hurt investor sentiment.During the transition period, exporters must report all of their export documents to DSI but otherwise the government expected shipments to be "business as usual", chief economic minister Airlangga Hartarto said at the press conference.The government would evaluate the transition after three months to determine its next steps, but full implementation will start at the latest on January 1, 2027, Airlangga said.Several business associations said they still had questions about the plan, with presidential decrees on the export mechanism still to be made public.Some buyers have questions about potential impact on pricing and whether they need to switch third-party vendors, business groups said. Prices of palm oil fresh fruit bunches have also dropped sharply amid the uncertainty.Finance Minister Purbaya Yudhi Sadewa told the press conference that stock investors should see improvement in companies' profitability from better pricing of their exports via DSI.Oskaria said DSI's operations at first would be backed up by civil servants from several ministries, but Danantara is hiring and developing the technology for export monitoring.Monday was also the start of a new export earnings retention policy, requiring most exporters of natural resources to keep their proceeds at state banks.
