AGP Executive Report

Rail Push: Indonesia is expanding its national railway network to 10,524 km from 6,927 km, aiming to cut logistics costs and ease congestion, with train passengers up 8.8% to nearly 550 million in 2025. Tourism Resilience: Indonesia tells the UN Tourism Executive Council it’s ready to back programs on sustainability and resilience, with a push to close digital and green skills gaps for youth and women. Gig Worker Protections: Indonesia welcomes an ILO convention on decent work in the platform economy, adopted June 12, covering safety, pay, social protection, and data transparency. Trade Boost via Quarantine: Barantin is upgrading four quarantine systems—biosecurity, digital traceability, pre-border cooperation, and fast clearance—to strengthen exports of animal, fish, and plant products. Indonesia–Mexico Ties: The Indonesian embassy opens a Cultural Center in Mexico City to deepen people-to-people links as trade hits US$4.6b. Nickel Investor Jitters: Chinese investors protest Indonesia’s nickel policy direction, warning new rules could raise costs and hurt downstream investment certainty. Fuel Price Shock: The government says non-subsidized Pertamax prices jumped to Rp16,250/liter and Pertamax Green to Rp17,000/liter, citing world oil moves amid student protests. Biodiversity Update: A critically endangered Sumatran tiger was captured on camera in Hutan Harapan, with further identification underway. Environment & Tech: Amazon claims its data centers are 7x more water-efficient than industry average, as AI’s environmental footprint faces scrutiny.

Student Protests in Jakarta: Hundreds of Indonesian students flooded central Jakarta on Friday under banners like “Indonesia Heading Toward Bankruptcy,” protesting fuel price hikes, budget waste, and Prabowo’s flagship free meals and village cooperative programs; police and TNI blocked parts of the march near Bundaran HI as organisers vowed more action. Sovereign Wealth Fund Bond Boost: Danantara Indonesia, the state’s sovereign wealth fund unit, raised US$1.5 billion in its debut US dollar bond sale, drawing about US$4.6 billion in orders and pricing five-year notes at 5.35% and 10-year notes at 5.95%, a key test of foreign investor appetite amid rupiah pressure. Economic Diplomacy Push: Indonesia’s foreign minister reaffirmed plans to strengthen economic diplomacy to attract trade and investment, stressing mutual benefit at a KADIN event in Jakarta. El Niño Watch: NOAA formally declared El Niño conditions underway, with experts warning of potentially extreme weather impacts that could disrupt rainfall and food production across regions. Labor Rights in the Gig Economy: The ILO adopted a new global treaty for platform workers, setting binding standards on pay, safety, social security, and how workers are classified. Nature Under Strain: Research links climate-driven extreme rainfall and landslides to the deaths of about 58 Tapanuli orangutans in four days, underscoring how fast extreme weather can push rare species closer to extinction.

Student Protests: Hundreds of Indonesian students flooded Jakarta on June 12, rallying under “Heading to Bankrupt Indonesia” against fuel and food price hikes, what they call wasteful spending, and the expansion of military roles in civilian life; police and soldiers were deployed in large numbers as protesters tried to reach the HI Roundabout and the palace area. Fuel & Food Pressure: The protests were sparked by this week’s gasoline price increase and broader cost-of-living strain, with students demanding rollback of Prabowo’s free-meals and village cooperatives programs. Danantara Clarification: Reuters reports Danantara’s export unit will not take over existing contracts or customer ties, saying its role is supervision via export transaction data—aimed at reducing state losses from under-invoicing and transfer pricing. Rupiah Watch: Bank Indonesia said the rupiah strengthened back below Rp18,000 after an off-cycle rate hike to 5.5%, supported by foreign inflows into SRBI and government bonds. Soybean Crisis: Indonesia is moving to cushion tempeh producers as soybean prices jump nearly 30%, with a Rp2,000/kg subsidy plan for imported soybeans to stabilize supply and prices. Budget Execution Focus: CPD warned the FY27 budget may be ambitious, but results will hinge on execution quality, not just size. Diplomacy & Trade: Indonesia and China agreed to broaden cooperation on HR development, technology transfer, and vocational education as they mark 76 years of ties.

Rupiah Pressure, Policy Response: Indonesia’s deputy finance minister said external and domestic economic pressures are “manageable” despite the rupiah sliding to record lows, after Bank Indonesia’s surprise rate hikes aimed at stabilizing capital outflows and inflation. Energy & Food Risk: Experts warn rising oil prices could boost biofuel demand sharply, tightening the link between fuel and food markets while fertilizer constraints add to food-cost pressure. El Niño Arrives: NOAA confirmed El Niño is officially here and likely to strengthen into a “Super” event, raising risks of drier conditions for Southeast Asia and Indonesia’s farmers as planting schedules race ahead. Conservation Alarm: Deadly Sumatra floods and landslides last year wiped out at least 7% of the critically endangered Tapanuli orangutan population, with climate-linked extreme rainfall blamed for habitat collapse. Creative Economy Push: Indonesia adopted WIPO’s Creative Economy Data Model to make the sector more data-driven, and Indonesia-South Korea talks advanced a high-level creative industries cooperation committee. Trade Enforcement: Indonesia’s Danantara Sumber Daya Indonesia clarified it was created to curb export fraud like transfer pricing and under-invoicing, not to seize commodity trade. ASEAN Investment Link: ASEAN diplomats visited Bangladesh’s BSEZ, signaling interest in expanding regional investment and industrial cooperation.

Indonesia–Foreign Investment: President Prabowo rejected claims his government is hostile to foreign investors, saying interest remains strong across sectors. Digital Infrastructure: STT GDC is expanding its Jakarta data center campus, with STT Jakarta 2 now operating at 24MW and STT Jakarta 3 topping out, while STT Jakarta 5 and 6 are set for 40MW each—building an AI-ready pipeline of 360MW+ for Indonesia. AI Adoption & Governance: Indonesia says 92% of knowledge workers use generative AI, while the government pushes AI innovation with security safeguards and ethical governance frameworks. Macroeconomy & Markets: The World Bank expects Indonesia’s growth to slow to 5% in 2026 as fiscal pressure rises, and Indonesia’s bond selloff resumed after a rate-hike relief rally faded. Food & Social Policy: The government will overhaul the Free Nutritious Meals (MBG) program within one month, including kitchen and beneficiary verification. Maritime Security: Indonesia’s navy foiled a bid to smuggle strategic raw minerals near Batam, seizing rare earth and radioactive materials. Energy & Climate Risk: A World Bank-linked report warns renewable assets across ASEAN face major climate exposure by 2030, with billions at risk.

Rupiah & Fuel Shock: Bank Indonesia’s surprise rate hike and a wider fuel price jump (Pertamax up 32% to Rp16,250/litre) are feeding cost-of-living worries as policymakers try to steady the currency. QRIS Cross-Border Push: Indonesia expands QRIS cross-border payments to Saudi Arabia and India to support hajj/umrah and tourism. AI’s Resource Cost: A UN report warns AI data centers could consume massive electricity and water by 2030, raising pressure on Indonesia’s power and water planning. Orangutan Tragedy in Sumatra: Climate-linked floods and landslides killed about 7% of the world’s rarest great ape, the Tapanuli orangutan, highlighting habitat risks. Trade & Investment Signals: Indonesia’s push for foreign inflows and market confidence continues as regional finance outlooks wobble amid the US-Iran conflict. World Cup Spotlight (Indonesia-linked): Saudi Arabia’s $2bn football spending spree and Indonesia’s World Cup group presence keep the spotlight on regional sports politics.

Fuel & Inflation Watch: Indonesia raised the price of widely used fuel by 32%, reviving cost-of-living worries as Pertamax users brace for higher daily expenses. Policy Response: The government and DPR are weighing stimulus to cushion households after the Pertamax hike, while BI signals it’s ready to defend the rupiah even if bond yields rise. Rupiah & Rates: Bank Indonesia expects 2027 growth at the top end of 5.1–5.9% and says it will coordinate fiscal, monetary, and financial steps to stabilize the currency. Clean Governance Push: President Prabowo ordered “zero tolerance” for corruption in healthcare, demanding transparent management in public hospitals. Legal Accountability: An Indonesian military court convicted four service members over an acid attack on human rights activist Andrie Yunus, drawing renewed scrutiny of TNI accountability. Halal Deadline: BPJPH urged firms to secure halal certification ahead of the Oct. 18, 2026 mandatory expansion, warning of sanctions for non-compliance. Digital Growth: Indonesia is accelerating AI-based GovTech to connect government data and broaden the tax base. Tourism & Environment: Bali’s waste crisis is flagged as a priority threat to its global reputation, with infrastructure gaps blamed for worsening piles.

Coal Export Overhaul: Indonesia’s Trade Ministry will centralize coal exports under state-owned PT Danantara Sumberdaya Indonesia (PT DSI), with a staged transition in 2026 and full exclusive control from Jan 1, 2027, requiring private exporters to route documents and data through PT DSI. Rupiah & Rates: Bank Indonesia unexpectedly hiked the BI rate by 25 bps to 5.50% to defend the rupiah and keep inflation in the 2026-2027 target range; the rupiah firmed to around Rp18,058/$ and the JCI jumped. Coal Export Curbs: The same policy push is also linked to tighter coal export rules, adding pressure and uncertainty for miners and traders. Digital-Green Cooperation: Singapore and Indonesia reaffirmed plans to deepen ties on digital infrastructure, green energy, industry, and supply chains, including a joint study for the Batam-Bintan-Karimun tech sector. Free Meals Governance Reset: President Prabowo reshuffled leadership at the National Nutrition Agency (BGN) to tighten SOP compliance and food quality for the MBG program. Regional Earthquake: A 5.1 quake hit the Talaud Islands, Indonesia. Retail Expansion: Marks & Spencer signed a franchise deal with MAP and plans to reopen in the Philippines later in 2026.

Monetary Policy Shock: Bank Indonesia delivered an unexpected 25-basis-point rate hike to 5.5% to defend the rupiah after it slid past IDR 18,000 per US dollar, aiming to keep inflation near the 2.5% target and attract foreign portfolio inflows. Market Mood: Jakarta stocks jumped as Asian peers rebounded on hopes of easing Iran-Israel tensions and softer oil prices. Food & Farming Push: The Agriculture Ministry and BRIN signed a new research pact to boost agricultural innovation for food self-sufficiency, including lab access for researchers. Power Trade Delay: Indonesia’s clean electricity exports to Singapore won’t start this year because transmission links still need 1–1.5 years of construction. Green & Digital Cooperation: Indonesia and Singapore expanded ties in BBK (Batam-Bintan-Karimun), including solar and digital economy projects, while Nokia and Indosat teamed up to modernize 5G for AI-ready services. Creative Economy in Prisons: The Creative Economy Ministry plans to scale creative skills training for correctional inmates, including music and film collaborations. Social Forestry Focus: Indonesia urged better social forestry management through agroforestry, aiming to raise incomes while protecting forests. Regional Diplomacy: Indonesia reaffirmed support for Myanmar’s inclusive peace process under ASEAN’s Five-Point Consensus. Enforcement: Indonesia deported 25 foreigners over illegal photography work tied to visa misuse.

Philippines Quake Response: A 7.8-magnitude earthquake struck Mindanao, killing at least 32 people and injuring dozens, with tsunami warnings later lifted after waves were reported; search-and-rescue is ongoing as buildings collapsed and landslides hit areas including General Santos. Digital Competition Watch: Asia-Pacific regulators are cracking down on “dark patterns” that steer users into unwanted choices, with Singapore pushing interface changes and Japan treating the issue as a potential competition-law problem. US Tariff Pressure on Forced Labor: The U.S. proposes new Section 301 tariffs of 10%–12.5% on imports from 60 economies, including Indonesia, over alleged failures to ban or enforce forced-labor import rules. Indonesia’s Energy & Tech Moves: Telkomsel rolled out an integrated ESG strategy, while DayOne secured a 1.5GW renewable supply deal in Malaysia—another sign of how AI and data growth are reshaping regional power demand. Halal Trade Expansion: Indonesia and Bangladesh are urging businesses to grow halal beyond food, targeting sectors like fashion, pharma, healthcare, medical devices, and digital services ahead of Jakarta’s D-8 Halal Expo 2026.

Philippines Quake Response: A powerful 7.8 earthquake struck off Mindanao, triggering tsunami warnings across the Philippines, Indonesia, Japan and Australia; reports say at least 15–19 people may have died, with 129–200+ injured as buildings collapsed in General Santos and schools were suspended. Energy & Trade: Indonesia’s Lemigas has been tasked to manage crude oil imports, including 150 million barrels from Russia through end-2026, under a new procurement regulation aimed at faster government-to-government deals. FX Watch: Bank Indonesia said reserves fell to $144.9B in May, still equivalent to about 5.6 months of imports, as policymakers stress external resilience. Regional Business Banking: Maybank launched Maybank2E, a single-login platform for cash management, trade finance and FX across markets, with online onboarding for SMEs. Energy JV: Eni and Petronas formed Searah, a 50-50 gas-focused venture spanning 14 Indonesia and 5 Malaysia assets, targeting 500,000 boe/d within three years. Indonesia Markets Sentiment: Coverage highlights investor concern over rupiah weakness and governance risks as markets reprice Indonesia.

India–Indonesia Strategic Push: External Affairs Minister S. Jaishankar and Indonesian FM Sugiono co-chaired the 8th Joint Commission Meeting in New Delhi, mapping cooperation across defence, maritime security, trade, fintech, health, critical minerals, tourism and education, with both sides also looking ahead to PM Modi’s Jakarta visit. Defence Deliverables: Indonesia and Qatar signed a defence cooperation statement of intent, but analysts warn Jakarta must move beyond ceremonial deals toward real training, exchanges and industrial follow-through. Rupiah & Trade Pressure: Finance Minister Purbaya Yudhi Sadewa inspected container pileups at Tanjung Priok, pointing to import delays and longer dwelling times as businesses report raw-material disruptions. Free Meals Under Scrutiny: Indonesia’s National Nutrition Agency (BGN) reshuffle and corruption probe are being framed as a make-or-break test for the Free Nutritious Meals (MBG) program. Central Bank Promotion: Bank Indonesia showcased Bali investment projects, including the Sanur Health SEZ, to foreign ambassadors to boost trade and MSME access. Ocean–Climate Angle: Climateworks highlights Indonesia’s push to embed ocean-based mitigation into updated climate plans, aiming to strengthen NDCs and unlock finance. Regional Security Watch: Japan and Indonesia began working-level talks on transferring retired Asagiri-class destroyers, focusing on sustainment, crew training and fleet integration.

Rupiah & Markets: South Korea unveiled targeted steps to curb won volatility and speculation after the currency hit its weakest level since 2009, as Asia steps up currency defense amid a stronger dollar—Indonesia is cited among recent interveners. Strategic Resources & Trade: Indonesia’s President Prabowo signed PP 24/2026 to route exports of strategic commodities like coal and palm oil through state firms, aiming to stabilize supply and boost value-added. Education Push: Prabowo urged students in Bali’s Sekolah Rakyat program to focus on discipline, integrity, and resisting bullying, while Public Works said Phase II People’s School construction is accelerating toward the 2026/27 school year. Infrastructure Cooperation: Indonesia invited Russian companies to join major rail corridor projects across Sumatra, Sulawesi, and Kalimantan, including tech, rolling stock, and low-carbon rail collaboration. Foreign Policy & Diplomacy: Indonesian FM Sugiono arrived in New Delhi to co-chair the 8th India-Indonesia Joint Commission Meeting, expanding cooperation across strategic sectors. Disaster Recovery: Indonesia’s disaster task force urged ministries to speed up budget allocation for post-flood and landslide rehabilitation in Aceh, North Sumatra, and West Sumatra.

Cuba Exit: Indonesian hotel operator Archipelago International confirmed it is ending its Aston-brand management arrangement for six hotels in Cuba, citing US sanctions and saying it could return if conditions improve. Public Opinion: A Pew Research Center survey across 36 countries found negative views of Israel and PM Benjamin Netanyahu have surged, with Indonesia among the highest at 86% unfavorable. Waste & Air Quality: A new study links China’s 2018 plastic waste import ban to a shift of waste to Indonesia, where researchers found higher fine-particle pollution near open dump sites. Nickel Market: Analysis says Indonesia is moving toward “value over volume,” using quotas and tighter smelter rules to support prices and a possible “green premium” for low-carbon nickel. Port Congestion: Finance Minister Purbaya Yudhi Sadewa wants tighter rules on how long cargo can sit at Tanjung Priok, after reports of thousands of documents and containers awaiting processing. Jakarta Global City: Jakarta’s planning office says human resources and knowledge management are central to the capital’s push to become a global city. Local Infrastructure: Papua’s Jayapura–Wamena road construction is still ongoing, with about 50 km being developed under a long-running PPP-funded plan. Sports: Gilas Pilipinas girls beat Indonesia 88-62 to sweep SEABA qualifiers for the FIBA U18 Women’s Asia Cup.

Rupiah & Markets: Indonesia’s finance minister Purbaya Yudhi Sadewa pushed back on fears of a 1997-98-style crisis, saying the fiscal and economy are solid while the rupiah slide is driven by negative sentiment; Central Bank Coordination: Bank Indonesia and the Finance Ministry agreed to boost the attractiveness of yields on Indonesian assets and keep liquidity in money and banking markets to pull portfolio inflows and stabilize the currency; KPK Anti-Graft: The Corruption Eradication Commission launched a probe into alleged bribery tied to banking notification services at BRI and Telkom, with possible state losses reported near Rp2 trillion; Tourism Growth: The Tourism Ministry said foreign arrivals rose to 1.25 million in April and 4.68 million in the first four months, supporting a positive trajectory; Waste & Climate Action: Government accelerated waste-to-energy projects in priority areas and launched the ASRI Movement for climate justice, alongside calls for “ecological repentance” and household waste separation; Energy & Industry: Indonesia also expects customs and excise revenue to keep recovering, reaching Rp123.8 trillion by end-May.

Forced-Labor Tariffs: The US has proposed new duties on goods from 60 countries, including Cambodia and several ASEAN states, after a USTR probe found many exporters fail to effectively ban forced-labor imports. Indonesia Wheat Push: USW signed a deal with Indonesia’s flour millers (APTINDO) to lift purchases of US milling wheat through 2030, aiming to expand market access via technical and trade programs. Rupiah & Cabinet Rumors: Finance Minister Purbaya Yudhi Sadewa dismissed resignation rumors, saying fiscal policy will stay on course as investors watch budget updates. Market Jitters: Wall Street slid sharply Friday as tech and semiconductor stocks tumbled amid rate worries. Palm Oil Export Overhaul: Palm futures fell as traders reacted to Indonesia’s centralised export control rules for strategic commodities, with the transition starting June 1. Health Policy: Indonesia is drafting plain packaging rules for cigarettes and e-cigarettes to curb youth smoking, with graphic warnings retained. Sports & Tourism: Indonesia Open badminton set up semis for Sze Fei-Nur Izzuddin; Bali will host the 2026 Asian Open Water Swimming Championship. Energy Deal: Empyrean shares jumped after a binding rig contract was secured for the Mako gas field development.