Indonesia is planning to create a new state entity to control exports of coal and palm oil — the two commodities that underpin its position as the world’s largest exporter of both — in a move that could send shockwaves through global commodity markets. The agency would report to Danantara, the sovereign wealth fund directly under President Prabowo Subianto, and could be announced as early as Wednesday, according to people familiar with the matter.
Why Indonesia is doing this
Two pressures are forcing Prabowo’s hand. The Indonesian rupiah hit a record low against the dollar this week, and the government is haemorrhaging tax revenue through under-invoicing — a practice where commodity exporters declare shipments at artificially low values to shift profits into lower-tax jurisdictions. A Global Financial Integrity study estimated the government lost $6.5 billion in tax revenue from this practice in 2016 alone. The new body is designed to close that gap by centralising oversight of export invoicing and foreign exchange inflows.
The broader fiscal context is equally stressed. Prabowo’s flagship universal free school meals programme and a rising energy import bill have strained state finances, while investor concerns about governance in Southeast Asia’s largest economy have compounded the currency pressure. The government has already imposed stricter limits on foreign exchange transactions; the central bank has been intervening repeatedly to support the rupiah.
What the new body would do
The proposed agency would manage commodity exports and crack down on under-invoicing by bringing shipment oversight under state control. Details of how it will function remain in flux, according to the people familiar with the plans. Danantara — the sovereign wealth fund that has emerged as Prabowo’s primary instrument for restructuring state economic assets — would supervise the entity. The ministries of trade and finance, along with Danantara and the Government Communication Agency, did not respond to requests for comment.
Indonesia’s benchmark stock index fell 3.5% on Tuesday, with traders citing speculation about the proposed body as a trigger.
What it means for global coal and palm oil markets
Indonesia’s dominance in both markets makes this a supply-side event with global implications. As the world’s top exporter of thermal coal and palm oil, any move toward centralised export management — or potential restrictions, benchmarked pricing, or output controls — would ripple through energy and edible oil markets worldwide. Indonesia has form here: it has previously banned certain natural resource exports to stimulate downstream manufacturing and has attempted price intervention through mandatory domestic sales at government-set benchmarks.
The India angle
India is among the largest importers of Indonesian coal and palm oil. Indian power utilities and edible oil refiners depend heavily on Indonesian supply. A state-controlled export regime in Jakarta that prioritises maximising rupiah inflows — potentially through volume controls or price benchmarks — could tighten availability or push up costs for Indian buyers. Palm oil in particular is the dominant edible oil consumed in India, and any disruption to Indonesian export flows feeds directly into domestic inflation.
This article is for informational purposes only and does not constitute investment advice. Please consult a qualified financial advisor before making any investment decisions.