Economist warns communication key to export agency success

JAKARTA — Trimegah Sekuritas Indonesia chief economist Fakhrul Fulvian said that the success of export agency policies hinges on avoiding rushed implementation or perceptions of excessive interventionism by market participants. Conceptually, the government is trying to build a new framework for managing Indonesia’s export forex to better align with domestic financing needs, rupiah stability, and national downstreaming agendas, Fakhrul said. In the context of increasing global fragmentation, he said the move is not unusual, as many countries are establishing strategic institutions to safeguard external resilience and maximise natural resources’ impact on domestic economies. However, he stressed that the success of such policies depends primarily on market confidence. “If executed while upholding standard market principles, transparency, and clear communication, this could be a structural improvement opportunity for Indonesia’s balance of payments. But poor communication and implementation could lead markets to perceive it as overly aggressive state control over exports,” he said. Fakhrul added that many countries have similar institutions, but their success is determined by governance, transparency, and the ability to maintain market incentives. This momentum should also be used to improve Indonesia’s insurance and export-import financing industry. For example, South Korea’s Korea Export-Import Bank (KEXIM) has successfully underpinned strategic exports such as shipbuilding, electronics, batteries, and global infrastructure projects. Fakhrul said South Korea’s success was not due to state control alone, but because the institution acted as a catalyst for financing, risk mitigation, and economic diplomacy without creating uncertainty for businesses. In China, Sinosure plays a major role in providing export credit insurance and supporting domestic firms’ global expansion. However, Fakhrul cautioned that China’s model stems from its strong fiscal capacity, foreign reserves, and industrial power, making it unsuitable for direct replication by Indonesia. “Indonesia should emulate how these countries coordinate between finance, industry, and trade diplomacy. But it must also maintain market credibility and avoid perceptions of excessive state dominance in trade mechanisms,” he explained. He also noted Middle Eastern countries are moving towards similar sovereign-backed trading ecosystems to safeguard foreign reserves and energy bargaining power. Almost all share a common trait: clear communication to investors and gradual transitions. However, the establishment of PT Danantara Sumberdaya Indonesia (DSI) is not without risks. Fakhrul outlined major risks the government must anticipate. First, risks to the balance of payments and rupiah stability. He said if commodity firms like coal, palm oil, and nickel producers perceive policy uncertainty or rising operational risks, they may delay expansion, reduce production, or slow exports. “Indonesia remains heavily reliant on commodity inflows to support its external sector. If production or exports are disrupted by rising uncertainty perceptions, balance of payments pressures could emerge, potentially leading to further rupiah depreciation,” he said. Second, risks to sovereign risk perceptions and Indonesia’s credit rating. Fakhrul noted global rating agencies like S&P Global Ratings have signalled that institutional quality and policy consistency are key to maintaining Indonesia’s rating. “Global markets and rating agencies will assess whether the policy enhances efficiency and external resilience or creates new distortions. If the mechanism is seen as non-market-friendly or overly opaque, Indonesia’s risk perceptions could rise,” he said. Third, risks of new frictions and higher costs in mining and natural resource exports. Fakhrul warned that the new agency must not lead to additional bureaucratic layers, approvals, or administrative processes that undermine export sector competitiveness. “The state’s intention to strengthen its role must not translate into added costs, approvals, or unclear mechanisms. Indonesia has long struggled to reduce high-cost economies in the natural resources sector,” he said. However, Fakhrul still views the policy’s broad direction as strategically sound, especially as the world shifts towards strengthening national resilience, strategic supply chain control, and domestic foreign reserve security. He said Indonesia needs to consider a stronger long-term balance of payments structure less vulnerable to global dollar cycles and foreign capital volatility. “We have long relied too heavily on global market mechanisms without strong institutional instruments to optimally manage foreign reserves and strategic exports. I understand the policy’s direction, but such transitions must be gradual, extremely cautious, and accompanied by extraordinarily clear communication to markets,” Fakhrul said.