This Week in Indonesian Business and Investment (15-21 Feb 2026)
Rarely does a single week reshape Indonesia's economic narrative as dramatically as the one just concluded. From the signing ceremony in Washington to a courtroom in the United States capital, the seven days between 15 and 21 February 2026 produced developments that will reverberate through Indonesian trade policy, investment strategy, and domestic politics for months to come.
**The Washington Pivot**
The centrepiece of the week was President Prabowo Subianto's working visit to the United States, which culminated on 19 and 20 February in the signing of the Agreement on Reciprocal Trade (ART) with President Donald Trump. The deal, framed by both sides as the foundation of a "new golden age" in the US-Indonesia alliance, reduces the reciprocal tariff on Indonesian goods entering the United States from 32 per cent to 19 per cent, whilst granting zero-duty access for 1,819 Indonesian tariff lines covering palm oil, coffee, cocoa, rubber, semiconductors, and textiles. In return, Indonesia eliminates import duties on more than 99 per cent of American products and commits to a package of procurement obligations that includes the purchase of 50 Boeing aircraft worth approximately US$13.5 billion, annual energy imports of US$15 billion covering crude oil, refined gasoline, and liquefied petroleum gas, and a further extension of Freeport-McMoRan's Papua mining concession to 2061 alongside a US$20 billion investment commitment. Cabinet Secretary Teddy Indra Wijaya confirmed that Prabowo was the sole head of state to secure a one-on-one bilateral meeting with Trump during the Board of Peace summit, a diplomatic coup that the government presented as evidence of Indonesia's rising strategic weight.
The MoU bonanza that accompanied the summit was equally striking. Eleven cooperation agreements worth a combined US$38.4 billion were signed at the US-Indonesia Business Summit, witnessed by Prabowo and spanning critical minerals, oilfield recovery, agribusiness, textiles, furniture, and semiconductor technology. Notably, Pertamina inked a deal with Halliburton on enhanced oil recovery, whilst Freeport-McMoRan formalized its critical minerals partnership with the Ministry of Investment and BPI Danantara. A semiconductor joint venture involving Batam's Wiraraja GESEIP National Strategic Project attracted initial US investment of US$4.9 billion, with a potential follow-on commitment of US$26.7 billion if the first phase succeeds.
Coordinating Minister Airlangga Hartarto noted that 90 per cent of Indonesia's proposals were accommodated in the final text, and Trade Minister Budi Santoso credited President Prabowo's personal diplomacy with accelerating not just the US deal but also the long-delayed Indonesia-EU Comprehensive Economic Partnership Agreement and new pacts with Canada and the Eurasian bloc.
**A Supreme Court Twist**
The Washington triumph was complicated almost immediately by a landmark ruling from the US Supreme Court. On 21 February, the court voted 6-3 to strike down Trump's sweeping global tariff policy, finding that the International Emergency Economic Powers Act does not grant the president authority to impose tariffs. The ruling, which upheld earlier lower court decisions, invalidates the "reciprocal" tariff regime that had given rise to Indonesia's 32 per cent rate in the first place. Trump responded swiftly by invoking the rarely used Section 122 of the Trade Act of 1974 to impose a blanket 10 per cent global tariff effective for 150 days from 24 February 2026.
For Indonesia, the implications were immediately contested. Prabowo, speaking from Washington, declared the new 10 per cent rate advantageous given that it falls well below the 19 per cent rate agreed under the ART. Airlangga confirmed that the bilateral agreement remains in force and within its 60-day implementation period. However, the Centre of Reform on Economics (CORE) took a sharper view. Executive Director Mohammad Faisal urged the government to seize the moment to renegotiate the ART, arguing that many of its provisions are disadvantageous to Indonesia -- particularly the fact that the majority of the 1,819 tariff-exempt product lines cover unprocessed raw materials rather than higher value-added goods. CORE also warned against granting the United States special exemptions on local content requirements, arguing this would set a damaging precedent for Indonesia's industrialisation agenda.
**The Halal Fault Line**
A separate controversy simmered at home over the trade deal's implications for Indonesia's halal certification framework. The ART contains provisions exempting certain American goods -- including cosmetics, medical devices, and products using conventional slaughter practices -- from Indonesia's mandatory halal certification requirements under Law No. 33/2014. The Indonesian Ulema Council (MUI) pushed back firmly. Fatwa chief Professor Asrorun Ni'am Sholeh insisted that halal labelling is a constitutionally protected right and urged consumers to avoid non-halal products, whilst acknowledging room for administrative simplification in certification processes. MUI described halal assurance as a fundamental human rights issue rooted in religious freedom, a framing that places it on a collision course with certain annexes of the ART. The government's response -- that zero-tariff US agricultural imports such as soybeans, wheat, and cotton will not undermine domestic industry because these commodities are not produced locally in sufficient quantity -- addressed the economic dimension but left the religious and regulatory questions largely unresolved.
**Investors Circle Danantara**
Alongside the formal trade negotiations, Prabowo held a nearly two-hour session with 12 leaders of global investment firms collectively managing approximately US$16 trillion in assets, a gathering that included the heads of Oaktree Capital, BlackRock, KKR, Warburg Pincus, and Eldridge Industries -- the last being Chelsea FC and Los Angeles Lakers owner Todd Boehly. The meeting, facilitated through BPI Danantara, the sovereign wealth fund established earlier in Prabowo's term, saw investors express strong interest in the fund as a strategic local partner across renewable energy, infrastructure, digital economy, and energy transition projects. Investment Minister Rosan Roeslani reported that several firms were considering opening representative offices in Indonesia. Prabowo's declaration that Indonesia is "no longer a sleeping giant" became the rallying phrase of the visit, signalling a deliberate effort to reframe the country's self-image before global capital.
The week also brought scrutiny of Danantara's domestic operations, with a detailed account of its "holdingisation" strategy -- consolidating state-owned enterprises into 14 major holding groups under COO Dony Oskaria -- circulating widely. The restructuring is designed to eliminate bureaucratic overlap and sharpen SOE competitiveness, though House Commission XI Chairman Misbakhun stressed that public credibility would ultimately depend on project realisation and measurable outcomes rather than policy architecture alone.
**Financial Markets Under Pressure**
Back home, Indonesia's financial markets navigated a testing week. Bank Indonesia held its benchmark BI Rate steady at 4.75 per cent at the February Board of Governors meeting, with Governor Perry Warjiyo signalling that further cuts remain possible later in the year but that global volatility and capital flow pressure constrain the timing. The rupiah hovered in the Rp16,800 to Rp16,942 range throughout the week, weighed down by a stronger US dollar, hawkish Federal Reserve minutes, and lingering investor concerns over MSCI's evaluation of Indonesia's capital market transparency and free float structure. Bank Indonesia reported US$1.6 billion in net foreign portfolio inflows from the start of 2025 through mid-February, primarily into SRBI and government securities, and maintained that the rupiah is fundamentally undervalued. The country's balance of payments posted a US$6.1 billion surplus in Q4 2025, with foreign exchange reserves at US$156.5 billion.
Gold stole the headlines in the commodity space. Antam gold breached the psychologically significant Rp3 million threshold on 21 February, reaching Rp3.012 million per gram -- a Rp68,000 single-day surge -- as global spot prices held above US$5,000 per troy ounce on the back of geopolitical uncertainties, sustained central bank buying, and safe-haven demand. The OJK delivered an encouraging signal for the broader financial sector, reporting 7.92 per cent year-on-year growth in Q4 2025, the highest rate since June 2021, with the ratio of financial assets and products to GDP reaching 184 per cent.
The Jakarta Composite Index ended the week broadly flat after a volatile ride, closing around 8,217. Structural concerns about the market persisted: the IDX confirmed that 267 listed companies would need to absorb up to Rp187 trillion in additional market capitalisation to meet a new 15 per cent minimum free float requirement scheduled for March 2026. Meanwhile, BRI President Director Hery Gunardi warned that despite ample banking sector liquidity, actual credit growth remains hampered by weak demand, with new consumer lending plunging and MSME non-performing loans rising since late 2024.
A domestic procurement controversy added an industrial dimension to the week. GAIKINDO, the automotive industry association, and Industry Minister Agus Gumiwang Kartasasmita pushed back against a Rp24.66 trillion contract to procure 105,000 commercial vehicles from India's Tata Motors and Mahindra and Mahindra for the Merah Putih Village Cooperative programme, arguing that domestic manufacturers retain ample capacity and that the deal forgoes approximately Rp27 trillion in local economic value-added. Several parliamentarians, including Golkar's Ilham Permana, raised governance questions about whether such large-scale public procurement should prioritise total cost of ownership and domestic industrial resilience over lowest unit price.
**Outlook**
Indonesia enters the coming weeks carrying both momentum and unresolved complexity. The ART has been signed and MoUs tallied, but ratification by both legislatures, implementation within the 60-day window, and Freeport's contract extension to 2061 all require further technical work. The Supreme Court's tariff ruling introduces fresh legal uncertainty into the global trading environment, and Trump's emergency 10 per cent tariff -- active for 150 days -- creates a de facto deadline for reassessment. Domestically, the halal certification dispute, the Indian truck procurement controversy, and the structural fragility of credit demand all point to friction between the pace of economic diplomacy at the presidential level and the slower-moving reality of industrial policy, regulatory coherence, and household purchasing power. Whether Danantara can convert pledges from US$16 trillion in institutional capital into tangible investment inflows -- and whether the ART's tariff gains translate into export diversification rather than a simple commodities bonanza -- will define how Indonesia's "sleeping giant" narrative is tested in the months ahead.
**The Washington Pivot**
The centrepiece of the week was President Prabowo Subianto's working visit to the United States, which culminated on 19 and 20 February in the signing of the Agreement on Reciprocal Trade (ART) with President Donald Trump. The deal, framed by both sides as the foundation of a "new golden age" in the US-Indonesia alliance, reduces the reciprocal tariff on Indonesian goods entering the United States from 32 per cent to 19 per cent, whilst granting zero-duty access for 1,819 Indonesian tariff lines covering palm oil, coffee, cocoa, rubber, semiconductors, and textiles. In return, Indonesia eliminates import duties on more than 99 per cent of American products and commits to a package of procurement obligations that includes the purchase of 50 Boeing aircraft worth approximately US$13.5 billion, annual energy imports of US$15 billion covering crude oil, refined gasoline, and liquefied petroleum gas, and a further extension of Freeport-McMoRan's Papua mining concession to 2061 alongside a US$20 billion investment commitment. Cabinet Secretary Teddy Indra Wijaya confirmed that Prabowo was the sole head of state to secure a one-on-one bilateral meeting with Trump during the Board of Peace summit, a diplomatic coup that the government presented as evidence of Indonesia's rising strategic weight.
The MoU bonanza that accompanied the summit was equally striking. Eleven cooperation agreements worth a combined US$38.4 billion were signed at the US-Indonesia Business Summit, witnessed by Prabowo and spanning critical minerals, oilfield recovery, agribusiness, textiles, furniture, and semiconductor technology. Notably, Pertamina inked a deal with Halliburton on enhanced oil recovery, whilst Freeport-McMoRan formalized its critical minerals partnership with the Ministry of Investment and BPI Danantara. A semiconductor joint venture involving Batam's Wiraraja GESEIP National Strategic Project attracted initial US investment of US$4.9 billion, with a potential follow-on commitment of US$26.7 billion if the first phase succeeds.
Coordinating Minister Airlangga Hartarto noted that 90 per cent of Indonesia's proposals were accommodated in the final text, and Trade Minister Budi Santoso credited President Prabowo's personal diplomacy with accelerating not just the US deal but also the long-delayed Indonesia-EU Comprehensive Economic Partnership Agreement and new pacts with Canada and the Eurasian bloc.
**A Supreme Court Twist**
The Washington triumph was complicated almost immediately by a landmark ruling from the US Supreme Court. On 21 February, the court voted 6-3 to strike down Trump's sweeping global tariff policy, finding that the International Emergency Economic Powers Act does not grant the president authority to impose tariffs. The ruling, which upheld earlier lower court decisions, invalidates the "reciprocal" tariff regime that had given rise to Indonesia's 32 per cent rate in the first place. Trump responded swiftly by invoking the rarely used Section 122 of the Trade Act of 1974 to impose a blanket 10 per cent global tariff effective for 150 days from 24 February 2026.
For Indonesia, the implications were immediately contested. Prabowo, speaking from Washington, declared the new 10 per cent rate advantageous given that it falls well below the 19 per cent rate agreed under the ART. Airlangga confirmed that the bilateral agreement remains in force and within its 60-day implementation period. However, the Centre of Reform on Economics (CORE) took a sharper view. Executive Director Mohammad Faisal urged the government to seize the moment to renegotiate the ART, arguing that many of its provisions are disadvantageous to Indonesia -- particularly the fact that the majority of the 1,819 tariff-exempt product lines cover unprocessed raw materials rather than higher value-added goods. CORE also warned against granting the United States special exemptions on local content requirements, arguing this would set a damaging precedent for Indonesia's industrialisation agenda.
**The Halal Fault Line**
A separate controversy simmered at home over the trade deal's implications for Indonesia's halal certification framework. The ART contains provisions exempting certain American goods -- including cosmetics, medical devices, and products using conventional slaughter practices -- from Indonesia's mandatory halal certification requirements under Law No. 33/2014. The Indonesian Ulema Council (MUI) pushed back firmly. Fatwa chief Professor Asrorun Ni'am Sholeh insisted that halal labelling is a constitutionally protected right and urged consumers to avoid non-halal products, whilst acknowledging room for administrative simplification in certification processes. MUI described halal assurance as a fundamental human rights issue rooted in religious freedom, a framing that places it on a collision course with certain annexes of the ART. The government's response -- that zero-tariff US agricultural imports such as soybeans, wheat, and cotton will not undermine domestic industry because these commodities are not produced locally in sufficient quantity -- addressed the economic dimension but left the religious and regulatory questions largely unresolved.
**Investors Circle Danantara**
Alongside the formal trade negotiations, Prabowo held a nearly two-hour session with 12 leaders of global investment firms collectively managing approximately US$16 trillion in assets, a gathering that included the heads of Oaktree Capital, BlackRock, KKR, Warburg Pincus, and Eldridge Industries -- the last being Chelsea FC and Los Angeles Lakers owner Todd Boehly. The meeting, facilitated through BPI Danantara, the sovereign wealth fund established earlier in Prabowo's term, saw investors express strong interest in the fund as a strategic local partner across renewable energy, infrastructure, digital economy, and energy transition projects. Investment Minister Rosan Roeslani reported that several firms were considering opening representative offices in Indonesia. Prabowo's declaration that Indonesia is "no longer a sleeping giant" became the rallying phrase of the visit, signalling a deliberate effort to reframe the country's self-image before global capital.
The week also brought scrutiny of Danantara's domestic operations, with a detailed account of its "holdingisation" strategy -- consolidating state-owned enterprises into 14 major holding groups under COO Dony Oskaria -- circulating widely. The restructuring is designed to eliminate bureaucratic overlap and sharpen SOE competitiveness, though House Commission XI Chairman Misbakhun stressed that public credibility would ultimately depend on project realisation and measurable outcomes rather than policy architecture alone.
**Financial Markets Under Pressure**
Back home, Indonesia's financial markets navigated a testing week. Bank Indonesia held its benchmark BI Rate steady at 4.75 per cent at the February Board of Governors meeting, with Governor Perry Warjiyo signalling that further cuts remain possible later in the year but that global volatility and capital flow pressure constrain the timing. The rupiah hovered in the Rp16,800 to Rp16,942 range throughout the week, weighed down by a stronger US dollar, hawkish Federal Reserve minutes, and lingering investor concerns over MSCI's evaluation of Indonesia's capital market transparency and free float structure. Bank Indonesia reported US$1.6 billion in net foreign portfolio inflows from the start of 2025 through mid-February, primarily into SRBI and government securities, and maintained that the rupiah is fundamentally undervalued. The country's balance of payments posted a US$6.1 billion surplus in Q4 2025, with foreign exchange reserves at US$156.5 billion.
Gold stole the headlines in the commodity space. Antam gold breached the psychologically significant Rp3 million threshold on 21 February, reaching Rp3.012 million per gram -- a Rp68,000 single-day surge -- as global spot prices held above US$5,000 per troy ounce on the back of geopolitical uncertainties, sustained central bank buying, and safe-haven demand. The OJK delivered an encouraging signal for the broader financial sector, reporting 7.92 per cent year-on-year growth in Q4 2025, the highest rate since June 2021, with the ratio of financial assets and products to GDP reaching 184 per cent.
The Jakarta Composite Index ended the week broadly flat after a volatile ride, closing around 8,217. Structural concerns about the market persisted: the IDX confirmed that 267 listed companies would need to absorb up to Rp187 trillion in additional market capitalisation to meet a new 15 per cent minimum free float requirement scheduled for March 2026. Meanwhile, BRI President Director Hery Gunardi warned that despite ample banking sector liquidity, actual credit growth remains hampered by weak demand, with new consumer lending plunging and MSME non-performing loans rising since late 2024.
A domestic procurement controversy added an industrial dimension to the week. GAIKINDO, the automotive industry association, and Industry Minister Agus Gumiwang Kartasasmita pushed back against a Rp24.66 trillion contract to procure 105,000 commercial vehicles from India's Tata Motors and Mahindra and Mahindra for the Merah Putih Village Cooperative programme, arguing that domestic manufacturers retain ample capacity and that the deal forgoes approximately Rp27 trillion in local economic value-added. Several parliamentarians, including Golkar's Ilham Permana, raised governance questions about whether such large-scale public procurement should prioritise total cost of ownership and domestic industrial resilience over lowest unit price.
**Outlook**
Indonesia enters the coming weeks carrying both momentum and unresolved complexity. The ART has been signed and MoUs tallied, but ratification by both legislatures, implementation within the 60-day window, and Freeport's contract extension to 2061 all require further technical work. The Supreme Court's tariff ruling introduces fresh legal uncertainty into the global trading environment, and Trump's emergency 10 per cent tariff -- active for 150 days -- creates a de facto deadline for reassessment. Domestically, the halal certification dispute, the Indian truck procurement controversy, and the structural fragility of credit demand all point to friction between the pace of economic diplomacy at the presidential level and the slower-moving reality of industrial policy, regulatory coherence, and household purchasing power. Whether Danantara can convert pledges from US$16 trillion in institutional capital into tangible investment inflows -- and whether the ART's tariff gains translate into export diversification rather than a simple commodities bonanza -- will define how Indonesia's "sleeping giant" narrative is tested in the months ahead.