This Week in Indonesian Business and Investment (25-31 May 2026)

The final week of May 2026 proved to be one of the most consequential in recent Indonesian economic history, with a cascade of sweeping policy announcements, landmark diplomatic deals, and turbulent market conditions converging to define the near-term trajectory of Southeast Asia’s largest economy. At the centre of it all stood two interlocking storylines: the launch of PT Danantara Sumber Daya Indonesia (DSI) as the state’s new single-window commodity export vehicle, and the rupiah’s alarming slide towards the psychologically critical Rp18,000-per-dollar threshold.

The establishment of PT DSI, which commenced its transitional phase on 1 June 2026, dominated business headlines throughout the week. Under the new framework, exporters of coal, crude palm oil (CPO), and ferroalloy – together accounting for 23.4% of national exports and underpinning Indonesia’s 71-consecutive-month trade surplus – are required to report all activities through the CEISA 4.0 customs platform. Full trading authority transfers to DSI by January 2027, following a three-month evaluation period. Finance Minister Purbaya Yudhi Sadewa framed the initiative as a decisive blow against decades of under-invoicing and transfer pricing abuses, citing data implicating ten major CPO companies, including Wilmar International, in alleged price manipulation. Police from the Bareskrim unit raided the Jakarta offices and Tangerang warehouses of PT MMS over suspected under-invoicing, signalling that the government intends to prosecute, not merely regulate.

The policy’s ambitions were broad and its reception mixed. Former minister Mahfud MD backed DSI’s creation, estimating potential annual savings of up to USD 15 billion from recovered foreign exchange leakage. Danantara’s COO Dony Oskaria pledged transparent governance, and Luke Thomas Mahony was confirmed as Managing Director, with the remainder of the senior team to be announced in the following week. Deputy Agriculture Minister Sudaryono repeatedly emphasised that DSI would not profit from its intermediary role and would not extend the trade chain, seeking to calm an industry rattled by uncertainty. The confirmation came too late to prevent market turbulence: CPO fresh fruit bunch prices plummeted as much as 5% within hours of DSI’s initial announcement, with farmer advocacy group POPSI warning that smallholders were bearing disproportionate pain. The Palm Oil Industry Association (GAPKI) reported that prices had begun recovering only after the government clarified transition timelines, but urged continued communication to prevent further disruption in the June-to-August window.

Economists were divided. Wijayanto Samirin cautioned that operating as a commodity “super trader” would require up to Rp330 trillion in annual working capital and create legal uncertainty for international buyers. Others warned of poor timing, given the rupiah’s concurrent weakness. The government also unveiled complementary DHE SDA regulations effective 1 June, requiring non-oil exporters to retain 100% of foreign exchange earnings domestically for twelve months, with oil and gas exporters holding 30% for three months. Tax incentives – including rates potentially reduced to zero percent – were offered to compliant exporters, while the United States was notably granted the first exemption from the DHE SDA policy.

The currency crisis provided the week’s most unsettling backdrop. The rupiah closed at successive record lows through the week, touching Rp17,906 intraday on Thursday before ending around Rp17,845, with some bank selling rates quoted as high as Rp18,135. The Singapore dollar breached the Rp14,000 threshold for the first time in history, a development that economists warned was transmitting real financial pain to the Indonesian middle class through higher education, healthcare, and travel costs. Bank Indonesia committed to round-the-clock forex market interventions, deploying Non-Deliverable Forward transactions, government securities purchases, and a new USD 25,000 monthly cash purchase limit to contain demand. Finance Minister Purbaya called the weakness “unreasonable” relative to Indonesia’s fundamentals, citing first-quarter GDP growth of 5.61% – faster than Malaysia and China – and confirmed that the state budget remained intact at current levels. Economist Fakhrul Fulvian of Trimegah Securities suggested the rupiah could rebound to Rp16,800 with strong fiscal-monetary coordination, but warned that without policy credibility, the depreciation cycle risked becoming self-reinforcing. Government-aligned agencies noted that energy subsidies and social assistance programmes were protecting low-income households from the worst inflationary effects.

Equity markets reflected the same anxiety. The Jakarta Composite Index (IHSG) ended the week down 0.56% at 6,162, extending a year-to-date decline of 29.14% that analysts described as the worst performance among major global indices and the steepest monthly fall – 11.9% in May alone – since 2000. Foreign investors net sold Rp8.51 trillion in the week, bringing their 2026 cumulative net outflow to Rp53.97 trillion. MSCI’s June rebalancing, effective 1 June, removed six Indonesian stocks from its Global Standard Index and froze adjustments to GoTo’s components due to persistent liquidity concerns at the Rp50 floor price – prompting the company to announce a Rp3.5 trillion share buyback to stabilise its position ahead of the August review. Despite the gloom, Finance Minister Purbaya urged investors to buy shares in state-owned Himbara banks, arguing that DSI’s centralisation of export proceeds would strengthen their liquidity and boost dividend payouts. Astra International, meanwhile, announced an Rp8 trillion share buyback fund and a target annual total shareholder return in the low teens, signalling confidence in its own long-term fundamentals even as the broader market struggled.

Against this backdrop of domestic turbulence, President Prabowo Subianto returned from a high-profile state visit to France bearing tangible results. Four new commercial agreements worth USD 3.5 billion (approximately Rp62.3 trillion) were signed across energy security, trade, and defence sectors. Simultaneously, Indonesia and France jointly launched the France-Indonesia High Level Business Council (FI-HLBC), co-chaired by Danone’s CEO and Kadin Indonesia chairman Anindya Bakrie, bringing together 30 leading companies with a combined market capitalisation of USD 1.3 trillion. The council’s headline ambition is to triple bilateral trade by 2035 from a 2025 base of USD 2.7 billion. French President Emmanuel Macron welcomed Indonesia’s decision to open its market to French beef and dairy imports, and both leaders pledged to accelerate ratification of the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA). Macron also expressed support for Danantara’s interest in investing in France, underscoring the reciprocal nature of the new partnership. Investment Minister Rosan Roeslani described the council as a new “driving engine” for bilateral economic flows, and the government defended the frequency of Prabowo’s France visits – his fourth – by pointing to the cumulative USD 14.5 billion in agreements now in play. The opposition PDIP called for greater transparency, but the business community broadly welcomed the diplomatic momentum.

Elsewhere in the investment landscape, PT Telkom Indonesia reported solid first-quarter 2026 results with consolidated revenue rising 1.5% year-on-year to Rp37.2 trillion, net profit of Rp4.3 trillion, and an EBITDA margin of 48.3%, supported by its TLKM 30 transformation strategy. Telkomsel appointed Muhammad Yusuf Ateh as Commissioner effective 1 June to strengthen governance. Indonesia’s fisheries sector received a boost as the Ministry of Marine Affairs and Fisheries secured permits for eight additional processing units to export to China, lifting the total to 638 approved facilities. On the manufacturing front, PT BEST broke ground on a USD 10 million AC and washing machine factory in Tangerang, while BYD’s Subang electric vehicle plant neared full operational status with an annual capacity of 150,000 units. Commodity futures trading continued to expand rapidly, with transactions projected to reach Rp48.87 trillion in 2025 – a 49.8% year-on-year increase – as digital platforms such as Invetra gained traction.

Several consumer-facing stories also captured the public’s attention. Indomaret faced a viral controversy after reports emerged of staff staging an overtime pay protest, sparking debate about labour rights in Indonesia’s vast convenience store sector. The Hanania Travel scandal deepened, with Jakarta police identifying 128 victims of alleged Umrah pilgrimage fraud totalling Rp12.1 billion and detaining the company’s director on charges of fraud, embezzlement, and money laundering. And concerns emerged about palm oil farmer welfare under the new DSI regime, with GAPKI and POPSI calling on the government to ensure the transition does not extend bureaucratic chains or depress farmgate prices further.

Looking ahead, the first week of June will be a critical test of the government’s ability to deliver on its ambitious but contested policy agenda. DSI’s operational credibility will be measured by its capacity to process export reports without disrupting supply chains, and by whether palm oil prices stabilise or continue to disappoint farmers. The three-month evaluation clock has started. The rupiah’s trajectory will depend heavily on whether US-Iran ceasefire negotiations – whose progress rattled oil markets throughout the week – produce a durable settlement, and on Bank Indonesia’s willingness to deploy further rate adjustments alongside its forex interventions. MSCI rebalancing flows are expected to clear in early June, potentially offering a technical floor for the IHSG. And the first concrete steps of the France-Indonesia business council will be watched as a barometer of whether Prabowo’s diplomatic capital can be converted into the kind of tangible foreign investment that Indonesia needs to shore up its current account and stabilise its currency over the medium term.