INDONESIA Trends and Developments Contributed by: Alvin Suryohadiprojo, KARNA
New Administration’s Asta Cita The new administration under the leadership of President Prabowo Subianto and Vice Presi - dent Gibran Rakabuming Raka was inaugurated in October 2024 after winning the election with more than 58% of the votes. The new govern - ment’s vision and mission are summarised in eight key points known as “Asta Cita” (eight aspirations). Among those key points, two could have a major influence on the national economy and investors’ outlook on the new administra - tion’s priorities and focuses, namely energy and food security, as well as downstream industri - alisation (which has also been a key focus since the previous administration). Therefore, M&A activities in industries related to those major aspirations are also expected to grow. Regarding food self-sufficiency initiatives, there are at least three areas of concern: • Expansion of Agricultural Land: increasing farmland by 3 million hectares, focusing on staple crops such as rice, corn and soybeans to reduce reliance on imports; • Development of Food Estates: enhancing productivity and ensuring a stable food sup - ply through the establishment of large-scale agricultural zones and the implementation of advanced agricultural practices; and • Bioethanol Production: conversion of the agricultural output from the food estates into bioethanol. Investments in the areas mentioned above would be needed to achieve economies of scale and operational efficiency. Meanwhile, regarding energy security, the fol - lowing matters have been discussed publicly by the government officials.
• Oil and Gas Production Increase: enhancing oil and gas production by cutting regulations and reactivating idle wells; • Biodiesel Mandate Expansion: increasing the mandatory palm oil content in biodiesel to 50% (B50) from the current 40% requirement, which also aims to boost domestic palm oil consumption and reduce diesel imports; • Liquefied Natural Gas (LNG) Utilisation: reducing costly diesel imports and lowering Indonesia’s fuel imports; and • Renewable Energy Development: investing more in renewable energy projects to diversify energy sources and enhance sustainability. The above plans offer substantial opportunities for investment and growth. The new administration is also continuing the downstreaming ( hilirisasi ) policy, which essen - tially increases the value added to natural resources by processing raw materials domes - tically before export or local industrial use. By prohibiting the export of raw materials such as copper, tin, nickel, bauxite, iron, etc (those natu - ral resources that Indonesia is blessed with), the government expects that industrialisation can be driven towards attracting investments, creating jobs and ultimately boosting state revenues. The obligation to increase the value-add of mineral and/or coal resources through local processing and refining activities has been clearly stipulated under Law No. 4 of 2009 regarding mineral and coal mining, as amended several times, most recently through the Government Regulation in lieu of Law No. 2 of 2022 ( “Mining Law” ). Fur - thermore, a holder of mining licences is only allowed to export unrefined minerals if the fol - lowing requirements are satisfied: • the processing and refining activities have been carried out;
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