The Indonesian government has recently implemented significant changes to regulations surrounding various commodity exports, raising concerns and expectations across the sector. The Ministry of Energy and Mineral Resources (ESDM) announced updates on the export permissions for copper, crude oil, and coal, signaling both tightening controls and new opportunities for local industries.
On February 26, 2025, Tri Winarno, the Director General of Mineral and Coal at ESDM, revealed during a press briefing at the Parliament Complex, "This harmonization is taking place today, but I'm not updated on the specifics. The speed of harmonization will determine how quickly the export license for Freeport can be issued." The urgency of this regulatory harmonization stems from the pending export license for PT Freeport Indonesia, which relies heavily on the resolution of these regulatory issues.
The extension of Freeport's export license is particularly pertinent as recent announcements from ESDM confirm this permit will be valid until June 2025. Minister Bahlil Lahadalia stated, "We decided to extend the export license for Freeport until the damaged plant is completed. This will be done by June." This decision is largely influenced by Freeport’s commitment to complete the construction of its copper smelter by the end of June 2025.
Interestingly, discussions around increased export tariffs for copper concentrate have emerged alongside these developments. While the exact rates related to the tariff remain unconfirmed, they indicate potential financial impacts on exporters. Since May 2024, Freeport has been subjected to a 7.5% export tariff on copper concentrates with copper content below 15%. This regulatory environment reflects the government’s push to manage national resources more effectively.
Beyond copper, the government has taken steps to curb crude oil exports, requiring all domestically produced oil to be refined within the country. Minister Bahlil emphasized, "All domestic oil production must be processed domestically to optimize refinery capacity." This move aims to maximize local processing capabilities, thereby enhancing energy security and operational efficacy within Indonesia's oil sector.
Additional changes have been introduced to the import regulations for fuel products; licenses will now be reevaluated quarterly instead of annually, promoting closer oversight of the fuel supply chain. These measures are anticipated to grant more flexibility and control over domestic fuel markets, allowing the government to respond proactively to fluctuations and ensuring adequate supply.
Meanwhile, Indonesia faces external pressures impacting its commodity export strategies. Recently, the Indian government announced plans to increase import tariffs on crude palm oil (CPO) to a substantial 27.5%. Industry analysts note this could significantly curtail demand for Indonesian CPO, particularly as India absorbs nearly 40% of Indonesia's palm oil exports. Emanuella Bungasmara, an agrifood analyst, highlighted this concern, explaining, "The increase of India's CPO import tax aims to protect local farmers from cheaper imports." It's clear this policy could severely challenge Indonesian competitiveness in the palm oil market.
And it seems not just large commodities are under scrutiny. The government is also seeking to simplify export procedures for smaller shipments. Chotibul Umam, head of the Subdirectorate at the Directorate General of Customs, mentioned initiatives to treat consignment notes as equivalent to tax invoices: "We proposed to the Tax Directorate to treat the consignment note as equivalent to tax invoices for small exports." This adjustment is expected to ease the burdens on exporters and simplify their operations.
These assorted regulatory changes reflect the Indonesian government's broader commitment to enhancing domestic processing capabilities and safeguarding local industries. By tightening controls and adjusting export tariffs, the authorities aim to bolster the national economy, yet they will need to navigate the delicate balance of maintaining international relationships and competitiveness.
The upcoming months will be pivotal as stakeholders within the commodity export sector grapple with these new policies. Striking the right balance between local processing and international market competitiveness will, undoubtedly, shape the future trajectories of Indonesia's export economy.