Jakarta grants the Danantara sovereign wealth fund a monopoly on the export of natural resources

President Prabowo wants to centralise all exports of coal, palm oil and other strategic raw materials through Danantara Indonesia. The measure, justified as an application of Article 33 of the 1945 Constitution, aims to halt capital flight and price manipulation, according to the former general, but has already sparked serious concerns among business leaders and financial markets.

Jakarta (AsiaNews) – Indonesian President Prabowo Subianto has announced one of the most radical economic measures in recent years: all exports of the country’s main natural resources, starting with palm oil and coal, will have to pass through Danantara Indonesia, the sovereign wealth fund created to manage and develop strategic national assets. The decision, presented to Parliament, immediately provoked strong reactions in the markets and the business sector, raising several questions about Indonesia’s future economic model.

Under the new plan, private companies will no longer be able to sell their raw materials directly abroad. Danantara will act as the sole state intermediary: it will purchase products from Indonesian producers and resell them to international buyers. “Entrepreneurs in the palm oil and coal sectors will no longer be able to export independently,” explained former minister and entrepreneur Dahlan Iskan, one of the first to comment on the measure. “All products will have to be sold to Danantara, which will then market them abroad.”

The announcement had an immediate impact on the financial markets. Shares in companies operating in the two sectors plummeted, whilst traders and investors are already talking of possible turbulence in the global coal and palm oil markets, of which Indonesia is the world’s leading exporter.

Prabowo defended the measure by explicitly invoking Article 33 of the 1945 Constitution, according to which natural resources must be controlled by the state and used “for the greatest prosperity of the people”. “The language of Article 33 is very clear. It requires no interpretation,” the president declared before Parliament, claiming he wished to finally apply a constitutional principle that had hitherto remained merely on paper.

According to numerous analysts, no Indonesian president had ever attempted such a centralisation of the commodities trade. From the era of Sukarno through to that of the dictator Suharto, the country’s economy oscillated between state dirigisme and heavily controlled capitalism, but without ever truly challenging the dominant role of large private companies, often linked to foreign capital.

Prabowo, on the other hand, seems intent on directly targeting the system he holds responsible for the dissipation of national wealth. In his speech, he denounced practices such as transfer pricing, under-invoicing of exports and the manipulation of export volumes, accusing companies of transferring a substantial portion of the profits generated from Indonesian resources abroad.

“How is it possible to grow by 5% a year for seven years without becoming 35% richer?” asked the president. “It means something isn’t working. Our wealth is flowing abroad.” According to Prabowo, the low ratio of tax revenue to GDP – stuck at 11%, even lower than Cambodia’s – demonstrates precisely the weakness of the current system.

Through Danantara, the government therefore aims to channel all financial flows from strategic exports, including dollar payments, into the state coffers. The aim is to prevent part of the revenue from being retained abroad or evading national tax control.

However, many questions remain. It is unclear, for example, how Danantara will actually manage international trade in coal and palm oil, or whether it has the necessary logistical infrastructure. Business leaders are wondering who will handle maritime transport, what criteria will be used to set purchase prices, and how existing international contracts will be managed.

Some economists also fear that centralisation could reduce the competitiveness of Indonesian exports and increase the risk of bureaucratic inefficiencies or corruption. Others, however, see the measure as an attempt to strengthen the country’s economic sovereignty at a time of growing geopolitical rivalry and global competition for control of strategic raw materials.

Prabowo’s decision also reflects an ideological stance that is increasingly critical of globalisation and the role of foreign multinationals in the Indonesian economy. Several observers speak of a ‘nationalist’ and ‘anti-liberal’ shift, which could profoundly redefine relations between the state and the private sector.

For now, however, the project still appears fraught with uncertainty. Even the president’s supporters acknowledge that the measure carries enormous risks: it could strengthen state control over national resources and boost public revenue, or produce the opposite effect, destabilising one of Indonesia’s main economic drivers.