(June 12): Indonesia’s commodity export agency will focus on monitoring the price of key raw-material exports instead of intervening in trade, according to a senior official, in an apparent effort to ease industry concerns over a radical natural-resource policy introduced last month.
An arm of sovereign wealth fund Danantara set up to oversee shipments of coal, palm oil and ferroalloys, will only ensure the natural resources are sold at their true prices, Danantara chief operating officer Dony Oskaria said.
“Our real goal is ‘Hey, you are selling it at the right price’,” he told a local podcast, according to a statement released by the government communications agency. “That’s our real goal. Not taking their goods and acting as a middleman and then selling them.”
President Prabowo Subianto caught traders and producers by surprise last month with a speech that laid out a dramatic change for one of the economy’s most important sectors, effectively taking full control of Indonesia’s top three raw materials.
Oskaria’s comments mark the latest effort by the government to scale back the ambition sketched by Prabowo and billed as a crackdown on under-invoicing, a practice where goods are sold overseas below their true price in order to evade tax.
Indonesia has been hit by sharp declines in the rupiah and its stock market, triggering an off-cycle rate hike this week. The capital Jakarta is also bracing for protests against the rising cost of living, with thousands of police and soldiers set to be deployed to the streets.
See also: Copper declines as fresh US-Iran flareup stokes inflation fears
Regulations covering Danantara Sumberdaya Indonesia published last week set out a transition phase to run until no further than Dec 31, during which exporters would continue shipping as usual but must electronically submit transaction reports to Danantara. Full implementation will hand the entire process to the new entity, according to the regulations.
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