InfoSAWIT, JAKARTA – Indonesia’s plan to establish a National Strategic Commodity Exchange has entered legislative discussions, reviving a fundamental question over the direction of commodity governance: will the new framework strengthen domestic competitiveness or expand state intervention in the market?
The proposed legislation gained momentum after President Prabowo Subianto raised concerns over Indonesia’s position as a leading global producer of commodities such as palm oil, nickel and coal while commodity price formation remains heavily influenced by foreign exchanges.
On paper, the rationale behind the bill is straightforward. The government seeks to reduce foreign-exchange leakage linked to under-invoicing and transfer pricing, shift greater pricing authority to domestic institutions and increase state revenues.
The proposed framework would establish two new institutions: the National Strategic Commodity Council (DKSN) and a Strategic Commodity Exchange. It also includes a plan to designate PT Danantara Sumber Daya Indonesia (DSI) as the sole gateway for export activities.
However, questions remain over how the proposed system would work in practice.
The central concern is whether the restructuring will genuinely improve the competitiveness of domestic industries or instead create another mechanism for increasing government intervention in commodity trading, potentially opening the door to rent-seeking practices.
The stakes are considerable because the policy could affect the backbone of Indonesia’s economy as well as millions of workers and farmers. For that reason, lawmakers and the government should avoid rushing the bill through the legislative process.
Establishing institutions as significant as the DKSN and a single commodity exchange requires comprehensive academic and economic analysis. The process should also involve the main stakeholders, particularly farmers and other groups that could be directly affected but have historically had less influence over policy formulation.
Defining Strategic Commodities
One of the most critical issues concerns the definition and scope of strategic commodities.
Several legislators have questioned whether the current definition is too broad and could effectively become an open-ended clause. Without clear boundaries, almost any agricultural commodity, including staple food products, could potentially be classified as strategic.
Commodity governance therefore needs a balanced partnership between the government, businesses, producer associations and farmers. Regulations should not undermine industrial flexibility or unnecessarily restrict farmers' ability to operate.
Indonesia's past experience also provides a warning. Highly centralized approaches to commodity control, including the historical management of the clove trade, created economic distortions that ultimately harmed farmers.
The government must ensure that regulations intended to strengthen exports do not become layers of restrictions that reduce supply-chain efficiency and domestic productivity.
Export policy should ultimately serve two objectives: increasing state revenues while improving people's welfare. Those goals, however, could be undermined if the institutions responsible for managing the system operate without transparency and accountability.
Appointments to the DKSN and the commodity exchange should therefore prioritize individuals with strong professional credentials, clean track records, high integrity and no conflicting private business interests.
Ensuring Export Revenues Stay in Indonesia
Recent policy developments suggest that palm oil derivatives and other major commodities could eventually face tighter regulatory controls, potentially resembling the proposed mandatory special dollar-account mechanism for natural-resource export proceeds.
Public oversight will be crucial.
If a single institution or state-owned enterprise is given extensive authority over exports without strong transparency mechanisms, the system could create additional layers of bureaucracy whose efficiency remains uncertain.
Ensuring that export earnings return to Indonesia and circulate within the domestic economy is a legitimate policy objective. But controls without adequate incentives, flexibility in industrial cash flows and legal certainty could simply shift existing problems from one part of the system to another.
The Strategic Commodity Bill has a legitimate ambition: strengthening Indonesia’s economic sovereignty in global markets. But achieving that objective will require more than good intentions.
The government and parliament need to open broader dialogue with stakeholders, particularly farmers, small businesses and traders who will be directly affected.
The ultimate goal should not be to control the commodity supply chain from upstream to downstream, but to strengthen and develop it. Otherwise, Indonesia's pursuit of greater export earnings could be undermined by regulatory complexity of its own making. (*)
By Edi Suhardi / Sustainability Analyst
Disclaimer: This article represents the author's personal opinion and is entirely the responsibility of the author. It does not represent the views of InfoSAWIT.
