The Indonesian government announced Thursday that the upstream oil and gas sector will be exempted from the controversial single-gate export centralization policy, a significant reversal that underscores the political economy’s sensitivity in a capital-intensive industry reliant on foreign investment.
Energy and Mineral Resources Minister Bahlil Lahadalia told delegates at the 2026 Indonesian Petroleum Association Convention and Exhibition in BSD City that the regulation under PP No. 21/2026 will not apply to upstream oil and gas operations. “I bring a special message from the President: the regulation does not apply to the upstream oil and gas sector. So, there is no need to worry, it’s business as usual,” he said.
Under a separate concession, Bahlil also confirmed that oil and gas exporters face different deposit rules than other exporters. Forex retention in the sector will be capped at 10 to 30 percent, reflecting heavy reliance on foreign financing.
The exemptions come days after President Prabowo announced on May 20 that key commodity exports — crude palm oil, coal, and ferroalloys — would be channeled through a single state-owned enterprise, PT Danantara Sumberdaya Indonesia (DSI). The government aims to prevent under-invoicing and transfer pricing fraud, which officials said could be costing the state up to US$150 billion annually.
During a June-to-September trial phase, exporting firms will still conduct direct transactions with buyers, but DSI handles export filing. From January 2027, DSI takes full control of export contracts, shipments, and payments. A later phase will expand the list to all strategic natural resource commodities.
The policy has drawn business pushback. The Indonesian Coal Mining Association warned that existing contracts, permits, and shipping schedules complicate any abrupt shift, while industry groups fear a de facto monopoly that could undermine buyer confidence across ASEAN markets.
Coordinating Economy Minister Airlangga Hartarto confirmed the revised regulation allows exporters to place part of their proceeds outside the Himbara banking consortium. The government also halved the currency conversion limit for FTA trading partners from 100 percent to 50 percent.
For ASEAN, Indonesia’s unilateral trade policy marks a significant shift in how Southeast Asia’s largest economy manages commodity export flows. Analysts warn it could trigger regional pushback and complicate Jakarta’s standing in ASEAN economic cooperation frameworks.