AmCham Update Vol. 7 #095

Airports Reopen after Anak Krakatau Eruption, OJK to Cap IDX Share Ownership at 5 Percent, 1,700 Free Lunch Food Poisoning Cases in Just One Week, Drying Rivers in Kalimantan, Gov’t to Test Drive Direct Cash Aid Transfers in Early 2027

Sep 08, 2026

Airports Reopen after Anak Krakatau Eruption, Risks Remain

The eruption of Indonesia’s Mount Anak Krakatau in the Sunda Strait lasted 25 hours and ended just after midnight on Sep 6, the head of the government’s Geological Agency, Lana Saria said.

"Following the end of that episode, Mount Anak Krakatau's volcanic activity transitioned back to Strombolian eruption characteristics, marked by the recording of three Strombolian eruption earthquakes," Saria said on Sep 6.

The milder and shorter Strombolian eruptions are a sign that the long, continuous eruption was over for now, although eruptions could return, Lana said.

Meanwhile, Soekarno Hatta airport and four others reopened on Sep 8, although some flights are still delayed. Thick volcanic ash from Anak Krakatau created severe safety hazards that led to airport closures.

More than 340,000 travelers were impacted. Transportation Ministry data showed that nearly 3,000 flights had been disrupted by the closures, which grew progressively worse from Saturday to Sunday.

The government diverted some traffic to alternative airports across Java. “We continue to encourage airlines, especially foreign airlines, to use larger aircraft and the alternative airports we have provided,” Transportation Minister Dudy Purwagandhi, said on Sep 7.

The minister said the Volcanic Ash Advisory Center had forecast that ash dispersion would continue into Sep 8.

Prior to the eruption, Anak Krakatau had been at Level III, the second-highest level of alert, since July. This followed years of relative calm. In addition to Anak Krakatau, the Meteorology, Climatology and Geophysics Agency (BMKG) website said five other volcanoes were active: Mount Ili Lewotolok in East Nusa Tenggara (NTT), Sinabung in North Sumatra, Semeru in East Java, Lewotobi Laki-laki in NTT, and Ibu in North Maluku.

The Health Ministry estimated that about 3.3 million older people could be at risk from exposure to volcanic ash, which can cause severe respiratory distress and irritation to the eyes and skin.

President Prabowo Subianto convened ministers and disaster officials virtually on Sep 7 to call for increased monitoring of eruptions in several regions.

“From the reports, I see that we have done our utmost so far. All of this will serve as material for us to plan our next steps,” Subianto said. “Since we are on the Ring of Fire, we have to be prepared."

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OJK to Cap IDX Share Ownership at 5 Percent

The Financial Services Authority (OJK) plans to cap individual ownership in the Indonesia Stock Exchange (IDX) at 5 percent following a planned demutualization.

OJK Capital Markets, Derivatives Finance and Carbon Exchange Supervision Chief Executive Hasan Fawzi said the limit is included in a draft regulation currently being finalized.

“In the current draft of the OJK regulation, we have stipulated a 5 percent limit for everyone. Any party that becomes a shareholder of the Stock Exchange may hold a maximum of 5 percent of the total shares issued by the exchange,” Hasan said on Sept. 3.

Imposing ownership limits was among the reforms called for by global index provider MSCI early this year, when it threatened to downgrade Indonesia from Emerging Market status to Frontier Market. That threat caused a massive drop in the IDX, from which it has yet to recover.

Ownership above the proposed cap could still be permitted for entities that qualify as strategic shareholders, Hasan said, citing Danantara, Bank Indonesia, and the Finance Ministry as examples, although they would still be subject to OJK supervision.

The draft regulation implements the demutualization provisions under Law No. 4/2026, which amended Law No. 4/2023 on the Development and Strengthening of the Financial Sector (P2SK Law).

Hasan said OJK would hold discussions with the House of Representatives (DPR) before finalization. The regulation is targeted for completion this month.

Once the regulation takes effect, the IDX is expected to amend its articles of association, with demutualization changing the bourse’s ownership, governance and organizational structure.

Mirae Asset Sekuritas Senior Market Analyst Nafan Aji Gusta said demutualization would separate exchange ownership from membership, potentially strengthening governance and giving the IDX greater flexibility to develop trading technology and infrastructure.

“In the short term, demutualization is likely to have a greater impact on sentiment than bringing immediate changes to issuers’ fundamentals,” Nafan told Kontan on Sep 2.

MSCI had said in January that opaque ownership structures were a factor in stock manipulation – known locally as “stock frying” or goreng-goreng saham – in which coordinated groups of stock owners artificially inflate a company’s shares regardless of real value. MSCI has delayed its final decision on Indonesia’s market status to November.

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1,700 Free Lunch Food Poisoning Cases in Just One Week

The troubles linked to the government’s free lunch program continued over the past week as more than 1,700 people fell ill from meals delivered by the program.

Of the total, 777 students became sick in Central Java, a school principal said on Sep 3. In separate incidents in three other locations last week, 950 people became ill from food poisoning linked to the Free Nutritious Meals program, according to a lawmaker on the DPR commission that oversees health issues.

In most cases, it appears that food handling is contributing to the problem for the multibillion-dollar program that President Prabowo Subianto launched in 2025 with the promise that it would improve nutrition for children and pregnant mothers and reduce stunting.

It is a noble idea but food poisoning and corruption cases have tarnished the program’s reputation.

In Lasem, Central Java, 752 students and 25 teachers from a local high school were suffering last week from diarrhea and vomiting after eating free grilled chicken on Sep 2, the school's principal, Juhartutik, said.

Before the chicken was distributed, a food taster found that some of it was "slimy," Juhartutik said. "The slimy ones had already been set aside... The kitchen operator said the food was cooked at 3 am and it was eaten at noon," she said. Most of the victims were sent home but a local doctor told Reuters that 15 students and teachers were hospitalized.

On Sep 1, 664 students fell ill in Sidoarjo, East Java, according to a local official. In two other cases on Sep 2, 49 people in East Java and 237 people in West Sumatra contracted food poisoning, said Charles Honoris, a lawmaker from the Indonesian Democratic Party of Struggle, citing local health department data.

In a post on Instagram, Charles said the cases indicate “a failure of the system." He said more than 50,000 people had been hit by food poisoning since the program began.

In July, a survey by pollster Saiful Mujani Research and Consulting showed only one-third of respondents were satisfied with the program, with food poisoning cases cited as a major flaw.

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El Niño Drought is Drying Rivers in Kalimantan and Disrupting Coal Shipments

Businesses are complaining about falling water levels in Kalimantan rivers disrupting coal shipments due to dry weather conditions made worse by the El Niño weather phenomenon.

Indonesian Coal Mining Association (APBI) executive director Gita Maharyani said that drought is impacting coal barge activities in parts of Kalimantan.

“In several river basins, falling water levels can limit barge draft, leaving barges unable to operate at maximum capacity,” she said on Sep 7.

Gita said the problem could increase stockpiles of coal but the association believed that coal price fluctuations would be influenced by many factors, particularly supply and demand in the global market.

“Logistics conditions in Indonesia may be one of the factors influencing market sentiment, but they are not the sole factor driving price increases,” Gita said.

The Indonesian Employers Association (Apindo) has estimated that lower water levels, particularly in the Barito River in Central Kalimantan, could disrupt around 3.9 million metric tons of coal in a month.

Hendra Sinadia, chairman of Apindo’s mineral and coal mining committee, said the association was waiting to hear from companies. “We have yet to receive detailed information on which companies have been affected. As for force majeure or defaults, we have not heard of any so far,” he said on Sep 7.

An August report from Argus Media, which monitors mineral pricing, said that the upper reaches of the Barito River have become completely unnavigable, with some mining companies already declaring force majeure on shipments because of the situation.

The report said it was hard to quantify the volumes being affected on the Barito River, but Central Kalimantan accounted for total coal production of around 46.78 million metric tons in 2025, of which 29.54 million metric tons were exported.

The Barito River spans around 770 kilometers, and market participants told Argus Media the water conditions are raising barging costs by as much as 100 percent, from $4.50-6.50 per metric ton to as high as $10 per ton.

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Gov’t Targets Early 2027 to Test Drive Direct Cash Aid Transfers

The government plans to conduct further trials of a digitalized social assistance delivery system in early 2027 as part of its broader Perlinsos Digital program, which aims to improve the accuracy, efficiency, and integration of social protection delivery.

The initiative is part of the government’s broader GovTech agenda and Digital Public Infrastructure (DPI), enabling government systems and data to work together more seamlessly to integrate public services.

National Economic Council (DEN) Chairman Luhut Binsar Pandjaitan, who also leads the Committee for the Acceleration of Digital Government Transformation (KPTDP), said officials are finalizing beneficiary data integration and matching, which is expected to be completed by the end of this year.

The Committee is the facilitator for digital government transformation, including cross-government coordination and interoperability. Further trials are planned for the first and second quarters of 2027.

“We plan to have all of this completed by the end of this year. We will conduct a trial early next year, in the first and second quarters,” Luhut said on Sep 5. The planned system would shift social assistance from in-kind aid to direct cash transfers, and will include safeguards to ensure the funds are spent on essential goods.

Luhut said the government was finalizing the exact amount of assistance. DEN officials clarified that the widely cited Rp 5.4 million figure is not a uniform new cash benefit, but an illustration of the maximum accumulated value of existing social-protection programs. Actual assistance will vary depending on household eligibility.

The government is integrating beneficiary records with population data from the Home Affairs Ministry and using facial recognition, artificial intelligence, and biometric verification to improve targeting.

Luhut said better data integration could sharply reduce mistargeted assistance as Indonesia’s population grows.

The rollout comes as the government continues updating its national socioeconomic database. Social Affairs Minister Saifullah Yusuf has said changes in beneficiary classifications reflect ongoing synchronization, validation and re-verification of data by Statistics Indonesia (BPS).

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Update is AmCham’s regular newsletter on developments related to investment, the economy, regulations and issues related to doing business in Indonesia. It comes out three times a week. It is edited by AmCham Managing Director Donna Priadi and written by the AmCham Staff.

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