AmCham Update Vol. 7 #089

Chinese Defense and Foreign Ministers in Jakarta for Bilateral Talks, Indonesia Denies US Transshipment Claims, Destry Promises Growth and Stability after BI Board Meeting, DPR Targets 2026 Passage of Asset Forfeiture Bill, AmCham Services Committee Meets

Aug 21, 2026

Foreign and Defense Ministers of China and Indonesia Meet in Jakarta

The defense and foreign ministers of China and Indonesia met in Jakarta on Aug 21 to discuss security, politics and economic issues as Jakarta’s balancing act between Beijing and Washington continues.

Chinese Foreign Minister Wang Yi met with Indonesian Foreign Minister Sugiono and was also scheduled to meet with the defense ministers of both countries in a 2+2 format.

In opening remarks, Wang said it was timely they were meeting under a new dialogue mechanism and that both countries should "seize the moment".

The Foreign Ministry’s East Asian affairs director, Arifianto Sofiyanto, described the mechanism as a way to review bilateral ties under five pillars of the partnership – political, economic, people-to-people, maritime and security cooperation.

“The main expected outcome is in strengthening our commitments, particularly in sustaining investment and foreign trade in Indonesia,” Arifianto said on Aug 20.

In May, the China Chamber of Commerce in Indonesia said in a letter to the Indonesian government that Chinese firms faced "excessively stringent regulation, over-enforcement," and alleged corruption and extortion by authorities. The Chamber urged the government to adopt more business-friendly policies.

Defense Minister Dong Jun received full military honors at the Indonesian Defense Ministry the same day. On arrival, he said the militaries of both countries should work together to protect their national interests.

"The prospects for cooperation between the two militaries are broad, and such cooperation is becoming higher in quality and more effective," Dong said.

Indonesian Defense Minister Sjafrie Sjamsoeddin said there would be increased joint exercises plus defense industry partnerships. He said cooperation with China would help build Indonesia's defense power.

The cooperation can be fraught. Last week, Taiwan was angered by a rare joint military %u2060exercise between the Chinese and Indonesian navies that took place east of Taiwan.

Indonesia said the incident was routine and that the vessel involved also conducted exercises with Japan and the United States.

Meanwhile, Indonesia’s renminbi clearing bank may begin operations by the fourth quarter of 2026.

Bank Indonesia (BI) and the People's Bank of China agreed to a clearing bank for the Chinese currency two months ago. BI Deputy Governor Thomas Djiwandono said Aug 19: “We expect to see the renminbi clearing bank be operational no later than Q4 2026.”

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Indonesia Denies US Transshipment Claims

Coordinating Minister for Economic Affairs Airlangga Hartarto has strongly rejected US allegations that Indonesia facilitates the transshipment of Chinese goods to evade US tariffs, following the release of a White House report identifying Indonesia as part of a global network of countries at elevated risk of such practices.

“Indonesia has never done transshipment,” Airlangga told reporters on Aug 20, adding that the government was neither involved nor consulted in preparing the report.

“Indonesia has been accused, along with Brazil, Malaysia, Thailand, Turkey, and Vietnam, of being part of a global transshipment network. We maintain that these allegations are untrue,” he said.

The White House report, The Great Transshipment Scam, released Aug 13, alleges that Chinese exporters increasingly route goods through lower-tariff jurisdictions, where products may undergo limited assembly, repackaging, relabeling, re-invoicing or documentation changes before entering the US market.

Indonesia is classified as a Tier 2 country in the report’s three-tier “Shadow Transshipment Network,” alongside Brazil, Malaysia, Thailand, Turkey, and Vietnam. The report said these economies combine significant suspected transshipment volumes with deep integration into China-linked supply chains, manufacturing, and logistics networks.

It specifically identifies the Bekasi-Batam corridor as one of several manufacturing and logistics routes linked to alleged Chinese-origin transshipment, including plastics and packaging products that the report claims compete with US producers.

Airlangga rejected the characterization, noting that industrial areas in Bekasi and Batam have operated since the 1990s and that many plastics and packaging manufacturers are domestic companies.

The US-Indonesia Agreement on Reciprocal Trade (ART), signed in February, contains provisions aimed at preventing third countries from benefiting from the agreement. Under Article 4.1, either party may establish rules of origin if ART benefits are accruing substantially to third countries or their nationals.

The agreement also requires Indonesia to adopt and enforce measures against transshipment and other practices used to evade or circumvent US duties.

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Destry Emphasizes Growth and Stability in First BI Governors Meeting

Bank Indonesia (BI) kept its benchmark rate at 5.75 percent during Destry Damayanti’s first Board of Governors meeting as interim governor, while both vigilance over global risks and support for economic growth. Destry is expected to be the next governor of the central bank.

At the Aug 18-19 meeting, BI also maintained its Deposit Facility and Lending Facility rates at 4.75 percent and 6.5 percent, respectively.

“We are entering an era called higher for longer, whereby we will face high pressure on the financial sector as well as global financial markets,” Destry said, citing the prospect of prolonged high US interest rates and oil-price pressures from the US war with Iran.

She said BI would maintain inflation within its 2.5±1 percent target range while balancing the rupiah and financial-system stability with its mandate to support growth.

Airlangga University economics professor Rahma Gafmi described Destry’s stance as “restrictive and vigilant,” warning that BI could face a trade-off between maintaining higher rates to support stability and using policy to stimulate growth.

Permata Bank Chief Economist Josua Pardede said the two objectives were not necessarily in conflict. While holding the policy rate steady, BI could continue using macroprudential measures to maintain liquidity and encourage financing for the real economy.

“In the August meeting, BI kept the benchmark interest rate at 5.75 percent to maintain the rupiah and inflation, but at the same time it keeps a loose macroprudential policy to enlarge financing to the real economy, ensuring adequate liquidity,” said Josua.

Meanwhile, the Jakarta Composite Index continued to tread water on Aug 21, closing at 6,525.30, a gain of 0.36 percent.

Destry, previously BI’s Senior Deputy Governor, has been nominated by President Prabowo Subianto as the sole candidate to succeed Perry Warjiyo after his surprise resignation in late July. Her nomination remains subject to approval by the House of Representatives (DPR).

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DPR Pledges to Pass Asset Forfeiture Bill this Year

The House of Representatives (DPR) is aiming to pass a long-delayed asset forfeiture bill by the end of this year, as lawmakers plan to consult with civil society groups and legal experts on legislation seen as a potential tool in the fight against corruption.

Habiburokhman, chairman of House Commission III, said lawmakers plan to pass the bill by December at the latest.

“We are determined to ensure that this law can further maximize efforts to eradicate corruption,” Habiburokhman, a Gerinda Party politician, said in a press release on Aug 18. “Many elements of society have submitted requests for public hearings on the asset forfeiture bill. We will make every effort to ensure meaningful public participation.”

He acknowledged that the legislative process had taken longer than the fast-track given to the controversial new Criminal Law Procedures Code and National Police Law, saying this is because asset forfeiture is a relatively new concept for Indonesia.

First proposed in 2008, the bill has been stuck largely due to the lack of political will from policymakers.

The massive 2025 anti-government protests breathed new life into the bill but it was again sidelined by deliberations for the Criminal Law Procedures Code and National Police Law.

The current impetus came from Subianto reportedly pushing for the measure to move forward.

“I am confident the House will soon propose the bill as its own initiative. We are ready, in principle, to discuss it together with the House,” Law Minister Supratman Andi Agtas said last week.

Legal experts and reformers have long said that asset forfeiture could help deter corruption but it could also be misused against political opponents or to enable extortion. They have called for clear rules to avoid abuse.

Criminal law expert Fickar Hadjar said the government should establish a dedicated institution with both criminal and civil powers to manage asset forfeiture while also ensuring a legal mechanism for challenging seizures.

“There must be a balance between giving the state the authority to forfeit assets and providing mechanisms for the public to object or challenge such action,” Fickar told The Jakarta Post on Aug 20. “Existing civil court mechanisms are available, but what is needed is a shorter and more certain process because the biggest weakness of conventional judicial mechanisms is the time they take to execute decisions."

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AmCham Takes the Temperature at Services Committee Meeting

AmCham Indonesia held its fourth Services Committee meeting of 2026 on Aug. 19. Led by Chair and Governor Emeritus Peter Meyer, the discussion covered recent economic and regulatory developments, with members sharing perspectives on Indonesia’s investment climate, policy uncertainty and challenges to business operations.

Members also discussed areas where greater regulatory clarity and policy consistency could help strengthen business confidence.

AmCham’s longest-running committee, Services brings together members from numerous sectors including hospitality, real estate, technology, consulting, diplomacy and security to share information about the dynamic business climate in Indonesia.

The lasting appeal of the Services Committee lies in the unvarnished opinions shared by members.

During the committee’s regular temperature take on the business climate, sentiment was fairly balanced. In assessing the current environment there were 6 positive votes, 10 neutral votes and 5 negative votes.

Member Announcement | MANDARIN ORIENTAL JAKARTA

Li Feng at Mandarin Oriental, Jakarta Introduces Dim Sum Delights and New Dining Experiences

In August, Li Feng, the award-winning Cantonese restaurant at the Mandarin Oriental, Jakarta, introduces a new series of dining experiences, including Dim Sum Delights, the Signature Lunch Experience, and live Guzheng performances. These are designed to enhance weekday and weekend dining, from leisurely dim sum gatherings to refined lunches and weekend meals accompanied by traditional Chinese music.

Dim Sum Delights invites guests to enjoy a buy-two-get-three offer on selected dim sum every weekend from 10:30 a.m. to 12:30 p.m. Highlights include the Li Feng Signature Dim Sum Platter, featuring goldfish prawn dumplings, phoenix prawn dumplings, and porcini mushroom buns, as well as the signature swan dumpling with black pepper duck meat and crispy seafood spring rolls.

For weekday diners, the Signature Lunch Experience offers Li Feng’s refined Cantonese flavors. Guests may select a first and second course at the regular price, with complimentary rice or noodles and dessert for orders placed before 12:30 pm. Highlights include wok-fried king prawns with dark soy sauce, crispy king prawns with oatmeal and salted egg yolk and wok-fried Australian beef tenderloin with mushrooms in black pepper sauce.

The weekend dining experience is further enhanced by live Guzheng performances during Saturday dinner and Sunday lunch. The traditional Chinese stringed instrument provides an elegant backdrop for dim sum gatherings, family occasions and celebrations.

Known for its interpretation of Cantonese cuisine, Li Feng combines traditional techniques, premium ingredients and thoughtful presentation in an elegant setting inspired by the history of the spice trade between China and Batavia.

For reservations and further information, please contact Mandarin Oriental, Jakarta via WhatsApp at +62 21 2993 8888 or visit mandarinoriental.com/jakarta.

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Get to Know Our Members | JAKARTA INTERCULTURAL SCHOOL

Established in 2004, PT KBR Indonesia is affiliated with KBR, a global engineering and technology leader based in Houston, Texas. With over 40 years of experience in Indonesia, KBR has delivered solutions across upstream and downstream sectors, including offshore oil and gas, LNG, petrochemicals, fertilizer, infrastructure and minerals. KBR supports industrial development through services such as Conceptual Studies, FEED, Detailed Engineering Design, and Project Management Consultancy, backed by global expertise in technology licensing and engineering. KBR has contributed to Indonesia’s largest LNG plants and FPSO projects. Most recently, it was awarded the FEED contract for the Abadi LNG project by Inpex Masela. Abadi is Indonesia’s largest single project and a National Strategic Project. With 13 of 16 ammonia plants using KBR’s licensed technology, PT KBR Indonesia remains a trusted partner in advancing Indonesia’s energy and industrial transformation.

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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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