AmCham Update Vol. 7 #090

Indonesia Eyes October Signing of EU-CEPA Deal, Indonesia is Bullish on Bullion, Slash and Burn Blamed for Fires, DPR Moves to Replace SKK Migas, Protest Leader has Bank Account Blocked

Aug 24, 2026

Indonesia Eyes October Signing of EU-CEPA Deal

Indonesia hopes to sign the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA) as early as October at a time when visits by senior EU officials are expected.

The agreement will take effect after it is signed and ratified by both sides, Coordinating Economy Minister Airlangga Hartarto said on Aug 21 during a meeting with EU ambassadors at his office.

He said Trade Minister Budi Santoso is already discussing the ratification procedures with the House of Representatives as the deal is being finalized.

There is some urgency, because a special tariff facility between Indonesia and the EU will expire this year and Airlangga wants to avoid a lapse in coverage. “If the IEU-CEPA is ratified soon, the gap between the [end of the] facility and the [start of the] IEU-CEPA could be bridged,” he said.

Under CEPA, around 90 percent of tariffs on Indonesian goods entering the EU will gradually be eliminated to zero. Airlangga said the government also anticipates increased European investment in Indonesia as result of the deal.

“This is a game changer for Indonesia,” Airlangga said.

Airlangga said the two sides have discussed cooperation in cybersecurity, agriculture, technology and innovation. Indonesia, he said, wants deeper collaboration on industrialization, workforce development and resilient energy systems.

EU Ambassador to Indonesia Denis Chaibi said at the meeting that all EU member states support CEPA and are enthusiastic about Indonesia.

“We have a lot of ministers, business delegations, we have even royals coming to Indonesia soon and all that is to take advantage of the CEPA,” Chaibi said.

Chaibi also said European companies need greater predictability in Indonesia’s legal and regulatory environment, alongside closer coordination between the ministries involved in implementing CEPA.

“Our main message is the EU wants to diversify its commercial partnerships,” he said.

Data from the Coordinating Economy Ministry shows bilateral trade between Indonesia and the EU at around $31.9 billion in 2025, with Indonesia recording a surplus of roughly $7 billion. EU investment in Indonesia amounted to $13.6 billion over the past five years, generating more than 245,000 jobs in a range of industries.

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Bullish on Bullion: New Indonesian Gold Association Debuts

The Indonesia government was bullish on bullion at the unveiling of the Indonesia Bullion Market Association (IBMA) on Aug 20 but analysts caution that the push into gold could divert capital from other productive instruments.

Speaking at the launch event, Coordinating Economy Minister Airlangga Hartarto said developing a domestic bullion market is part of the broader mining downstreaming policy.

The IBMA comes after President Prabowo Subianto inaugurated the country’s first bullion banks in early 2025, managed by state-owned pawnshop PT Pegadaian and state-owned lender PT Bank Syariah Indonesia (BSI).

The bullion banks currently manage 177 metric tons of gold, with Pegadaian holding 153 metric tons and BSI holding the remaining 24 metric tons.

The government estimates that around 1,800 metric tons of gold are privately held, worth roughly $252 billion.

“The task for both Pegadaian and BSI is to turn around 20 percent of this $252 billion in gold kept under the pillow into financial or banking instruments,” Airlangga said.

Authorities also launched the first exchange-traded funds (ETFs) backed by physical gold on Aug 10, which is being seen as a way to improve financial inclusion by offering investors a new way to invest in the metal.

The Indonesia Stock Exchange (IDX), the Financial Services Authority (OJK) and the government are preparing tax incentives for the gold ETF. IDX president director Jeffrey Hendrik told The Jakarta Post on Aug 13 that the ETF rollout is a another way for investors to plan investments in the capital market.

He said the initiative is not a way to “pit gold ETFs against other capital market instruments” but the effort will instead “certainly deepen our market.”

Permata Bank chief economist Josua Pardede warned on Aug 13 that major shifts toward gold could make savings less productive and reduce the pool of funds available to finance banks, the government and businesses.

“I believe that gold products on the exchange are most beneficial when they attract funds or gold that were previously outside the financial system, rather than simply shifting funds from one instrument to another,” Josua said.

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Gov't Cracks Down on Slash-and-Burn as Forest Fires Rage

Indonesia has intensified firefighting and enforcement efforts as widespread forest and land fires continue across Kalimantan and Sumatra, with the government looking to curb slash and burn land clearing techniques that often get out of control.

The National Police Criminal Investigation Department (Bareskrim) said most cases were linked to deliberate land clearing, particularly for plantations.

“During the dry season, it is very easy to burn land before planting oil palms when the rainy season comes,” Bareskrim Director Brig. Gen. Mohammad Irhamni told reporters on Aug 23. As of this writing, police have opened 89 cases across nine provinces and named 72 individual suspects. Riau recorded the highest number, followed by South Sumatra and Central Kalimantan.

President Prabowo Subianto traveled to West and Central Kalimantan on Aug 22 to oversee the response after ordering the military and police to reinforce firefighting operations. The government deployed three additional army battalions, while adding more helicopters for water bombing and aerial patrols.

Authorities are also investigating possible corporate involvement. State Secretary Minister Prasetyo Hadi said four companies in West Kalimantan are under scrutiny and could face permit revocation if violations are proven.

Prasetyo also dismissed reports that Subianto had appointed wealthy plantation tycoon Andi Syamsuddin Arsyad, known as Haji Isam, to lead firefighting operations, saying coordination remained under government officials.

The National Disaster Mitigation Agency (BNPB) said tens of thousands of hectares have burned across Kalimantan, while satellite monitoring continues to detect thousands of hotspots. The fires have also generated cross-border haze affecting parts of Malaysia and Brunei. Singaporean officials said it was preparing contingency plans in case the Sumatra fires intensify, as has happened many times in the past.

House Commission VIII Chairman Marwan Dasopang said that Indonesia welcomed foreign assistance but that the scale of the fires made prevention difficult. He said that Malaysian and Singaporean owned palm oil companies were partly responsible for the fires.

“Malaysia and Singapore also have plantations in Indonesia. They should not just protest but also take part in prevention efforts,” said Marwan on Aug 21. Neither country has lodged a formal diplomatic complaint so far.

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House Moves to Replace SKK Migas with a New Structure

The House of Representatives (DPR) is pushing for a new Oil and Gas Bill that would replace the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) with a new entity.

Proposed changes to Law 22/2001 on oil and gas would establish a Special Oil and Gas Business Entity (BUK Migas) to manage upstream oil and gas activities.

Lawmakers said the institutional overhaul will strengthen state control over upstream oil and gas, improve legal certainty and support energy security. The bill is undergoing harmonization at the DPR Legislative Body (Baleg).

The proposed changes follow a 2012 Constitutional Court ruling that dissolved BP Migas after finding that its structure weakened direct state control over upstream oil and gas resources. SKK Migas was subsequently established as an interim institution to manage upstream activities pending a permanent legal framework.

House Commission XII Chairman Bambang Patijaya said the creation of BUK Migas would not fundamentally alter Indonesia’s upstream oil and gas governance, but would strengthen state supervision.

“As for whether this will replace the existing system, I think it’s just a matter of changing the name,” Bambang said on Aug 21.

Under the draft framework, BUK Migas would combine upstream management and regulatory functions currently carried out under the SKK Migas structure.

Unlike SKK Migas, which operates under the Ministry of Energy and Mineral Resources, the proposed BUK Migas would report directly to the president, a structure intended to streamline decision-making and reduce bureaucratic delays.

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Protest Leader has Bank Account Blocked

A leader of a group planning to bring protesters from Pati, Central Java to demonstrate against corruption outside the House of Representatives on Aug 27, has had his bank account frozen by Bank Mandiri, leading civil society groups to denounce the action as a blow to civic freedom.

The blocked account belongs to Supriyono, the coordinator of the United Pati Community Alliance (AMPB), and contains Rp 80.9 million ($4,900) in personal funds and donations intended to finance the protest. His group along with several others from outside Jakarta are planning the protest.

Mandiri has apologized and said the freeze was requested by an unnamed law enforcement agency. Leaders of the Pati group told Kompas the account remained blocked and they have set up alternate ways to collect donations through Facebook.

A coalition of rights groups, including the Center of Economic and Law Studies (CELIOS), the Indonesian Legal Aid Foundation (YLBHI) and Amnesty International Indonesia, said the freeze could violate Article 140 of the Criminal Law Procedures Code, which requires court authorization for an account to be frozen by law enforcement.

If the matter is urgent, investigators can freeze an account before obtaining approval but must get authorization from a district court within 48 hours, the groups said.

The coalition said the timing of the freeze raised concerns that banking powers were being used to restrict the right to protest.

“We see a serious danger when citizens’ accounts are frozen while they are exercising their right to voice criticism. Restricting access to money for food, transportation and other needs of protesters effectively cripples freedom of expression through economic pressure,” the coalition said.

It said Mandiri should restore access to the account if there was no valid legal basis or court order and called on the Financial Services Authority (OJK) to investigate.

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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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