AGP Executive Report

Bank Indonesia Shake-Up: Governor Perry Warjiyo’s surprise resignation is set to test central bank independence as markets watch for a successor and policy continuity. US Tariff Pressure on Trade: Indonesia is among countries seeking better terms after the U.S. forced-labor probe lifted Section 301 duties, with businesses warning of competitiveness hits—especially for textiles and palm-related exports. Corporate & Finance Watch: Indonesia’s takaful insurers reported negative investment returns in Q1 2026 as equity market volatility weighed on sharia portfolios, while Bank of Baroda faces an alleged 1TB data leak claim. Jobs & Labor: PT Amos Indah reached a mediated settlement with 134 former employees, agreeing about Rp12.7bn in severance while terminations stand. Energy & Climate: Asia braces for a new energy squeeze as a Red Sea blockade threatens oil flows, while Indonesia pushes methane cuts that could reshape waste-pickers’ livelihoods. Tech & Industry: Indonesia eyes new EV incentives to boost local production, and hospitality and tourism see fresh momentum with new Bali openings and travel demand signals.

Central Banking Shake-up: Bank Indonesia Governor Perry Warjiyo has resigned mid-term for personal reasons, with Senior Deputy Governor Destry Damayanti stepping in as acting governor while the government starts the process to name a permanent successor—raising fresh questions about monetary stability and central bank independence as the rupiah stays under pressure. US Trade Pressure: Indonesia and ASEAN exporters face an overhang from the latest US Section 301 forced-labor tariffs, though some product exemptions may soften near-term impacts; business groups warn supply-chain uncertainty could still bite. Cybersecurity: Researchers flagged a Microsoft Teams-themed phishing campaign using fake “secure document” lures to deploy remote monitoring tools, including Level RMM and ScreenConnect—another reminder to tighten workplace email and link checks. Waste & Jobs: Bali’s waste-to-energy plant is set to cut emissions, process up to 1,500 tons of waste daily, and create about 1,200 green jobs, with full operations targeted for end-2027. Public Services & Welfare: House leaders are pushing additional central funds to cover PPPK contract staff salaries in 39 regions that can’t afford them from local budgets. Environment & Health: Jakarta-area air-quality efforts get a boost as officials urge more tree and mangrove planting ahead of El Niño-driven haze risks. Sports (Regional): Singapore kept a perfect start in the ASEAN Championship with a 2-0 win over Timor-Leste.

Central Banking Shake-Up: Bank Indonesia Governor Perry Warjiyo resigned for personal reasons, with Senior Deputy Governor Destry Damayanti named acting governor as President Prabowo accepted the move—raising fresh questions about policy continuity and central bank independence. Drought & Food Security: Indonesia is preparing 56,000 water pumps to keep rice fields watered as El Niño-driven dry conditions worsen, with officials pushing rapid pump distribution plus farm modernization. Anti-Corruption Scrutiny: Former top graft prosecutor Febrie Adriansyah was arrested by the AGO over alleged money laundering, but questions linger about detention procedures and whether the AGO can fairly handle a case involving its own. Public Order Debate: West Java Governor Dedi Mulyadi’s cash-reward plan for catching street criminals drew backlash over fears of vigilantism. Press Freedom Clash: Press unions demanded Prabowo apologize after calling journalists “londo ireng,” saying the remark denigrates the profession. Digital Nomads Under Pressure: Two Dutch men behind a “foreigner-only” Bali run club were banned from Indonesia after accusations of discrimination. Waste Management Shift: Bantargebang landfill is set to move from open dumping to controlled systems, starting Aug. 1, as methane-cutting reforms threaten livelihoods of waste pickers.

Trade Diplomacy: Indonesia is pushing the EU to fast-track the Indonesia–EU Comprehensive Economic Partnership Agreement (IEU-CEPA), aiming for ratification in the second half of 2026 and entry into force in early 2027. Defense & Security: Indonesia and South Korea agreed to speed up follow-ups under their Comprehensive Strategic Partnership, with emphasis on defense, energy, and investment, including shipyard development. Defense Cooperation: Indonesia also moved to deepen defense ties with New Zealand, including support for Indonesia’s Free Nutritious Meal Program, while Indonesia and Norway discussed energy transition and marine aquaculture cooperation. Finance & Payments: UAE’s central bank met Indonesia’s ambassador to explore stronger banking ties and faster cross-border digital payments. Environment & Food Security: Indonesia marked World Mangrove Day with calls to go beyond planting and restore ecological functions; Jakarta also planted 21,060 mangroves. Energy Transition: PLN EPI is building an integrated green hydrogen ecosystem for heavy industry and sustainable aviation fuel. Law Enforcement: Indonesia’s Forestry Ministry shut down illegal gold mining in North Sulawesi and is tracing financiers and equipment owners. Business & Economy: Indonesia’s President’s Cup is expected to boost local MSMEs and football talent development.

ASEAN-Asia Industry: UNIDO’s Marco Kamiya says China-ASEAN cooperation can speed sustainable industrial growth by pulling producers into higher-value niches and upgrading skills through investment in green manufacturing, EV charging and digital infrastructure. Child-Centered Policy: Indonesia’s Deputy Minister Veronica Tan urged child protection programs built on children’s voices, holding dialogues with kids in East Jakarta on education, play spaces and local protection services. Financial Hub Push: Parliament passed the legal basis for Indonesia’s planned international financial centre to rival Singapore/Hong Kong/Dubai, with plans for dispute settlement, oversight and a government body reporting directly to the president and parliament. Energy Mega-Project: Indonesia began work on the $15bn Makassar Strait North Hub, including an ultra-deepwater FPSO facility targeting first gas in Q4 2028. China Partnership: Investment minister Rosan Roeslani told Xinhua Indonesia wants long-term, deeper industrial cooperation with China beyond commodities, including downstreaming, EV batteries, digital infrastructure and renewables. Aviation Links: Scoot says it is expanding Malaysia routes, now serving 12 destinations with 130 weekly flights and 2.2m passengers carried to/from Malaysia in FY ended March 31, 2026. Disaster Update: A fire in West Java’s Sukabumi Regency destroyed 70+ homes and left 400+ people homeless, reportedly sparked by an electrical short circuit. Global Security: The US sanctioned a London-based Muslim Brotherhood leader over alleged Hamas funding, raising pressure on the UK to take a tougher stance.

UNESCO Watch: Indonesia is preparing the Aug. 3–7 revalidation of the Ijen UNESCO Global Geopark in East Java, aiming to keep its “green card” status by improving heritage promotion, accessibility, partnerships, and visitor safety around the iconic blue fire. Food Security & Farming: The government says Indonesia remains confident on food self-sufficiency as global protectionism rises, citing rice surplus and broader gains in corn, sugar, eggs, chicken, and fish. Tourism Push: Indonesia’s Tourism Ministry launched a domestic open-trip sales mission to boost affordable local travel, with domestic trips rising strongly in 2025 and early 2026. Energy & Industry Downstreaming: Downstreaming is framed as a way to strengthen Indonesia’s global supply chain and jobs, with projects highlighted around nickel processing and industrial estates. Social Welfare Data: Social Affairs Minister Saifullah Yusuf urged better data quality for targeted assistance, stressing accurate National Single Socioeconomic Data and stronger accreditation and partnerships. Anti-Corruption Crackdown: Authorities arrested former anti-graft prosecutor Febrie Adriansyah after seizing about $19m and over 70kg of gold bars, alleging money laundering. Regional Safety & Search: Rescue teams are searching for a missing speedboat off Sulawesi carrying 11 European tourists and two crew members. Tech & AI Debate: Jensen Huang urged Washington not to over-restrict open-weight AI models, arguing they support innovation, competition, and security. Trade Shock Abroad: The U.S. forced-labor tariff regime continues to reshape global exporters, with Bangladesh’s RMG facing a lower tier rate than some rivals.

US Tariff Shock: The Trump administration imposed new 10% and 12.5% Section 301 tariffs on goods from 60 trading partners, citing forced-labour concerns as a temporary global 10% levy expired; Indonesia is among those hit at 10%, and Jakarta says it will keep pushing the USTR for better rates. Indonesia–US Trade Talks: Indonesia welcomed exemptions and its regulatory recognition, while awaiting a separate USTR review on excess manufacturing capacity. Minerals & China Link: China offered to help Indonesia upgrade manufacturing and raise the value of downstream minerals, aiming to plug into Indonesia’s ban on exporting unprocessed nickel, bauxite and raw copper. Bali Financial Hub Push: Indonesia’s economic tsar Luhut Pandjaitan framed Bali’s push for an international financial centre as “a matter of survival,” amid regional confidence worries. AI Mobility Launch: OMODA & JAECOO will debut a mass-produced AI smart cockpit in Indonesia on July 27, betting on personalised, agent-style driving tech. Clean Energy Diplomacy: Indonesia–Singapore clean energy cooperation is moving toward execution, with energy transition deals now the real test. Regional Security: Muslim-majority countries including Indonesia condemned Israeli incursions at Al Aqsa, warning of escalating violence. Banking Update: GoTo-backed Bank Jago reported Q2 2026 net profit up 54% as lending and deposits grew.

US-Indonesia Trade Talks: Indonesia is continuing consultations with the U.S. Trade Representative after the U.S. imposed a 10% Section 301 tariff on Indonesian goods over forced-labour concerns, replacing a temporary 10% levy; officials say Indonesia welcomed USTR recognition of its forced-labour rules and that some Indonesian products are on the exemption list, while a separate USTR review on excess manufacturing capacity is still pending. Forced-Labour Tariff Wave: The U.S. rolled out tiered duties of 10% and 12.5% covering 60 trading partners as it rebuilds its tariff program after a Supreme Court setback, with many product categories exempted. Coal Export Shock for Neighbours: The Philippines is seeking supply assurances from Jakarta as Indonesia overhauls coal export rules by centralizing exports through state-linked Danantara, warning the shift could disrupt power supply. Aviation Consolidation: Indonesia’s state airline plan moves ahead as Danantara and BP BUMN push for Pelita Air to be merged into Garuda Indonesia to strengthen services and operations. Cultural Repatriation: The FBI returned stolen Papua artefacts to Indonesia, underscoring growing U.S.-Indonesia cooperation on recovering cultural heritage. Cocoa Revival: Indonesia is stepping up cocoa production with a new export levy to fund replanting and boost farm productivity, aiming to raise processing capacity usage.

US Tariffs Over Forced Labor: The Trump administration is set to impose new 10% or 12.5% tariffs on imports from 60 trading partners under Section 301, replacing a temporary 10% global tariff that expires Friday; Indonesia is listed among the countries facing the lower 10% rate, after the USTR said partners failed to adequately ban forced-labor goods. Digital Connectivity: Telkom Group’s Telin has completed the landing of the Nongsa–Changi submarine cable in Batam, a key step for a faster Indonesia–Singapore digital corridor. Banking & Insurance: HSBC agreed to sell its Singapore life and health insurance unit to Allianz in a deal valued at about $2.1bn, with a long-term bancassurance distribution pact afterward. Corruption Probe Spillover: Malaysia’s MACC recorded statements from 10 witnesses in its investigation into a RM200m KWAP investment loss tied to Indonesia’s eFishery. Energy Transition Push: LiuGong broke ground on a $317m electric heavy equipment plant in West Java, targeting operations in early 2027. Policy & Health Diplomacy: BRICS health ministers adopted a declaration aimed at strengthening resilient, people-centric health systems and pandemic preparedness.

Cultural Repatriation: The FBI returned Indonesian cultural artefacts to President Prabowo, with Culture Minister Fadli Zon saying the items—linked to Papua’s Dani and Asmat communities and Lake Sentani—were smuggled illegally and are being restored to Indonesia’s cultural sovereignty. Biometric SIM Registration: The Communications Ministry urged mobile operators to make biometric SIM registration accessible and inclusive, including for people with disabilities, while stressing operators must not store biometric data and should keep on-the-ground compliance monitoring. Sovereign Finance: Indonesia plans about US$1 billion in renminbi Panda Bonds to diversify funding away from the US dollar, using local-currency settlement links with China’s central bank frameworks to reduce rupiah pressure. Public Health & Vaping: President Prabowo signaled a possible total vape ban if a joint review finds higher risks and continued links to new narcotics, ordering tighter supervision across import and distribution channels. Education Access: Indonesia’s tuition-free Sekolah Rakyat program targets about 45,000 students in 2026, expanding quotas to reach children out of school due to economic hardship. ASEAN Diplomacy: Indonesia and Australia pushed for stronger economic resilience and maritime security at an ASEAN-Australia ministerial meeting in Manila. Maritime Innovation: The Ocean Institute of Indonesia is set to drive marine research, vocational talent, and innovation nationwide. Scam Warning: A UN report says Southeast Asia’s scam networks have evolved into a transnational “service” economy, costing victims up to $114.1B in 2025.

ASEAN Security Watch: Top diplomats gathered in Manila for the ASEAN Regional Forum as the Iran war and the Strait of Hormuz blockade threaten energy and food supply chains, with US Secretary of State Marco Rubio and China’s officials among the key voices. Rupiah & Banking: Bank Indonesia held its benchmark rate at 5.75%, leaning on inflow support to stabilize the rupiah after recent currency pressure. Indonesia’s Financial Push: Indonesia is set to issue its first panda bonds (up to 7 billion yuan) and is also moving ahead with plans for an Indonesian International Financial Center, aiming to turn policy into investor-ready execution. Energy Transition & Power Resilience: A new Ember report argues distributed solar, wind and storage can better withstand extreme climate shocks than fossil-heavy grids across ASEAN. Coconut Downstreaming: Indonesia is targeting major growth in coconut-based exports, backed by a long-term downstreaming roadmap and financing, research and incentives. Trade & Diplomacy: Indonesia and China agreed to accelerate the Twin Parks scheme, prioritizing projects around Batang Industropolis SEZ. Human Rights: An ASEAN group condemned Indonesia’s move to label “LGBTQ culture” as a non-military threat, warning it could legitimize discrimination. Business & Travel: Saudia and Garuda Indonesia signed an MoU to expand connectivity, including single-ticket options and stronger Umrah/Hajj support. Commodities: Malaysian palm oil edged up on El Niño worries and expectations of tighter Indonesian supplies under the B50 biodiesel mandate.

Coconut Downstream Push: Indonesia targets 151,554 hectares for coconut downstream development in 2026, backed by about Rp427 billion, with seed, fertilizer and land-prep support across 28 provinces to raise value-added output. Digital Connectivity Boost: The Nongsa–Changi undersea cable is now set to strengthen the Indonesia–Singapore digital corridor for data centers, cloud and AI, with officials highlighting faster, low-latency regional connectivity. Aviation Upgrade: Indonesia is moving Kertajati International Airport toward an MRO hub, with asset transfers to the central government underway and operations targeted to start this year. AI Tightrope: Indonesia’s decision to join China-led WAICO as a founding member is drawing questions about balancing China and US tech rivalry, though Jakarta says the initiatives serve different goals. Marine Conservation: The Forestry Ministry is partnering with OceanX to improve management of seven marine national parks using stronger scientific mapping, biodiversity inventories and restoration work. Energy Survey: Indonesia is drafting a legal framework to survey “white hydrogen” potential in Central Sulawesi after earlier research pointed to promising sites. Premium Banking: UOB and Visa are rolling out new Visa Infinite Privilege and Private tiers across ASEAN, upgrading 300,000+ UOB cardholders without downgrades. Free Meals Turmoil: Indonesia’s free-meal program faces further disruption as the head of the troubled agency resigns on health grounds amid budget cuts. ASEAN Diplomacy: ASEAN granted Turkey full Dialogue Partner status, expanding cooperation across political-security, economic and socio-cultural areas.

Foreign Policy Debate: A new commentary argues Indonesia risks weakening its foreign-policy institutions by letting presidential activism replace the process that should make diplomacy durable. Anti-Corruption & Governance: Pressure is mounting around the AGO’s graft takeover linked to Febrie Adriansyah, with allegations tied to major state losses and energy-sector scandals. Nutrition Program Fallout: Indonesia is probing the Blora free-meals poisoning after 19 students fell ill; the food supplier unit was temporarily shut while health officials join the investigation. Public Procurement Scrutiny: The BGN denies electric motorcycles for a nutrition unit were bought with corruption funds, saying payments used state budgets and focusing on suspected markup. Regional Business Links: Singapore launched a Professional Services Centre network to help firms expand across Asia, with Jakarta expected to join later this year. Energy Transition: Indonesia says it has 93 hydrogen ecosystem projects worth about US$2.05b, aimed at accelerating “dedieselization.” Finance Law: Parliament passed the Indonesia International Financial Centre (PFII) bill into law, moving fast but leaving key questions unanswered. Digital Safety: France approved an under-15 social media ban (and phone limits in high schools), adding to a growing regional trend on youth online protection.

Free Meals Budget Cut: Indonesia has trimmed President Prabowo’s signature free school meals programme budget again to 229 trillion rupiah (about US$12.81b), with officials warning more efficiency cuts may follow as the target shifts from fixed recipient numbers to better quality and fewer cases of food poisoning. Energy Policy: The government says the B50 biodiesel programme is already cutting oil imports by 250,000–300,000 barrels per day, pushing imports down to about 700,000–750,000 bpd as diesel import phasing continues. Food Security & Fisheries: Coordinating Minister Zulkifli Hasan is pushing protein self-sufficiency with plans for 40,000 thematic fish-farming villages, aiming to boost domestic supply and fisheries exports. Education Reform: The Ministry of Primary and Secondary Education is preparing Integrated National Schools to blend the national curriculum with locally tailored content, including foreign languages and digital skills. Digital & Finance: Indonesia will issue a US$1b debut renminbi Panda Bond on July 23 to test demand in China’s onshore debt market, while Indonesia also moves ahead with a law to establish international financial centres. Tourism & Trade: Seychelles is exploring cooperation with Indonesia on developing the Pemapak hot springs in East Kalimantan, while a small tempeh-chip maker in Tanjungpinang has expanded into Singapore via Batam. Governance & Compliance: Indonesia’s Law Ministry says higher fees for renouncing citizenship and naturalisation will take effect Aug. 1, urging the public not to worry about the impact.

Financial Hub Push: Indonesia’s parliament panel has given the go-ahead to a bill to create an international financial centre, with lawmakers debating key rules and expected tax incentives aimed at attracting Rp 300t–Rp 500t in investment, potentially with Bali in the spotlight. Jobs & Industry: Layoffs hit 32,389 in the first half, with West Java the biggest contributor, though officials warn the real impact may be higher than official Job Loss Insurance figures. Food Security & Energy: President Prabowo ordered faster sugarcane rejuvenation—targeting 100,000 hectares per year in two years—and linked the plan to ethanol expansion for E20 ambitions. Rural Economy Under Scrutiny: Questions are growing over KDMP cooperative procurement run by PT Agrinas, after reports of Rp 1.8t–Rp 2.56t fan spending that lawmakers say needs clearer pricing and vendor selection. Corruption Watch: Prabowo reiterated zero tolerance as the Attorney General’s Office continues investigating former top prosecutor Febrie Adriansyah without detaining him, drawing public concern. Public Services & Daily Life: Police guarded gas stations in North Sumatra amid fuel scarcity, while commuters complained about major congestion from ongoing Jakarta–Tangerang toll road repairs. Digital Rules for AI: Indonesia’s copyright draft bill would recognize AI-assisted works with human input, ban imitation of distinctive styles, require AI disclosure, and may force tech platforms to compensate content used for training.

SOE Overhaul: President Prabowo says Danantara has restructured 250 state-owned entities in 18 months, cutting overhead costs by Rp50 trillion and targeting a further reduction to cap SOEs at 350 by end-2026. Indonesia–Chile Deal: Foreign ministers Sugiono and Chile’s Francisco Pérez Mackenna discussed deeper cooperation in critical minerals, science/tech, agriculture and health, while highlighting IC-CEPA tariff-free access for thousands of Indonesian products. Digital Connectivity: Singapore and Indonesia marked the arrival of the Batam–Changi undersea cable, aimed at faster, more efficient links for data centres and broader ASEAN digital integration. AI Push: Indonesia is betting on AI to power its digital economy, with officials pointing to a potential jump to about US$600 billion regionally under ASEAN’s digital framework. Cyber Crime Probe: Jambi police hunt a Bulgarian suspect behind a Bank Jambi cyber theft involving 6,609 accounts and Rp144 billion losses. Energy & Commodities: Nickel ore supply is flagged as vital for downstream smelters as Indonesia adjusts quotas, while oil prices ease after Iran says US contacts continue via mediators. MSME Support: The MSME ministry reiterates policy backing for MSMEs and ride-hailing drivers, tying welfare goals to tangible cabinet delivery. Regional Aviation: AirBorneo plans ASEAN expansion, starting with Kuching–Singapore on July 22 and a Jakarta route within two months.