AGP Executive Report

Protests and Fires: Thousands rallied in Jakarta and other cities on Oct. 28, demanding a national emergency over wildfires and protesting corruption and rising living costs. Haze Response: Indonesia and Singapore are moving quickly to set up a joint task force on firms linked to fires; Jakarta also plans changes to its haze law, while companies summoned by Singapore pledged to cooperate. Markets and Banking: The rupiah is under pressure amid concerns over a possible MSCI downgrade, with Bank Indonesia buying government bonds to steady markets. GoTo-backed Bank Jago reported third-quarter net profit up 51% year on year to 109 billion rupiah. Energy Ties: Indonesia has cut pipeline gas exports to Singapore by 9% to meet domestic demand, while saying it will honour its contractual obligations.

Wildfire Protests: Hundreds of security personnel were deployed in Jakarta ahead of student protests demanding a national disaster declaration for fires in Sumatra and Borneo and a rethink of spending on Prabowo’s free-meals programme. BRIN is working on fire forecasts up to six months ahead. Regional Tensions: Indonesia and Singapore agreed to form a task force to tackle forest fires and pursue companies linked to burning, as toxic haze spreads across the region. The dispute over Indonesia’s 9% cut to gas supplies for Singapore adds strain to ties. Market Confidence: Indonesia faces a possible two-notch downgrade by index provider MSCI, raising concerns about foreign investment. The government is also considering changes to the corruption law, saying clearer rules could improve legal certainty. Jobs: Indonesia’s unemployment rate fell to 4.65%, its lowest since 1994, though youth employment remains a concern.

Haze Response: Indonesia and Singapore agreed to form a task force to share information and pursue companies linked to forest fires, after months of toxic haze. Indonesia is also assessing Malaysia’s offer of aircraft, a helicopter and 44 personnel to help fight the blazes. Energy Tensions: Jakarta has cut pipeline gas exports to Singapore by about 9% to meet domestic needs, prompting concern over contracts and regional trust. Trade and Investment: Indonesia is targeting US$33 billion in trade agreements and business deals with the United States this year. Bilateral trade reached US$32.34 billion through August, while US investment hit US$3.4 billion in the first three quarters. Economic Outlook: Unemployment fell to 4.65%, its lowest level since 1994, and Japan’s Inpex moved its US$21 billion Indonesian LNG project closer to an investment decision.

Haze and Energy Tensions: Indonesia and Singapore’s foreign ministers are due to meet as fire-linked haze strains relations. Jakarta has cut pipeline gas supplies to Singapore by about 9%, citing domestic demand; Singapore is considering tougher haze laws and has issued notices to companies. Fires have been linked to 333,470 respiratory illness cases in Indonesia and threaten ancient cave art. Corruption Law: President Prabowo has ordered a review of Indonesia’s corruption laws to align them with the UN convention against corruption. Critics warn that proposals to narrow the definition could weaken accountability. Markets and Energy: The rupiah is near record lows amid higher oil prices and concern over a possible MSCI downgrade. Bank Indonesia expects local-currency trade to top US$55 billion this year, while the government drafts more flexible terms to explore 67 untouched oil and gas basins. Health Reform: The Health Ministry and doctors’ association are pursuing changes to national insurance financing and stronger legal protections for physicians as enrollment reaches 99.1% of the population and demand for care rises.

Energy and Regional Ties: Indonesia has cut pipeline gas exports to Singapore by about 9%, citing domestic needs. Singapore has urged Jakarta to honor supply agreements, putting regional trust under pressure. Haze and Health: Forest fires have been linked to 333,470 respiratory illness cases, while flames threaten communities and ancient cave paintings. Markets and Finance: Bank Indonesia is monitoring the rupiah, which weakened to Rp18,135 per US dollar amid geopolitical volatility. The stock exchange plans to target accounts suspected of manipulation rather than suspend entire shares, aiming to preserve liquidity. Growth and Jobs: Ministers called for faster industrialization to avert the middle-income trap. QRIS payment data could help assess MSME creditworthiness, while school construction projects have employed 97,000 workers.

Energy and Regional Ties: Indonesia has cut gas supplies to Singapore by 31 million cubic feet a day, citing domestic power needs. The move, amid tensions over wildfire haze, has raised concerns about contracts and Indonesia’s reputation as a reliable trading partner. Markets: Bank Indonesia says the MSCI warning triggered about Rp5 trillion in combined stock and bond outflows, which it considers manageable. The exchange plans independent observers to help identify concentrated share ownership and immediate probes into suspected share-price manipulation. Haze and Fires: With 1.9 million hectares reportedly burned since January, the government faces scrutiny for refusing to declare a national disaster. Governance: A proposal to narrow corruption rules to protect commercial decision-making has drawn warnings it could weaken accountability. MSMEs: The government is developing ways to bring more small businesses into the free-meals program, whose kitchens already have 68,000 MSME suppliers.

Energy and Trade: Indonesia has begun cutting pipeline gas exports to Singapore by 31 billion British thermal units a day, redirecting supply to domestic users including Batam. Singapore says the reduction is manageable but has urged both sides to honour contracts. Haze and Accountability: Forest fires have triggered student protests and a wider regional haze probe. Indonesia has named 11 companies as suspects, suspended permits and vowed to revoke licences of firms linked to fires; Singapore is also investigating local companies. Markets and Investment: Jakarta is pledging reforms to restore investor confidence after MSCI warned of a possible downgrade, while Bank Indonesia says the rupiah remains manageable. Food Security: The government is extending rice aid to 33.2 million low-income households through December and accelerating new paddy fields in South Papua, though farmers say roads and fertiliser remain pressing needs. Digital Economy: Indonesia is promoting digital growth and protection, but its free-university plan to attract AI talent could add to fiscal strain.

Wildfire Emergency: El Niño-fuelled fires are Indonesia’s worst since 2015, bringing toxic haze, student protests and new aid for affected areas. In South Sulawesi, flames came within 800 metres of caves holding some of the world’s oldest known paintings. Energy and Trade: Indonesia has cut pipeline gas exports to Singapore by 31 million cubic feet a day, redirecting supplies to domestic power needs. Singapore says the shortfall is small but expects contracts to be honoured; Indonesia is also seeking more gas from the Maha field. Market Confidence: Tensions over a possible MSCI downgrade have put Indonesia’s capital market in the spotlight. President Prabowo has accused MSCI of intimidation, while Bank Indonesia says the rupiah remains manageable. Growth: The economy grew 5.45 percent, and Indonesia reported US$216 billion in investment during Prabowo’s first two years in office.

Energy and Trade: Indonesia began cutting natural-gas exports to Singapore by a planned 31 billion British thermal units a day from Oct. 24, citing domestic needs. Singapore says the actual reduction is 17 billion BTU a day, less than 2% of its demand. Investment and Jobs: State fund Danantara will host a Jakarta technology investment forum on Oct. 26–28, targeting global capital for sectors including semiconductors, energy and AI. The government is also promoting animation as a source of digital jobs and eco-friendly products from small businesses for export. Markets and Growth: Indonesia’s reported 5.45% economic growth contrasts with investor concern over a possible MSCI market downgrade; Bank Indonesia says the rupiah remains manageable. Wildfires: Fires and toxic haze have triggered protests and corporate investigations, while threatening Sulawesi’s ancient cave art and the survival of the Tapanuli orangutan. Regional Ties: Indonesia joined Türkiye, Qatar and Pakistan in a defence-industry cooperation pact focused on joint production and technology sharing.

Forest Fires and Haze: Indonesia says it will prosecute people and companies responsible for deliberate forest burning, as fires threaten ancient cave art and worsen regional pollution. Singapore has widened its haze investigation to 10 locally based firms, while Indonesian authorities have named companies as suspects. Energy Policy: Indonesia began cutting gas exports to Singapore by 31 billion British thermal units a day on Oct. 24, prioritising domestic supply. The move raises questions about revenue and the country’s plans for downstream industry. Political Pressure: Allies of President Prabowo are distancing themselves from his flagship free-meals programme amid food-poisoning cases, logistical problems and corruption allegations. Economy and Markets: Indonesia’s economy grew 5.45 percent, while investment reached US$216 billion in Prabowo’s first two years. But market concerns persist after an MSCI downgrade warning, prompting calls for stronger capital-market reforms.

Haze Crisis: Students across Indonesia are demanding a national emergency declaration as toxic smoke from severe forest fires blankets cities and spreads across Southeast Asia. Jakarta says it will prosecute people and companies linked to the fires; Singapore has sought information from 10 locally based firms. Economic Outlook: Indonesia’s economy grew 5.45% in the first half of 2026, the government says, driven by investment and productive sectors. Officials also aim to raise fishers’ terms of trade to 120 next year, from 108. Major Drug Seizures: Police seized 1.2 tonnes of liquid methamphetamine in Aceh and intercepted 1.16 tonnes of ketamine off Sumatra, arresting 11 people in the Aceh operation. Defence Cooperation: Indonesia joined Turkey, Qatar and Pakistan in a pact to develop defence manufacturing, research and training. The agreement does not establish a mutual-defence commitment. Disaster Recovery: A government task force says homes and essential services are being restored in North Sumatra communities hit by landslides.

Forest Fires and Haze: President Prabowo says foreign firms linked to recurring fires could lose their permits, while police have named 11 corporations as suspects. El Niño-driven drought is worsening the crisis and keeping pressure on Indonesia to curb smoke crossing borders. Drought Preparations: BNPB is preparing for a delayed rainy season that could stretch into early 2027, with firefighting, weather modification and clean-water deliveries underway. Markets and Growth: Fitch says Indonesia is unlikely to reach 8% growth soon, as officials face investor concern over a possible MSCI market downgrade. Energy and Trade: Jakarta is weighing gas export curbs as it prioritizes domestic supply. Indonesia Eximbank is also urging more small businesses to export; just 15.7% of the country’s 65.5 million MSMEs currently do so. Defence Industry: Indonesia has joined Türkiye, Qatar and Pakistan in a pact to expand defence production, research and training.

Forest-Fire Crackdown: President Prabowo vowed to revoke licenses of foreign-owned firms repeatedly linked to fires, with company names expected later. The government has allocated Rp1.235 trillion (US$68 million) for firefighting and health care as 71,000 personnel tackle blazes and haze. Public Unrest: Protests over living costs, fires and alleged corruption turned violent in Jakarta and other cities, with police vehicles set alight and thousands of officers deployed. Market Confidence: An MSCI downgrade warning has shaken Indonesian stocks; authorities have promised capital-market reforms as regulators issue record fines for violations. Trade and Investment: The Indonesia-Canada trade deal is set to take effect on Dec. 1, while Jakarta is seeking approval to begin CPTPP accession talks in November. Household Support: Prabowo is targeting Rp400 trillion in loans for 28 million families in 2027, including farmers, fishers and small businesses.

Market Confidence: OJK imposed record fines of Rp2.1 trillion ($116.7 million) for violations involving three listed companies as Indonesia works to head off an MSCI downgrade. CIMB denied plans to privatise its Indonesian banking unit, CIMB Niaga. Haze Crisis: Police have named 11 companies as suspects in fires driving regional haze. Acute respiratory infection cases in seven affected provinces exceeded 314,000, including more than 70,000 among children under five. Indonesia and Malaysia are discussing joint fire monitoring and prevention. Economy and Politics: Student protests have challenged rising living costs and the government’s response to fires. President Prabowo’s administration touts self-sufficiency in eight food commodities, while Energy Minister Bahlil Lahadalia says gas exports may be halted to prioritize domestic needs. Regional Ties: Indonesia signed a defence-industry cooperation pact with Qatar, Türkiye and Pakistan, covering joint production, research and training.

Market Turmoil: President Prabowo accused MSCI of trying to intimidate Indonesia after its warning that the country could lose emerging-market status. The Jakarta Composite Index rose 0.94% on Wednesday but remains down more than 40% this year. Regulators are promising reforms to improve transparency. Forest Fires: Indonesia’s fires have burned nearly 2 million hectares, worsening haze across Southeast Asia. Authorities are investigating companies suspected of involvement and coordinating firefighting assistance as health concerns and regional pressure mount. Defence Industry: Indonesia, Qatar, Pakistan and Türkiye signed the Badr pact in Doha to expand joint defence production, training and research. Rupiah Support: Bank Indonesia held its benchmark rate at 5.75% and said foreign-exchange hedging incentives had attracted US$9.9 billion in inflows since June.

Protests: Students rallied across Indonesia as Prabowo marked two years in office, demanding action on wildfires, living costs and corruption, and better access to education and healthcare. Haze Crisis: Fires have burned nearly 2 million hectares, exposing more than 10 million people to unhealthy air. Health officials recorded over 314,000 respiratory illness cases, including many among children. Singapore is widening scrutiny of companies linked to the fires, while Malaysia has offered firefighting aircraft and helicopters. Market Turmoil: Indonesian shares rebounded with regional markets on Wednesday after a historic selloff, but investor nerves remain over MSCI’s proposal to downgrade Indonesia from emerging-market status. The proposal is not final; a decision is expected by June 2027. Regulators have pledged market reforms. Economic Outlook: The protests underscore public concern that economic gains have yet to ease pressure on households, even as the government reports progress on poverty and investment.