Indonesia Takes Currency, Market Measures After Rupiah and Shares Fall

Indonesia's financial services regulator has allowed listed companies to buy back their stocks without shareholders' approval, while the central bank conducted "bold" currency intervention to calm markets, officials said on Wednesday. 

The moves came after the main stock index (JKSE) fell as much as 7.1% on Tuesday, pressured by concerns over the government’s policy, fiscal position and growth prospects. 

The index recovered by around 1% as of 0430 GMT Wednesday after the announcement. The rupiah, however, extended losses, falling by as much as 0.7%, despite Bank Indonesia's intervention. 

The currency was hit by spillover impact from Tuesday's drop in the stock market as well as global factors including U.S. trade policy, expectations around the Federal Reserve's meeting this week and tensions in the Middle East, BI's director of monetary and securities asset management Fitra Jusdiman told Reuters. 

"BI has and will continue anticipatory, mitigatory responses to ensure stability in the rupiah exchange rate, maintain FX supply-demand, including by intervening in a bold and measured way," he said. 

The financial regulator's new buyback rules are effective for six months and are intended to shore up market confidence, said Inarno Djajadi, chief regulator for the capital market at the Indonesia Financial Services Authority. 

"We hope to give a positive signal that companies have good fundamentals, to provide market confidence to investors as well as give flexibility to listed companies to conduct corporate actions to reduce share volatility," Inarno told a press conference. 

Satria Sambijantoro, head of research at Bahana Securities, said cash-rich companies whose share prices are undervalued may opt to use the opportunity to reduce public holdings. 

In past episodes of stock market plunges, state companies were among those which conducted buybacks to prevent further falls. 

State-controlled banks last month announced plans for buybacks. 

Iman Rachman, chief executive of the Indonesia Stock Exchange, said Tuesday's index drop has not affected the pipeline for initial public offerings. 

BI is due to hold a press conference on its monetary policy review later in the day. Most economists polled by Reuters expect BI to keep rates unchanged to prioritize rupiah stability, although a significant minority expected a 25-bp rate cut. 

"Moves in local financial markets ... create a headache for the central bank," said Capital Economic's chief emerging markets analyst William Jackson. 

"While low inflation and slower economic growth should set the stage for another interest rate cut... concerns about the currency ... may prompt it to act more cautiously and leave rates unchanged." 

CONCERNS OVER POLICY, POLITICS 

Analysts said the market selloff was triggered by several factors. 

Those include an increase in the state's role in Southeast Asia's largest economy under President Prabowo Subianto, management of state companies, the set up of new sovereign wealth fund Danantara, rising risk of fiscal deterioration and speculation over the resignation of respected Finance Minister Sri Mulyani Indrawati, which she has since denied. 

Of particular concern to investors was a government plan to have the military play a wider role in state institutions, which could allow armed forces personnel to serve in more civilian positions, said head of Indonesia research at Macquarie Capital Ari Jahja. 

Parliament is set to pass contentious revisions to the military law on Thursday. 

Appearing alongside financial regulators at Wednesday's press conference, lawmaker Budi Djiwandono said no active military personnel would be placed in state-owned companies. Djiwandono is deputy head of the parliamentary committee overseeing the deliberation of the military law revisions and Prabowo's nephew. 

Foreign investors, who make up around 40% of Indonesia's stock market participants, recorded net sales of around 2.49 trillion rupiah (USD 150.68 million) on Tuesday. 

Source: Reuters 

Batang Industropolis Now Officially an SEZ, More to Come, Govt Vows

Coordinating Economic Minister Airlangga Hartarto said developing SEZs had been a key strategy among Southeast Asian nations to attract investment and that Indonesia lagged behind with only 24 SEZs covering a total of 21,000 hectares. 
 
President Prabowo Subianto has officially designated the Batang Integrated Industrial Zone (KIT) a special economic zone (SEZ), now called Batang Industropolis, under Government Regulation No. 12/2025.  

Spanning nearly 4,300 hectares, Batang Industropolis offers a range of incentives for companies to set up shop in the area, including tax breaks and streamlined permit processing.  

It has been designated an SEZ for three sectors: manufacturing, tourism and logistics.  

Addressing reporters at the SEZ itself on Thursday, Coordinating Economic Minister Airlangga Hartarto said SEZs were a key strategy in Southeast Asian nations to draw investment. He pointed out that Vietnam had four SEZs covering a total of 1.6 million ha, Malaysia had six SEZs spanning 2.2 million ha and Thailand operated 10 SEZs over 622,000 ha.  

By comparison, Indonesia currently has 24 SEZs covering a total of 21,000 ha.  

“We are optimistic that Batang will be one of many SEZs we establish in the coming years. Ideally, each province should have at least one, meaning we may need at least 38 SEZs nationwide,” President Prabowo said at the same event. 

Batang Industropolis currently has 27 tenants. Seven of the companies have begun operations, creating 7,000 jobs, while another seven are in the construction phase.  

The zone has drawn IDR 17.95 trillion in foreign direct investment (FDI), led by Chinese and South Korean companies. These tenants span various industries, including renewable energy, footwear, glass and plastics.  

The management of Batang Industropolis revealed that 16 more companies were eyeing investments worth IDR 13.2 trillion. With this momentum, the government expects the zone to draw a total of IDR 60 trillion in investments over the next five years.  

In October last year, the management pointed to its large land bank, which it said could be developed “without conflicts”, as the entire area was owned by state-owned PT Perkebunan Nusantara (PTPN) 9, and to the region’s relatively low minimum wage as selling points.  

Batang Industropolis has signed a memorandum of understanding (MoU) with China State Construction Engineering Corporation (CSCEC) to collaborate on the Two Countries Twin Park (TCTP) program.  

The initiative aims to enable Batang Industropolis and CSCEC to jointly plan, develop and market the area as a strategic business hub, potentially transforming it into Indonesia’s own version of Shenzhen. 

Currently, Batang Industropolis has developed a 450-ha zone on its western side, which is already 80-percent utilized. Another 550-ha area on the eastern side is now being marketed to investors.  

Ngurah Wirawan, president director of PT Kawasan Industri Terpadu (KIT) Batang, which operates the SEZ, revealed that the partnership with CSCEC would develop another 500 ha of industrial area. 

He emphasized that the partnership was not exclusive, reflecting President Prabowo’s commitment to befriend all countries and attract investment from any country. 

Airlangga noted some key hurdles that had to be overcome for the SEZ to become a success story. These include the delayed transfer of land management rights (HPL) from PTPN 9 to the SEZ and the ongoing development of a dry port, jointly pursued by the SEZ, state-owned railway company PT Kereta Api Indonesia and a Singaporean investor, to enhance logistics efficiency and connectivity. 

President Prabowo vowed to cut red tape and simplify regulations to accelerate investment and development.  

“With greater efficiency, we can boost our competitiveness and fast-track our journey to becoming a prosperous nation,” he noted. 

Source: The Jakarta Post 

Indonesia Keeps Positive Trade Balance for 58 Months in a Row, But Surplus Weakens

Indonesia had been enjoying a positive trade balance for 58 consecutive months, but the monthly surplus had weakened in February, official data showed on Monday. 

According to the Central Statistics Agency (BPS), Indonesia's overall trade surplus totaled USD 3.12 billion last month, giving Southeast Asia's largest economy its 58-month streak since May 2020. 

Last month, Indonesia exported USD 21.98 billion worth of goods, while it imported USD 18.86 billion from its foreign partners. 

The recently announced surplus is smaller than the USD 3.49 billion positive trade balance recorded in January 2025. Even so, it surpassed the USD 830 million surplus in February 2024, thanks to the rising exports of its top commodity palm oil, among others. BPS revealed that crude palm oil (CPO) exports had soared over 58 percent month-to-month, hitting USD 2.27 billion in February. 

"The USD 4.84 billion surplus in our non-oil and gas trade in February helped us keep up the positive trend. The top contributing commodities include vegetable or animal fats and oils, mineral fuels, as well as iron and steel," BPS' head Amalia Adininggar Widyasanti told a press briefing. 

Indonesia saw a USD 1.72 billion deficit in its oil and gas trade last month, Amalia said. 

The US remained Indonesia's top contributor to the positive trend as Jakarta's surplus with Washington topped USD 1.5 billion in February, followed by India (nearly USD 1.3 billion), and the Philippines (USD 753.3 million). The latest figures further cemented the possibility of Indonesia being a future target for US President Donald Trump's tariffs as the American politician is targeting his country's top sources of foreign trade deficit. BPS reported that Indonesia posted a USD 291.1 million surplus when trading electrical machinery and equipment with the US. 

Indonesia booked the largest deficit with China in February, running a negative trade balance of almost USD 1.7 billion with Beijing that month. The nearly USD 1.4 billion deficit in Indonesia's electrical machinery and equipment trade with China made up the lion's share of these figures. The neighboring Australia became Indonesia's second-largest source of deficit, reaching USD 428.6 million over the said period. In third place was Brazil (USD 168.1 million), BPS announced. 

Source: Jakarta Globe