Govt Eyes 6.5% Economic Growth in 2027

President Prabowo Subianto has revealed that the economic growth projection in next year’s state budget would be set at 5.8% to 6.5%, which he said keeps Indonesia on track to achieve its ambitious 8% target by 2029.

In a speech outlining the Macroeconomic Framework and Fiscal Policy Points (KEM-PPKF), Prabowo told the House of Representatives on Wednesday that the deficit for 2027 was set at 1.8% to 2.4% of gross domestic product (GDP), below the legal cap of 3 percent.

“We will keep striving to press down the deficit,” Prabowo said.

The rupiah is projected to trade between 16,800 and 17,500 per dollar next year, despite currently being around 17,700 per dollar this week.

This marks the first time a president has delivered the KEM-PPKF speech, the initial document in the state budget formulation process that outlines macroeconomic projections. The speech has traditionally been delivered by the finance minister.

Prabowo said the country was facing “geopolitical challenges” that created uncertainties with a “very big impact on our livelihoods”, hence his decision to deliver the speech himself.
 

Source: The Jakarta Post

Indonesia Eases Earnings Retention Rules for US Exports

Indonesia is easing its export earnings retention rules for US-bound mining shipments, according to a senior official, citing Jakarta’s trade agreement with Washington. 

Starting in June, Indonesia will require natural resource exporters to park receipts to ramp up foreign reserves and stabilize the falling rupiah. Businesses in the non-oil sector will have to place 100% of their earnings in state-owned banks for at least a year. Oil exporters will be subject to a 30% minimum retention for no less than three months. Companies can use the proceeds for operational needs if converted to rupiah, although the conversion is capped at 50%.

The government, however, will introduce flexibility for miners who export to countries that have already sealed trade pacts or reached a mutual understanding with Indonesia.

“Such businesses only have to park at least 30% of their proceeds onshore for at least 3 months. They would have the option to put the money in non-state banks,” Chief Economic Affairs Minister Airlangga Hartarto told industry associations in Jakarta on Thursday.

Asked by the press about the export destinations that would qualify for this special treatment, Airlangga replied: “There are exceptions for our partners; we will see. But the US is one of them.” 

Jakarta had already sealed a tariff deal with Washington in late February when the government tried to bring down US President Donald Trump’s import duty hikes. It took less than 24 hours since the signing for the Supreme Court to rule Trump’s tariffs as unlawful. Trump has been doing his utmost to revive the tariff regime ever since, including by launching probes into alleged unfair trade practices in Southeast Asia’s biggest economy. 

Bank Indonesia has signaled that American banks could accept the export proceeds.

“As for the eligible non-state banks, we will factor in their size, transactions, risk management, infrastructure, and interconnectivity. But most importantly, if they come from countries covered by the bilateral trade agreement or the other deals,” the central bank’s governor Perry Warjiyo said.

As the clock ticks on the new rule, Airlangga defended this policy, saying that “Indonesia has the right to do so. Other countries like Malaysia and Thailand are doing the same”. 

The two ASEAN nations indeed had urged companies to keep their export earnings onshore. Malaysia-based firms are obliged to repatriate their proceeds in full value within 6 months after shipment. Thai businesses, too, must bring home foreign income, although the country’s central bank had not long ago raised the threshold to USD 10 million, from the previous USD 1 million.

Indonesia’s foreign exchange reserves stand at USD 146.2 billion by the end of April, shrinking $2 billion from the previous month. The prolonged US-Iran war continues to add pressure to the rupiah, which closed at IDR 17,667 on Thursday. According to the Trade Ministry, Indonesia’s exports to the US neared USD 7.3 billion in Q1 2026.

Source: Jakarta Globe

Indonesia Launches Auctions For 13 New Oil and Gas Blocks

Indonesia’s Ministry of Energy and Mineral Resources (ESDM) is auctioning 13 new oil and gas blocks at the Indonesian Petroleum Association Convention and Exhibition (IPA Convex), which opened in Tangerang on Wednesday.

“For those interested in participating, the auction begins today,” the ministry’s director general of oil and gas, Laode Sulaeman, remarked.

The government is offering private and state-owned entities the flexibility to choose their preferred Production Sharing Contract (PSC) scheme, opting for either a gross split or a cost recovery model.

Simply put, the gross split scheme allows companies to retain a larger portion of the production revenue, but without government reimbursement for production costs.

Conversely, the cost recovery scheme allows companies to receive government reimbursement for production expenses, though the government's profit-sharing share is usually higher to offset those covered costs.

Other incentives provided by the government include tax breaks and compensation for oil and gas deliveries under the Domestic Market Obligation (DMO), commonly known as the DMO Fee.

For the direct offer route, access to bidding documents is open from May 20, 2026, to July 3, 2026, with the submission deadline set for July 6, 2026.

Additionally, the government is opening a regular tender for the ABT 2025 study area, which includes the Rupat, Puri, Pesut Mahakam, Bengara II, Maratua II, Rombebai, and Jayapura working areas. In this category, bidding documents will be accessible from May 20, 2026, to July 17, 2026, with a submission deadline of July 20, 2026.

Meanwhile, for the standard regular tender channels, the government is offering the Namori, South Tanimbar, Cerera, and Areca Bruni working areas. Bidding document access for these blocks will be open from May 20, 2026, to September 15, 2026, with submissions closing on September 17, 2026.

Below are the details for the 13 oil and gas blocks currently up for auction:


A. Direct offer tender route:

1. Natuna D Alpha Working Area

Location: Offshore Natuna

Area: 10,211.85 km²

Resource estimate: ± 2,865 mm²

Contract format: cost recovery with a 50:50 split (oil and gas)



2. Sapukala Working Area

Location: Offshore Makassar Strait

Area: 8,474.5 km²

Resource estimate: ± 2,309 bscf of gas

Contract format: gross split (base split PSC 53:47 oil and 51:49 gas)



B. List of Working Areas Regular Auction:

1. Rupat Working Area

Location: Offshore and onshore Riau, and offshore North Sumatra

Area: 7,843.66 km²

Resource estimate: ± 1,110 mm²

Commitment: 200 km of 2D seismic



2. Puri Working Area

Location: Onshore Riau Province

Area: 4,190.32 km²

Resource estimate: ± 1,110 mm²

Commitment: 200 km of 2D seismic



3. Pesut Mahakam Working Area

Location: Onshore East Kalimantan

Area: 1,530.15 km²

Resource estimate: ± 1,336 mm²

Commitment: 100 km² of 3D seismic



4. Bengara II Working Area

Location: Onshore and offshore North Kalimantan

Area: 3,289.67 km²

Resource estimate: ± 1,057 mm²

Commitment: 100 km² of 3D seismic



5. Maratua II Working Area

Location: Onshore and offshore North Kalimantan

Area: 4,350.36 km²

Resource estimate: ± 3,279 mm²

Commitment: 200 km of 2D seismic



6. Namori Working Area

Location: Offshore East Nusa Tenggara (NTT)

Area: 9,769.82 km²

Resource estimate: ± 17,475 mm² or 38.5 tcf of gas

Commitment: 200 km² of 3D seismic



7. South Tanimbar Working Area

Location: Offshore Arafura Sea

Area: 8,492.49 km²

Resource estimate: ± 5.6 tcf of gas

Commitment: 500 km² of 3D seismic



8. Cerera Working Area

Location: Offshore Papua

Area: 7,171.22 km²

Resource estimate: ± 1,487 mmboe and 1.3 tcf of gas

Commitment: 250 km² of 3D seismic or 1,000 km of 2D seismic



9. Areca Bruni Working Area

Location: Offshore and onshore, Southwest Papua

Area: 8,480.52 km²

Resource estimate: ± 2,985 mmboe

Contract form: Cost recovery (split PSC 60:40 oil and 55:45 gas) or gross split



10. Rombebai Working Area

Location: Offshore and onshore Papua

Area: 7,367.48 km²

Resource estimate: ± 14.75 tcf of gas

Contract type: cost recovery (split PSC 55:45 oil and 50:50 gas) or gross split



11. Jayapura Working Area

Location: Offshore and onshore Papua

Area: 7,299.41 km²

Resource estimate: ± 19.4 tcf of gas

Contract type: cost recovery (split PSC 55:45 oil and 50:50 gas) or gross split.

Source: Antara News