Indonesia to Launch Economy Stimulus to Boost Consumption

Indonesia plans to announce economic stimulus measures on June 5 to revive activity and boost consumer purchasing power, hoping to push economic growth to around 5% this quarter, the Coordinating Ministry of Economic Affairs said on Saturday. 

"These programs are prepared to encourage growth by increasing consumption," chief economic minister Airlangga Hartarto said in a statement, adding that launching the measures before a school holiday starting in late June would provide momentum to boost purchasing power. 

Southeast Asia's largest economy grew 4.87% in the first quarter from the same period last year, its weakest in more than three years. The central bank trimmed its 2025 growth forecast to between 4.6% and 5.4% from a 4.7%-5.5% range. 

The ministry is still calculating the size of the stimulus package, which is meant to boost growth in the second and third quarters, a spokesperson said. 

The incentives include a 50% discount on electricity bills for around 79.3 million households and food handouts for 18.3 million lower-income households in June and July. 

The government also plans to give cash transfer for low-income workers and a discount on work accident insurance for workers in labor-intensive industries. 

To boost tourism, the government said there will be discounts on airfare, train and sea transportation rates during the school holiday, which runs through mid-July, and discounts on highway tolls for 110 million users in June and July, the ministry said. 

Source: Reuters 

Danantara, INA Ink Nickel Deal with Eramet 

French mining giant Eramet signed a deal related to the nickel-based battery materials with Indonesia’s sovereign wealth funds Danantara and the Indonesia Investment Authority (INA) in Jakarta on Wednesday. 

This memorandum of understanding (MoU) was one of the major outcomes from French President Emmanuel Macron’s meeting with his Indonesian counterpart Prabowo Subianto. 

According to Danantara, the partnership aims to develop a sustainable and integrated electric vehicle (EV) battery raw materials ecosystem in the Southeast Asian country. All three will work together on a preliminary assessment to identify the most viable projects in Indonesia’s EV ecosystem. They have also agreed to develop a roadmap for future collaborations. 

Danantara’s chief investment officer, Pandu Sjahrir, revealed that the two funds would manage the long-term financing. On the other hand, Eramet is in charge of providing the technical expertise and experience that are needed for a large-scale mining project that meets international sustainability standards. 

“This partnership reflects the commitment of the three parties to encourage world-class nickel downstream investments in Indonesia - an essential pillar in enhancing the competitiveness of the national industry,” Pandu was quoted as saying in a press statement. 

Eramet Group’s chief executive officer Paulo Castellari revealed that the company had already “reviewed various opportunities” to partake in Indonesia’s nickel-based EV battery value chain. 

He added: “With a shared focus on downstream development, energy transition, and critical minerals, Danantara and INA’s priorities are closely aligned with Eramet’s strategic ambitions in Indonesia.” 

Since its establishment three months ago, Danantara has consolidated the assets of all 844 government-run businesses, including its sub-subsidiaries. Danantara is open to co-investment schemes with foreign agencies, and has even agreed to set up a joint fund worth USD 4 billion with the Qatar Investment Authority (QIA). Danantara mainly targets industrial processing, food production, petrochemicals, or basically sectors that can greatly spur the Indonesian economy. 

INA is a separate sovereign fund that took shape when Prabowo’s predecessor, Joko “Jokowi” Widodo, was still in office. According to its official website, INA boasts about USD 10.5 billion in assets under management.  

Eramet’s main presence in Indonesia lies at the Weda Bay Nickel joint venture. The French company runs the open-pit nickel mining operation in North Maluku’s Halmahera in a joint venture that it shares with Chinese stainless steelmaker Tsingshan and state-run miner Antam. This mining site also represents 17% of the global nickel production. 

Danantara CEO Rosan Roeslani had dropped hints of the fund possibly partnering with Eramet. 

Nickel, of which Indonesia is abundant in, is a mainstay ingredient in EV battery production. 

Indonesia and France also signed a separate government-to-government letter of intent on critical minerals that day. The Indonesian government will likely reveal more details on this partnership soon. 

“This independence, policy of sovereignty, requires us to strengthen the resilience of our value chains. [And thus] we have signed [cooperation] in many areas, including on critical minerals,” Macron said. 

Official statistics showed that France invested USD 85 million in 3,750 projects across Indonesia throughout the first quarter of 2025. The government, however, did not give details on the sectors that were popular among French investors. Bilateral trade amounted to USD 2.4 billion last year. 

Source: Jakarta Globe 

Indonesia Eyes EU Trade Breakthrough As Bloc Softens Green Business Rules

Indonesia has the opportunity to wrap up a long-delayed free trade deal with the European Union after the bloc officially placed Indonesia in its “standard-risk” deforestation law category, a step seen by businesses as a signal that could boost exports of palm oil, coffee, cacao and other commodities. 

“Yes […] we’re in the middle of finalization, and the EU seems to be easing now as we near the final stage,” Trade Minister Budi Santoso said on Wednesday, confirming that Indonesia was not among the countries deemed high risk under the EU’s Deforestation Regulation (EUDR).  

He noted that the EU’s move emerged during the final talks to conclude the Indonesia-EU Comprehensive Economic Partnership Agreement (I-EU CEPA), which was expected to be finalized by mid-year.  

Negotiations on the trade pact began in 2016, but multiple deadlines to conclude them have been missed. “A lot of changes are happening, including things like that,” he added. 

Indonesia, the world’s largest palm oil producer, has raised concerns over EU law banning imports of commodities linked to deforestation after 2020, as well as requiring traceability and geolocation coordinates of commodities subject to the regulation, effective for large companies from the end of this year.  

The country was featured among standard-risk countries while only Russia, Belarus, North Korea and Myanmar were placed in the high-risk category, Reuters reported on Friday. 

The rule’s country benchmarking system classifies nations as low, standard or high risk to minimize the EU’s role in global deforestation, with lighter checks for low-risk countries. 

 The decision to categorize only those four countries as “high-risk” has raised eyebrows and sparked criticism from environmental groups, with a coalition of 40 NGOs warning the European Commission in an open letter that “premature conclusions could politicize the benchmarking process.” The list is due to be formalized by June 30. 

Businesses welcomed Indonesia’s exclusion from the high-risk group, but many said the real prize remained the “low-risk” label, a classification that would ease due diligence and cut export costs, especially for small players. 

“It’s a good thing for us, especially for our small- and medium-sized exporters still struggling with the high cost of traceability,” Indonesian Coffee Exporters and Industries Association (AEKI) chairman Moelyono Soesilo told The Jakarta Post on Friday. 

 About a quarter of Indonesia’s coffee exports go to Europe, but demand has stagnated since 2023 as local beans lost out in competition to Vietnam and Brazil. Easier compliance could help revive exports, Moelyono added. 

For palm oil exporters, the stakes are even higher. Indonesia shipped 3.3 million tonnes of crude palm oil (CPO) to the EU in 2024 and hopes that could grow to 4 million tonnes annually once the new rules take effect. 

“We were hoping Indonesia will be classified as low risk […] that would bring greater perks,” Indonesian Palm Oil Association (GAPKI) chairman Eddy Martono told the Post on Thursday.  

Under the EUDR, companies from low-risk countries need to conduct full due diligence on only 1% of shipments, while standard-risk countries must check 3%.  

But recent guidance clarified that due diligence is not required for every shipment if goods come from the same supplier and are destined for the same buyer or corporate group. 

This reduces the administrative load for recurring transactions between verified partners. “I believe this should ease the burden quite a bit,” Eddy said. 

Indonesian Cocoa Board chairman Soetanto Abdullah warned that soaring bean prices over the past year had pushed many multinational companies to halt purchases.  

If EUDR compliance pushed costs even higher, he said, more buyers might back out entirely, shrinking global chocolate supply. “Are chocolate lovers in Belgium, Switzerland and Germany ready to give up chocolate?” he told the Post on Friday. 

Chris Humphrey, executive director of the EU-ASEAN Business Council, called the EU’s softened stance both timely and expected.  

“It’s a welcome development, if Indonesia had landed in the high-risk category, it could’ve harmed the I-EU CEPA finalization,” Humphrey told the Post on Friday. He added that proposed changes to the EU’s other flagship green law, the Corporate Sustainability Due Diligence Directive (CSDDD), were also viewed as business-friendly. 

The CSDDD requires large companies to police environmental and labor practices throughout their supply chains. It has yet to take effect but faces growing opposition from industries.  

This entails tracking the deforestation and pollution they and their suppliers and subcontractors cause, as well as other issues, like forced labor, and taking steps to curtail them. 

Economic uncertainty in Europe, much of it tied to the impact of recent United States tariff policies, had intensified pressure on the EU to improve its competitiveness and strengthen ties with ASEAN, Humphrey added.  

“While companies will still aim to meet high supply chain standards due to consumer pressure, easing the rules would reduce regulatory and cost burdens,” he continued. 

The CSDDD’s future is uncertain after French President Emmanuel Macron and German Chancellor Friedrich Merz urged the EU to scrap it entirely, AFP reported on Friday. European Commission spokeswoman Paula Pinho insisted the regulation was still “alive,” though many observers say the call from Europe’s two biggest economies could seal its fate. 

The pivot reflected EU efforts to adjust to geopolitical and economic pressures, said Muhammad Habib Abiyan Dzakwan of the Centre for Strategic and International Studies (CSIS), noting that not all countries were ready to meet its strict regulations, and that the bloc itself needed stronger economic ties with the rest of the world.  

“The current declining interest in the green trajectory may lend more space and time for Indonesia to improve itself, but it doesn’t mean that this room for reform will be there forever,” Habib told the Post on Friday. 

Source: The Jakarta Post