Indonesia, the world’s biggest nickel producer and top coal exporter, is moving to tighten control over exports of key commodities, Indonesian President Prabowo Subianto said on Wednesday.
The government is introducing a new regulation that require state-owned enterprises approved by the cabinet to be the sole exporters of several key commodities, beginning with coal, palm oil, and ferroalloys, Subianto told Parliament.
“Today the Indonesian government that I lead will issue a regulation on management of commodity exports,” the Indonesian president said.
“The issuance of this regulation is a strategic step to strengthen management of commodity exports,” he added, noting that this would boost export revenues and tighten the screws on illicit export practices.
“Indonesia’s natural resources belong to the Indonesian people. Therefore, the state has the right to know in detail how those resources are sold abroad,” local media quoted Subianto as saying.
“We no longer want to be misled. We want to know exactly how much of our wealth is being sold,” the president added.
Indonesia will evaluate every three months which commodities should be on the list of controlled exports, Senior Economic Minister Airlangga Hartarto said.
Exporters now can do export business as usual during a three-month transition period until the state enterprises take control over exports, but exports in the transition period will be strictly monitored, Hartarto added.
Indonesia is a major commodity exporter, especially of key energy and battery metal commodities such as coal and nickel. Analysts are concerned that the export controls could distort the global markets, and create additional distortion domestically rather than solving issues about which Indonesia is concerned.
Meanwhile, nickel prices have jumped this week amid reports of output cuts in Indonesia, while the benchmark three-month nickel futures on the London Metal Exchange extended gains on Wednesday after Subianto’s announcement of tight export controls of key commodities.
By Tsvetana Paraskova for Oilprice.com
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