Echoes of the New Order: Why Indonesia's New Export Body Stirs Old Anxieties in the Capital Market
A familiar shape on the horizon
On 20 May 2026, President Prabowo Subianto used his state-of-the-economy address to the House (DPR) to unveil a new Government Regulation on the Governance of Natural-Resource Exports. The headline instrument is PT Danantara Sumberdaya Indonesia (DSI), a vehicle under the Danantara sovereign wealth holding that will become the single channel for exports of palm oil, coal, and ferro alloy. The official rationale is cleanup: closing under-invoicing, transfer pricing, and the offshore leakage of foreign-exchange proceeds.
The market did not read it that way. The next trading day, the Jakarta Composite Index (IHSG) closed at 6,094.94 — down 223.56 points, or 3.54%, marking a fresh 52-week low. Analysts attributed the move primarily to the new export-centralization scheme, though Bank Indonesia's surprise 50-basis-point rate hike to 5.25% the same day and the recent removal of six Indonesian names from the MSCI Global Standard Index added to the pressure. CNBC Indonesia Research counted roughly 20 listed emiten in coal and palm-oil plus at least one ferro-alloy issuer with material direct exposure to the new regime.
For anyone with a memory of the New Order, the source of the unease is not hard to locate. Indonesia has tried single-window commodity bodies before, and the experiment ended badly.
The Soeharto playbook: BPPC
The most cited precedent is the Badan Penyangga dan Pemasaran Cengkeh (BPPC), formed by SK Menperdag No. 306/1990 and chaired from January 1991 by Hutomo "Tommy" Mandala Putra, Soeharto's youngest son. Officially, BPPC was a "buffer and marketing agency" meant to stabilize prices for smallholder clove farmers. In practice, ministerial regulation gave it exclusive rights to buy cloves from village cooperatives and to sell them on to the kretek (clove cigarette) industry — a textbook monopsony-monopoly sandwich.
The structure was politically engineered. Under BPPC sat PT Kerta Niaga (the state-owned trader), 828 village cooperatives, and PT Kembang Cengkeh Nasional — the latter a consortium of five private companies that Tommy had assembled before BPPC itself was even decreed. The industry's own producer association, GAPPRI, opposed the scheme; the protest was overridden.
The results were the opposite of the stated mission. As BPPC's sole-buyer position took hold, farm-gate clove prices fell from around Rp 7,900/kg to roughly Rp 4,000/kg by 1994. In spot markets, the collapse went further — from a promised floor of about Rp 7,000/kg to under Rp 2,000, and reportedly as low as Rp 250/kg in some regions, while BPPC continued selling on to factories at Rp 10,000–12,000/kg. In 1996, Tommy ordered farmers to burn surplus stocks to prop prices, then to convert their groves to coffee or vanilla. Furious growers in South Sulawesi took to calling BPPC "VOC gaya baru" — the new Dutch East India Company.
The state's own funds were captured in the process. According to ICW citing the Attorney General's Office, total state losses tied to BPPC were estimated at roughly Rp 3 trillion, including state liquidity credit and various farmer-protection funds (Dana Penyertaan Modal, Simpanan Wajib Khusus Petani, and others) that never reached their intended beneficiaries. BPPC was dismantled in 1998 as part of Indonesia's IMF rescue package.
The casualties in the capital market
The damage was not confined to villages. Indonesia's stock exchange had only just been reactivated by the 1988 deregulation, and 1990 saw a wave of major listings — Gudang Garam, Bentoel, and HM Sampoerna among them. These companies walked straight into the BPPC squeeze.
The most public casualty was Bentoel, which listed on the Jakarta and Surabaya bourses in 1990. By mid-1991, the company was already in serious trouble — squeezed by a combination of high clove prices under BPPC, changing excise rules, machine-quota restrictions, and roughly Rp 700 billion of debt left over from the 1986 rupiah devaluation. Public pressure to bail Bentoel out fell on a government that, with BPPC in operation, had little appetite for the optics. The company was ultimately rescued in 1991 by Rajawali Group, which took over the shares and rebranded it as Bentoel Group.
Privately held PT Djarum nearly shuttered its PB Djarum operation under the same cost pressure. Industry-leading Gudang Garam and HM Sampoerna survived on scale, but the sector traded under a structural regulatory discount that did not fully clear until BPPC was abolished. For an embryonic capital market still trying to attract foreign portfolio capital, the lesson investors drew was uncomfortable: in a sector touched by a connected monopoly, fundamentals matter less than political access.
DSI and the new single window
DSI's design is not a one-to-one copy of BPPC. It sits inside Danantara, the sovereign wealth holding structure, rather than under a presidential family member, and its stated mandate is transparency, not price-setting — closing the gap between declared and real export values. The rollout is staged. In the first phase, beginning 1 June 2026, exporters must report all transactions (volumes, prices, shipment terms) to DSI, while still transacting directly with foreign buyers; the government can then check whether declared prices match global index references. In the second phase — targeted for January 2027 — DSI becomes the actual buyer, purchasing strategic commodities from domestic exporters and reselling them onto international markets itself, with all proceeds repatriated to Indonesia in full.
That staged design is the optimistic case. The pessimistic case is that the structural features that broke BPPC are present again.
Where the parallels bite
First, monopsony risk. If DSI eventually becomes the sole domestic buyer of palm oil, coal, and ferro alloy bound for export, private producers lose any meaningful counter-party. Pricing discretion shifts from a competitive market to an administrative body. Samuel Sekuritas analysts have already flagged the specific channels: lower average selling prices (ASP) imposed by DSI, FX losses from rupiah-denominated settlement with the BUMN, and counterparty service fees — each of which would compress margins for listed exporters.
Second, margin compression for listed issuers. Larger, lower-cost producers may absorb the hit through scale economies; mid-tier and high-cost names will not. The valuation gap that opened on 21 May 2026 is, in part, the market beginning to price that dispersion. Phintraco Sekuritas added a second concern: longer transaction lead times as a new layer of bureaucracy is inserted into the export chain.
Third, governance and elite capture. Centralizing a multi-billion-dollar export flow inside a single state vehicle concentrates decisions about quotas, fees, logistics contracts, and counterparty selection. The strategic commodities involved are not marginal — coal, palm oil, and ferro alloy together account for roughly 23% of Indonesia's total export value, and natural-resource commodities as a whole make up around 60% of national exports. Without strong transparency rules — public reporting of margins, independent audit, parliamentary oversight — the structure creates exactly the rent-seeking surface area that critics say doomed BPPC.
What would make this time different
Three things would meaningfully distinguish DSI from its New Order ancestors.
One: a hard statutory limit on the spread between DSI's purchase price from producers and its sale price to foreign buyers, indexed to a transparent international benchmark.
Two: real-time public disclosure of volumes, prices, fees, and counterparties — not aggregate annual summaries.
Three: a sunset clause tying DSI's monopoly powers to measurable reductions in under-invoicing. If the leakage closes, the monopoly retires.
Without those guardrails, the comparison to BPPC is not alarmist; it is the base case. Indonesia's listed commodity champions have spent two decades building scale and disclosure standards that finally attracted serious global capital. A single-window export regime designed without binding constraints risks reintroducing the political risk premium that the 1998 reforms were supposed to put behind us — and the market, judging by the 21 May selloff, already suspects it.
Disclaimer: For discussion and analysis only. Not investment advice.
References
- On Danantara & DSI (May 2026)
- On market impact & affected emiten
- CNBC Indonesia Research, "Pemerintah Bentuk Badan Khusus Ekspor, Puluhan Emiten Bisa Terdampak?", 20 May 2026. Link
- Kompas Money, "Penyebab IHSG Ambruk Saat Bursa Asia Hijau: Sentimen BUMN Ekspor dan Suku Bunga BI," 22 May 2026. Link
- Bisnis.com, "IHSG Terdampak Respons Ekspor Satu Pintu, Purbaya Yakini Valuasi Emiten SDA Justru Naik," 21 May 2026. Link
- On BPPC (1990–1998)