Strategic Commodities Bill: Clearer Exports?

Indonesia’s House Legislative Body is drafting a Strategic Commodities Bill. One proposal is to build an integrated commodity-management system from production to marketing, potentially including transactions through a strategic commodity exchange.

The stated objectives include stronger price transparency, a better negotiating position for Indonesia, and less under-invoicing or underpricing in export transactions.

An exchange can produce standardized data on prices, volume, quality, and participants. However, moving transactions onto an exchange does not automatically make every export price transparent.

The outcome will depend on which commodities are covered, how much volume enters the exchange, whether contracts are standardized, and whether regulators can connect exchange data with customs, banking, tax, and physical-delivery records.

As of September 18, 2026, the bill remains under preparation and discussion. Proposals involving an exchange, Domestic Market Obligations, a single export channel, or a new institution should not be described as final legal requirements.

Proposals to use a strategic commodity exchange and reduce under-invoicing during preparation of the Strategic Commodities Bill. Source: Indonesian House of Representatives E-Media, September 16, 2026, covering the September 15 meeting. 

What Counts as a Strategic Commodity?

The final criteria have not been established publicly. A commodity may be considered strategic because it:

• supports essential domestic needs;

• generates substantial exports or foreign exchange;

• serves as an industrial input;

• affects domestic price stability;

• relates to food or energy security;

• contributes materially to state revenue;

• plays an important role in downstream industrial development.

Coal, palm oil, and ferroalloys are already covered by the first stage of Indonesia’s 2026 strategic natural-resource export framework.

That framework is not the same as the bill. Existing regulations govern the export administration of selected natural resources. The bill is intended to provide a broader legal framework for commodity management.

How Are Export Prices Formed?

Export prices may vary because of:

• global benchmark prices;

• grade and quality;

• delivery location;

• freight and insurance;

• currency movements;

• contract volume;

• delivery schedule;

• discounts or premiums;

• processing costs;

• relationships between buyers and sellers.

Two contracts for the same commodity can legitimately have different prices. Price transparency therefore requires comparable product specifications, not merely publication of a single number.

How Could an Exchange Improve Transparency?

A commodity exchange may contribute through:

Standardized Contracts

Quality, unit size, delivery location, and settlement dates can be defined consistently.

Recorded Orders and Transactions

Bid prices, offer prices, transaction time, and volume create an audit trail.

Price Discovery

A sufficiently active market with diverse buyers and sellers may create a useful reference price.

Clearing and Settlement

A clearing system may reduce counterparty risk, depending on the final design.

Export-Document Verification

Invoice values may be compared with exchange transactions, product specifications, payments, and reference prices.

These benefits require real liquidity. A thin exchange can produce prices that are unrepresentative or easy to influence.

What Is Under-Invoicing?

Under-invoicing occurs when an invoice reports a value below the transaction’s actual economic value.

Assume an exporter ships 10,000 tonnes of a commodity with an economic value of US$100 per tonne:

10,000 tonnes × US$100 = US$1 million

If the invoice records only US$90 per tonne:

10,000 tonnes × US$90 = US$900,000

The gap is:

US$1 million − US$900,000 = US$100,000

The declared export value would be 10% below the illustrative economic value.

This example does not establish wrongdoing in any actual transaction. Differences may be legitimate when quality, freight, discounts, or contract terms differ. Regulators must compare genuinely equivalent transactions.

An Exchange Cannot Eliminate Manipulation by Itself

Potential limitations include:

• low trading volume;

• concentration among a small number of participants;

• differences in grade and delivery costs;

• related-party transactions;

• contracts executed outside the exchange;

• limited public access to transaction data;

• weak integration with customs and banking records.

A reference price is only credible when the market behind it is sufficiently deep and representative.

DMO Would Not Automatically Apply to Every Commodity

Indonesia’s Ministry of Trade has recommended that Domestic Market Obligations be applied selectively. The decision should consider domestic importance, shortage risks, price stability, industrial demand, and the effect of exports on local availability.

Government input on selective DMO application and further study of a single export-channel mechanism. Source: Indonesia Ministry of Trade, September 16, 2026. 

A broad DMO may support local supply, but it can also reduce producer prices, weaken investment incentives, or create excessive compliance costs if applied without regard to commodity conditions.

The government has also said that a single export channel through a state-owned enterprise should not automatically cover all strategic commodities.

Who Could Benefit?

Producers may gain access to clearer reference prices and stronger bargaining power. However, small producers may struggle to access an exchange if volume, warehousing, and administrative requirements are too demanding.

Exporters may benefit from standardized contracts and reduced disputes, but may face higher clearing, collateral, and reporting costs.

The government may obtain better information for export monitoring, taxation, foreign-exchange policy, and downstream development.

Domestic industries may receive more reliable raw-material supply through a targeted DMO. Consumers may benefit from more stable availability, although the outcome also depends on logistics, competition, and distribution margins.

Transparency Does Not Guarantee Higher Prices

A transparent price can move down as well as up. An exchange may reveal oversupply, lower quality, or high delivery costs.

The realistic benefits of transparency are:

• less information asymmetry;

• verifiable reference prices;

• clearer links between grade and value;

• stronger transaction oversight;

• less room for misreporting.

It should not be presented as a guarantee that exporters or producers will receive higher prices.

Connection to the Rupiah and State Revenue

Commodities generate a large share of Indonesia’s foreign-exchange earnings. More accurate export values can improve the reliability of trade data and revenue calculations.

However, export proceeds do not automatically strengthen the rupiah. The effect depends on whether the proceeds are converted, retained domestically, used for imports or debt payments, and governed by export-proceeds regulations.

State revenue also depends on taxes, royalties, export duties, deductible costs, corporate structures, and enforcement, not only the invoice price.

What Remains Unresolved?

Public information has not yet answered:

• which commodities will be classified as strategic;

• whether exchange trading will be mandatory;

• what proportion of transactions must enter the exchange;

• who will operate the exchange;

• how reference prices will be calculated;

• how long-term export contracts will be treated;

• whether smaller exporters will receive exemptions;

• what roles state-owned and private companies will have;

• how DMO quantities will be determined;

• what sanctions and transition periods will apply.

These questions require the draft text and final statutory provisions.

Will Export Prices Become More Transparent?

A strategic commodity exchange could improve transparency if it captures meaningful volume, uses comparable specifications, provides auditable data, and is not dominated by a handful of participants.

It will be less effective if liquidity is weak, quality is not standardized, or most commercial terms remain outside the system.

The bill may improve commodity governance, but its effect will depend on provisions that remain unfinished: commodity coverage, exchange design, data integration, DMO rules, the role of state-owned enterprises, private-sector access, and enforcement.

Disclaimer

This article is provided for information and education only. As of September 18, 2026, the Strategic Commodities Bill remains under preparation. Its scope and mechanisms may change during the legislative process. This article is not legal advice, investment advice, or a commodity-price forecast.