Indonesia grants export proceeds relief to select mining firms under new bilateral framework

Indonesia grants export proceeds relief to select mining firms under new bilateral framework

Indonesia has introduced a selective easing of foreign exchange deposit requirements for mining companies, allowing eligible exporters to retain at least 30 percent of their natural resource export proceeds for three months under a new provision that takes effect September 1, 2026.

The facility, established under Article 18A of Government Regulation No. 21/2026, represents a significant departure from the stricter rules imposed earlier this year. In January 2026, the government had tightened export proceeds requirements through Government Regulation No. 2/2026, mandating that 100 percent of natural resource export proceeds be deposited in dedicated bank accounts for at least 12 months—a sharp increase from the previous 30 percent for three months requirement that had been in place since 2019.

Susiwijono Moegiarso, secretary of the Coordinating Ministry for Economic Affairs, outlined three primary objectives for the new policy: strengthening macroeconomic stability and domestic financial markets, supporting investment and working capital for downstream development, and boosting investment and exports.

The policy comes as Indonesia's foreign exchange reserves have faced pressure, declining from US$154.6 billion at the end of January 2026 to US$146.2 billion by the end of April 2026, largely due to Bank Indonesia's market interventions to stabilize the rupiah.

Limited eligibility under bilateral framework

Government Regulation No. 21/2026, which was enacted on May 6, 2026 and took effect on June 1, 2026, expanded eligibility criteria beyond bilateral trade agreements to include memoranda of understanding and other trade arrangements. Bank Indonesia was designated to authorize specific foreign exchange banks for export proceeds placement.

Based on export customs declarations from the Directorate General of Customs and Excise covering March 2025 through July 2026, the government identified 537 tax identification numbers belonging to mining exporters. After matching the data with the Directorate General of General Legal Administration, only 64 tax identification numbers—approximately 12 percent—met the criteria for the Article 18A facility.

The facility applies exclusively to mining exporters incorporated as limited liability companies with at least one shareholder from an eligible partner country holding at least 10 percent of shares. The government has designated five partner countries: the United States, China, Hong Kong, Australia and Canada.

Susiwijono explained that these countries were selected based on their substantial investments in Indonesia's mining sector and existing bilateral trade agreements or other trade understandings with Indonesia. Foreign direct investment into Indonesia's mining and quarrying sector totaled approximately US$5.2 billion in 2024, with the mining sector alone accounting for approximately 23 percent of total realized investment in the first quarter of 2025.

Strategic importance of mining sector

The policy reflects the strategic significance of Indonesia's mining sector, which contributed 11.9 percent to the country's gross domestic product in 2023. Indonesia holds a dominant position in global commodity markets as the world's largest exporter of coal, palm oil and nickel, with combined exports exceeding US$65 billion in 2025. The country controls 42 percent of global nickel reserves.

The mining sector attracted approximately Rp105 trillion, or around US$5.92 billion, in investment during the first half of 2026, representing 10.4 percent of Indonesia's total investment realization.

Indonesia's push for downstream processing has yielded substantial results. Between 2019 and 2022, investment in the country's mineral processing and manufacturing increased from US$3.56 billion to US$10.96 billion—a 207.9 percent increase—driven overwhelmingly by Chinese financing following the raw nickel export ban.

Implementation and opt-out provisions

Under the new facility, eligible exporters can place their natural resource export proceeds in 15 designated foreign-exchange banks, comprising five state-owned banks and 10 private-sector banks.

The facility is optional. Eligible exporters that do not wish to use it can opt out by submitting a statement to Bank Indonesia within five working days after the exporter list is announced. Exporters that do not submit the statement will automatically be deemed to have chosen the special facility.

Exporters that decline the facility will remain subject to the general rules under Government Regulation No. 2/2026. Non-oil-and-gas mining exporters must place 100 percent of proceeds for 12 months, while oil-and-gas exporters must place at least 30 percent for three months.

The new regulation adds another layer to Indonesia's evolving resource governance framework. In May 2026, the government also introduced Government Regulation No. 24/2026, which established a framework to centralize exports of strategic natural resource commodities through a state-owned enterprise, creating additional compliance requirements for exporters in the sector.