JAKARTA: The success of Indonesia’s plan to launch a commodity exchange will hinge on whether it can build a credible benchmark and persuade producers and traders to use it, experts say.
The exchange, which is set to launch on Jan 1, aims to have greater influence over prices of key exports such as nickel products, palm oil and coal.
The plan, announced by President Prabowo Subianto in his 2027 budget speech to parliament on Aug 14, received a thunderous response from lawmakers.
“For decades, Indonesia has become one of the largest producers of some of the world’s most essential commodities,” Prabowo told the lawmakers.
“Yet all too often, the prices of our wealth, extracted from our land and through the sweat of our people, are determined overseas, in another country’s commodity exchange,” Prabowo said.
“I ask the people’s representatives, do we want to continue in this situation?”
“No!” lawmakers roared back, rising to their feet.
At their simplest, commodity exchanges are organised marketplaces that bring together raw ingredient producers, manufacturers, traders and financial institutions to buy and sell commodities or contracts linked to them.
The industry’s response has been mixed. The Indonesian Nickel Miners Association, which has lobbied for a national mineral exchange, welcomed the plan but emphasised the importance of data integrity and clear governance, Reuters reported.
The Indonesian Palm Oil Association (GAPKI) told news outlet Detik the majority of its members currently prefer to strike deals directly with buyers instead of listing themselves on a commodity exchange.
Meanwhile, the Indonesian Coal Miners Association (APBI) said in a statement that it is still monitoring how the plan will be implemented before commenting further.
Indonesia has the world’s largest nickel reserves, and is the world’s largest exporter of thermal coal and palm oil.
The plan for the Indonesian Commodity Exchange, or Icomex, comes amid headwinds such as a sharp decline in nickel prices, which fell from an average of US$21,474 per metric tonne in 2023 to US$15,349 in 2025.
The slump prompted the government to cut its nickel ore production target from 379 million tonnes in 2025 to around 250 million tonnes this year in hopes of creating temporary scarcity to drive up the price.
The new target, which was announced in January, caused prices to soar and reach a two-year high of US$19,350 per metric tonne in April. The prices have since cooled to around US$17,000 per metric tonne in August.
The exchange plan also comes as Jakarta seeks to stamp out unlawful trade practices that it says deprive state coffers – in particular transfer-pricing, where a company sells goods too cheaply to an overseas sister company to avoid higher taxes and customs fees, and under-invoicing, when a company underdeclares the value of goods and transactions for the same tax evasion reasons.
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