Danantara Indonesia unit will not take over contracts in new export plan, meeting minutes show

Danantara Indonesia unit will not take over contracts in new export plan, meeting minutes show JAKARTA, June 12 : A unit of Danantara Indonesia assigned to handle strategic commodity exports will not take over existing contracts or customer relationships, according to minutes of a meeting with industry associations seen by Reuters on Friday, easing concerns about potential trade flow disruptions. Investors have been spooked by President Prabowo Subianto's plan to bring exports of all of Indonesia's strategic commodities under the control of a new company set up by Danantara, the country's sovereign wealth fund. The company, Danantara Sumberdaya Indonesia (DSI), met with the Indonesian Employer's Association (APINDO), the Indonesian Mining Association (IMA), the Indonesian coal miners group APBI, nickel industry group FINI and palm oil producer association GAPKI on Thursday to allay those concerns and discuss how to implement the plan, which was introduced to tackle state losses caused by under-invoicing and transfer pricing. "DSI emphasised that the mandate given is not intended to disrupt normal trading activities, but rather to strengthen data-based supervision," according to the minutes, which have been verified by two sources with direct knowledge of the meeting. GAPKI secretary general Hadi Sugeng emphasised the importance of maintaining relationships with buyers to dissuade them from switching to other palm oil suppliers such as Malaysia or opting for other kinds of edible oil. DSI is currently building a digital platform to analyse transaction data on exports of strategic natural resource commodities, so that evidence of under-invoicing can be identified objectively and on a data-driven basis, the company had said. According to government regulations, DSI will be responsible for determining the selling price. The meeting minutes said the company plans to develop a transparent pricing assessment methodology based on international principles and industry-standard price indices. "The price fairness assessment will consider product quality, commodity specifications, logistic costs, contract structure, other commercial factors," the minutes said, adding that DSI will seek advice from the associations. A FACILITATOR, NOT A TRADER During the plan's transition period from June 1 up to December 31, exporters of coal, palm oil and ferroalloys are obliged to report all their export activities to DSI. After the transition period has been completed, DSI's priority is to serve as an intermediary by facilitating and overseeing exports, rather than acting as a trader, Danantara had previously said. "DSI assessed that the trader model requires significant working capital, different operational capacities, and carries significant business risks," the minutes said. A participant in the meeting, who did not want to give his name, told Reuters that DSI said it "will merely monitor prices and supervise how they (the buyer and seller) establish prices". "If the contract is normal, reasonable, then fine, go ahead," he said. DSI's role will be evaluated on a regular basis "to assess the effectiveness of the system and the need for future adjustments". A Jakarta-based palm oil analyst said the news was more encouraging, but uncertainties remain. "The explanation is different compared to the decrees," the analyst told Reuters, referring to the government regulations that brought the plan into operation. Regulations issued earlier this month stated that after December 31, 2026, commodity exports "can only be carried out" by the state entity. Danantara did not immediately respond to request for comments on the minutes.