On 20 May 2026, Indonesia issued Government Regulation No. 24/2026 (PP No. 24/2026) (unofficial English translation here) on the Governance of Exports of Strategic Natural Resource Commodities (“Regulation”), which entered into force on 1 June 2026.[1] Under the Regulation, Strategic Natural Resource Commodities may only be exported by a State-owned enterprise (“SOE”) appointed by the Government as an Export SOE, either as owner or as sole intermediary.[2]
The Regulation does not identify the Export SOE by name. Official statements and reporting, however, indicate that PT Danantara Sumberdaya Indonesia (“DSI”), a company established under Indonesia’s sovereign wealth fund, Danantara, is expected to perform that role.[3]
The Regulation will be implemented in stages. In the initial phase, the measure applies to coal, palm oil and ferroalloys, and may be extended to other commodities following a coordination process led by the relevant minister.[4] Given Indonesia’s position as the world’s largest exporter of thermal coal and palm oil, the new Regulation is significant not only for Indonesian producers but also for global commodity supply chains.[5]
The announcement has already unsettled businesses and investors because the new framework may affect pricing, export channels and existing contracts.[6] This note considers the potential implications of Indonesia’s new Export Regulation for foreign investors in the natural resources sector, including possible claims under investment treaties, contractual remedies and Indonesia’s likely regulatory defences.
Key Aspects of the Export Regulation
Key aspects of the Regulation include:
- Export SOE: Strategic Natural Resource Commodities, as determined by the Government, may only be exported by an Export SOE, either as owner or as sole intermediary.[7] The Regulation also contemplates export controls, verification or technical tracing, regulation of export transportation and insurance, and other mechanisms under applicable laws.[8]
- Prices: The selling prices of the Strategic Natural Resource Commodities will be determined by the Export SOE.[9] The Export SOE may also determine a reasonable margin in accordance with applicable laws and regulations.[10]
- Phased implementation: Exports by the Export SOE must be implemented no later than 31 December 2026, subject to evaluation within three months of the Regulation having entered into force.[11]
- Existing contracts: Danantara has stated that existing signed contracts may continue to be performed, provided there is no under-invoicing.[12] The Regulation itself is more limited. It provides only that sales contracts signed before 1 June 2026 and still in effect must be evaluated by the Export SOE, without specifying the criteria or legal consequences of that evaluation.[13] This is important for investors with long-term offtake, supply or financing arrangements.
- Policy objectives: The Regulation’s Preamble refers to “utilisation of natural resources for the greatest prosperity of the people”, national economic resilience, increased added value and sustainable national development.[14] Indonesia’s President Prabowo Subianto has also justified the reform by referring to under-invoicing, transfer-pricing and alleged loss of revenues from Indonesia’s natural resource sector.[15]
- Exemptions and supervision: Exemptions may be granted for business actors that have contracts or agreements with the Government containing provisions on investment, divestment and domestic processing or refining.[16]
Potential Treaty Protections for Foreign Investors
For foreign investors affected by the Regulation, the threshold question is whether they are protected by an applicable investment treaty. This will depend on the investor’s nationality, corporate structure and the treaties in force between Indonesia and the investor’s home State.
According to UNCTAD’s International Investment Agreements Navigator, Indonesia currently has 28 Bilateral Investment Treaties (“BITs”) in force, in addition to various treaties with investment provisions.[17] Where a foreign investor is protected by one of these treaties, it may be able to submit a claim to investor-State arbitration.
For ASEAN investors, the ASEAN Comprehensive Investment Agreement (“ACIA”) may be relevant. ACIA permits disputes between a Member State, such as Indonesia, and an investor of another ASEAN Member State to be submitted to arbitration where the investor alleges a breach of obligations such as expropriation, fair and equitable treatment, full protection and security of the investment, subject to ACIA’s procedural requirements.[18]
In each case, the treaty analysis should begin with three questions: (i) whether the claimant qualifies as a protected investor, (ii) whether its rights in Indonesia qualify as a protected investment, and (iii) whether the challenged measures fall within the treaty’s substantive protections. This analysis will be fact-sensitive.
Where a protected investment exists, several treaty protections may become relevant.
Expropriation
Investors may consider whether the Regulation amounts to direct or indirect expropriation. The Regulation provides that Strategic Natural Resource Commodities may only be exported by an Export SOE, either as owner or as sole intermediary. It also provides that the Export SOE will determine the selling price and may charge a reasonable margin.[19] These provisions may affect export-oriented projects: who sells the commodity, at what price, through which channel, and on what payment terms.
That said, a State-controlled export channel is not automatically expropriatory. Tribunals generally examine the measure’s actual effect, including whether the investor can continue operating, and whether the investor has been substantially deprived of the economic value of its investment.[20] If, for example, existing long-term contracts signed before 1 June 2026 are not allowed to be performed after evaluation, or if the Export SOE imposes non-market prices or excessive margins that materially undermine the economics of the investment, the risk of an expropriation claim would increase.
For a detailed discussion of Expropriation, refer to our previous note here.
Fair and Equitable Treatment
Investors may consider claims based on fair and equitable treatment (“FET”). These claims may arise where State conduct is alleged to be arbitrary, non-transparent, discriminatory, procedurally unfair or contrary to specific assurances given to the investor.[21] For a detailed discussion of FET, refer to our previous note here.
For example, the Regulation requires sales contracts signed before 1 June 2026 and still in effect to be evaluated by the Export SOE, without specifying in detail how that evaluation will be conducted or what consequences may follow.[22] This creates several potential areas of dispute. If the Export SOE’s evaluation of existing contracts is opaque or inconsistent, if confidential contract pricing is not protected, or if investors are not given a meaningful opportunity to respond before adverse decisions are taken, such conduct may give rise to potential FET claims. A further example would be where an investment was made in reliance on Government stabilisation promises or other specific assurances.
At the same time, States are generally entitled to modify export, tax and commodity governance rules. A stronger FET claim would usually require more than a general expectation that the regulatory framework would remain unchanged.[23]
Restrictions on Transfers of Funds
Although the Regulation does not itself impose a foreign-exchange retention requirement, Indonesia has separately tightened export earning rules requiring most natural resource exporters to place 100% of their earnings in State-owned banks starting 1 June 2026.[24] The combination of a State-linked export channel and mandatory retention of export proceeds in State-owned banks may raise issues under treaty provisions protecting the free transfer of profits, contractual payments, loan repayments, dividends and proceeds from sale or liquidation.[25] Foreign investors may argue that the measures interfere with their ability to receive, convert or transfer funds relating to their investment. Indonesia would likely respond that such measures pursue legitimate objectives, including monetary stability, export proceeds monitoring, tax enforcement and prevention of under-invoicing. Many treaties also contain exceptions allowing States to apply non-discriminatory rules relating to taxation or balance-of-payments difficulties.[26]
For further discussion, see our previous note on the free transfer principle.
National Treatment, MFN and Discrimination
National treatment and most-favoured-nation (“MFN”) provisions are common treaty protections that seek to ensure foreign investors are not treated less favourably than domestic investors or investors from other countries in like circumstances.[27] The Regulation’s exemption mechanism may raise national treatment or MFN issues if applied unevenly. On its face, the exemption mechanism is not nationality-based. It is tied to the existence of particular contractual or regulatory commitments to the Government.[28] That may assist Indonesia in defending the measure. However, affected investors could argue that the regime is discriminatory if exemptions are granted selectively, without clear criteria, or in a way that favours certain investors or nationalities over similarly situated investors.
We have previously discussed National Treatment and MFN in investment arbitration in more detail here and here.
Indonesia’s Potential Defences
The Regulation is expressly grounded in Article 33 of the Indonesian Constitution, which provides that natural resources are controlled by the State and used for the greatest prosperity of the people.[29] Indonesia would likely rely on this and argue that the measure pursues legitimate public objectives, including protection of natural resources, domestic supply stability, national economic resilience, increased added value, sustainable national development, improved export governance and prevention of under-invoicing.[30] It may also argue that the regulation is not confiscatory because it does not transfer ownership of investments to the State, is implemented in stages, allows certain exemptions and permits the Export SOE to act as intermediary rather than owner.
The strength of these arguments will ultimately depend on how the measures are implemented in practice.
Contract-Based Arbitration Claims
If an Indonesian producer is unable to perform an existing sales contract because exports must be channelled through, or carried out by, the Export SOE, or if the Export SOE requires a higher benchmark price than the price agreed in existing contracts, foreign buyers may seek contractual remedies. Indonesian sellers may argue that performance has become unlawful, impossible or subject to a change in law.
The outcome will depend on the governing law, dispute resolution clause and contractual language. Relevant provisions may include force majeure, change in law, hardship, material adverse change, stabilisation, termination and price adjustment clauses.
Practical Steps for Foreign Investors
Foreign investors affected by the Regulation should consider taking the following steps:
- identify the potentially applicable investment treaty and assess whether the investment qualifies as a protected investment;
- determine whether the investor or its Indonesian project company has contracts or agreements with the Government that may qualify for an exemption under the Regulation;
- review long-term offtake agreements, concession agreements, financing documents and joint venture agreements for arbitration clauses, stabilisation clauses, change-in-law provisions and force majeure language;
- document the impact of the measure on pricing, margins, contractual performance, export volumes, cash flows, financing and access to export proceeds;
- preserve evidence of communications with Indonesian authorities, the Export SOE, buyers, lenders, insurers and logistics providers; and
- comply with any notice, cooling-off or amicable settlement requirements before commencing arbitration.
Foreign investors should also monitor implementing regulations. The Regulation leaves several issues to further regulation by ministers and heads of agencies, including the detailed types of strategic commodities and further export governance rules. Those implementing measures may be decisive in determining whether the regime operates as a transparency mechanism, a State trading monopoly, or something in between.
Conclusion
The Regulation illustrates the growing tension between resource nationalism and investment protection. Indonesia is entitled to regulate strategic natural resource commodities and to address under-invoicing, export leakage and domestic economic concerns. Yet measures that require export-oriented businesses to sell through a State-appointed Export SOE, allow that SOE to determine prices and margins, and subject existing sales contracts to evaluation may create legal risk if implemented in a way that interferes with protected investments or contractual rights.
Ultimately, a transparent, market-based system that respects existing contracts, protects confidential commercial information and applies exemptions according to objective criteria may be defensible. A system that forces sales at non-market prices, delays exports, rewrites existing bargains, restricts access to export proceeds or favours selected investors may expose Indonesia to both commercial and investor-State arbitration claims.
[1] Government Regulation of the Republic of Indonesia No. 24 of 2026 on the Governance of Exports of Strategic Natural Resource Commodities (PP No. 24/2026), Art. 10.
[2] Id. Art. 3(1).
[3] Sekretariat Kabinet Republik Indonesia, Gov’t Finalizes New Export Policy Requiring Key Natural Resources to Channeled through Danantara Sumberdaya Indonesia, 22 May 2026, https://setkab.go.id/en/govt-finalizes-new-export-policy-requiring-key-natural-resources-to-channeled-through-danantara-sumberdaya-indonesia/ (last accessed 6 June 2026); Reuters, Indonesia issues regulation to bring strategic commodity exports under central control, 5 June 2026, https://www.reuters.com/world/asia-pacific/indonesia-issues-regulation-bring-strategic-commodity-exports-under-central-2026-06-05/ (last accessed 5 June 2026).
[4] PP No. 24/2026, Art. 2(3)-(6).
[5] Channel NewsAsia, Indonesia to bring commodity exports under centralised control, president says, 20 May 2026, https://www.channelnewsasia.com/asia/indonesia-bring-commodity-exports-under-centralised-control-president-says-6131621 (last accessed 5 June 2026).
[6] Reuters, Indonesia coal export shake-up rattles miners, traders, 22 May 2026, https://www.reuters.com/business/energy/indonesia-coal-export-shake-up-rattles-miners-traders-2026-05-22/ (last accessed 6 June 2026).
[7] PP No. 24/2026, Art. 3(1).
[8] Id. Art. 4(1).
[9] Id. Art. 3(2).
[10] Id. Art. 3(4).
[11] Id. Art. 7(a)-(c).
[12] Danantara Indonesia, Implementation of the Government Regulation on Export Governance of Natural Resource Commodity, 5 June 2026, https://www.danantaraindonesia.co.id/media-center/press-releases/danantara-dsi-natural-resource-export (last accessed 5 June 2026).
[13] PP No. 24/2026, Art. 8.
[14] Id. Preamble.
[15] Sekretariat Kabinet Republik Indonesia, President Prabowo Issues Government Regulation on Natural Resource Export Governance, Emphasizes Utilization of Natural Resources for People’s Welfare, 20 May 2026, https://setkab.go.id/en/president-prabowo-issues-government-regulation-on-natural-resource-export-governance-emphasizes-utilization-of-natural-resources-for-peoples-welfare/ (last accessed 5 June 2026); The Economist, Indonesia’s erratic president grabs the country’s commodity exports, 28 May 2026, https://www.economist.com/asia/2026/05/28/indonesias-erratic-president-grabs-the-countrys-commodity-exports (last accessed 5 June 2026).
[16] PP No. 24/2026, Art. 4(2)-(3).
[17] UNCTAD, International Investment Agreements Navigator: Indonesia, https://investmentpolicy.unctad.org/international-investment-agreements/countries/97/indonesia (last accessed 5 June 2026).
[18] ASEAN Comprehensive Investment Agreement, Arts. 5-6, 11, 13-14, 32-34.
[19] PP No. 24/2026, Art. 3(1)-(4).
[20] LG&E Energy Corp., LG&E Capital Corp. and LG&E International Inc. v. Argentine Republic, ICSID Case No. ARB/02/1, Decision on Liability, 3 October 2006, paras. 188-200; Electrabel S.A. v. Republic of Hungary, ICSID Case No. ARB/07/19, Award, 25 November 2015, paras. 6.61-6.66.
[21] Técnicas Medioambientales Tecmed S.A. v. United Mexican States, ICSID Case No. ARB(AF)/00/2, Award, 29 May 2003, paras. 154-156; Waste Management, Inc. v. United Mexican States (II), ICSID Case No. ARB(AF)/00/3, Award, 30 April 2004, para. 98; Saluka Investments BV v. Czech Republic, UNCITRAL, Partial Award, 17 March 2006, paras. 302-309.
[22] PP No. 24/2026, Art. 8.
[23] Parkerings-Compagniet AS v. Republic of Lithuania, ICSID Case No. ARB/05/8, Award, 11 September 2007, para. 332 (“It is each State’s undeniable right and privilege to exercise its sovereign legislative power. A State has the right to enact, modify or cancel a law at its own discretion.”); Saluka Investments BV v. Czech Republic, UNCITRAL, Partial Award, 17 March 2006, para. 305.
[24] Reuters, What we know about Indonesia’s new export earnings retention rules, 21 May 2026, https://www.reuters.com/world/asia-pacific/what-we-know-about-indonesias-new-export-earnings-retention-rules-2026-05-21/ (last accessed 6 June 2026); Antara News, Coordinating Minister Hartarto explains rules on export forex earnings, 22 May 2026, https://en.antaranews.com/news/416364/coordinating-minister-hartarto-explains-rules-on-export-forex-earnings (last accessed 6 June 2026).
[25] See, e.g., ASEAN Comprehensive Investment Agreement, Art. 13; Indonesia-Singapore BIT (2018), Art. 8.
[26] See, e.g., ASEAN Comprehensive Investment Agreement, Arts. 13, 16, 17.
[27] See, e.g., ASEAN Comprehensive Investment Agreement, Arts. 5-6; Indonesia-Singapore BIT, Arts. 4-5.
[28] PP No. 24/2026, Art. 4(2)-(3).
[29] Id. Preamble and Elucidation, General Section.
[30] Id. Preamble.
