Indonesia’s PP 21/2026 Eases Mining DHE SDA Rules, but Qualification Remains Unclear

Why the Regulation Matters

For mining and mineral-processing projects in Indonesia, regulatory certainty extends beyond investment permits, construction costs and production capacity. Companies must also understand how export revenue can be managed and how much cash remains available for operations, financing and reinvestment.

DHE SDA, or Devisa Hasil Ekspor Sumber Daya Alam, refers to foreign-exchange proceeds generated from the exploitation, management or processing of Indonesia’s natural resources. Its treatment can affect working-capital requirements, debt servicing and project returns.

Rare-earth content checks recently delayed alumina and nickel-product exports even though Indonesia had not established limits governing rare-earth elements occurring as by-products in those shipments. The government subsequently moved to address the regulatory gap.

Against this backdrop, Government Regulation No. 21 of 2026 introduces more flexible DHE SDA treatment for certain mining-sector exports. The regulation amended Article 18A and became effective on June 1, 2026.

What PP No. 21 of 2026 Changes

Under the general framework, exporters must repatriate 100% of their DHE SDA into Indonesia. Non-oil-and-gas exporters must generally retain the full amount for at least 12 months through Bank BUMN.

PP No. 21 of 2026 provides different treatment for certain mining-sector DHE SDA connected with bilateral agreements, understandings or other intergovernmental arrangements concerning trade.

The change is a relaxation rather than a complete exemption. Full repatriation remains mandatory, but the amount subject to retention may fall from 100% to 30%, while the minimum period declines from 12 months to three months. Qualifying exporters may also place or convert the proceeds through banks outside Bank BUMN, subject to Bank Indonesia’s designation.

For every US$100 million in export proceeds, the minimum retained amount could consequently fall from US$100 million for 12 months to US$30 million for three months.

The actual financial effect would depend on the exporter’s working-capital requirements, financing arrangements, banking costs and the permitted use of the retained funds.

How the Framework Appears to Operate

PP No. 21 of 2026 refers to mining trade conducted in the implementation of bilateral agreements or other recognised trade arrangements.

Based on that wording, this analysis reads the framework as follows:

A qualifying trade arrangement exists or is recognised → an exporter or transaction is linked to that arrangement → the Article 18A treatment may apply.

This is an analytical reading of the regulation’s structure, not a procedure expressly prescribed in PP No. 21 of 2026.

The underlying trade arrangement appears to provide the policy basis for the relaxation. However, the regulation does not explain how an individual exporter, contract, shipment or export receipt becomes formally connected to that arrangement.

Exporter Qualification and Bank Designation Are Separate

The framework appears to involve two separate determinations.

First, the exporter or DHE SDA flow must qualify for the Article 18A treatment because the relevant mining trade is connected with a recognised bilateral or other trade arrangement.

Second, qualifying proceeds must be handled through a foreign-exchange bank designated under the framework. This may include a non-BUMN bank, but exporters cannot automatically use any foreign-exchange or non-BUMN bank.

The designation of a bank does not establish that every exporter or transaction processed through it qualifies for reduced retention. Similarly, an exporter that qualifies for Article 18A treatment must still use an authorised banking channel.

The qualification of the exporter or transaction determines whether the relaxation applies; bank designation determines where the qualifying proceeds may be handled.

Four Countries Were Publicly Identified

At separate press briefings on July 23, the United States, China, Australia and Canada were identified as countries associated with the exception.

When explaining China’s inclusion, the finance minister referred to bilateral or multilateral arrangements, significant investment ties and the longstanding presence of Chinese banks in Indonesia. These considerations should not automatically be assumed to have been applied in the same way to all four countries.

In this context, the term “exception” refers to the more flexible Article 18A treatment. It does not mean that export proceeds may remain overseas or that the minimum 30% retention requirement is removed.

PP No. 21 of 2026 does not name the four countries and is drafted more broadly around bilateral agreements, understandings and other trade arrangements. They should therefore be treated as countries publicly identified by the government at that stage. The unresolved question is whether country-level recognition is sufficient or whether individual exporters and transactions must still pass a separate qualification process.

What Remains Unclear

The financial treatment is defined. The missing link is how a specific exporter or DHE SDA receipt is connected to a qualifying trade arrangement.

These questions are material because a mineral transaction may involve an Indonesian producer, a trader in Singapore, an end user in China and a foreign-linked bank operating in Indonesia. The available framework does not identify which connection would be decisive.

Implications for Exporters and Investors

The revised treatment could reduce the amount of cash tied up under the DHE SDA regime and lower short-term financing requirements for qualifying operations. This may be relevant to capital-intensive alumina refineries, aluminium smelters and other mineral-processing facilities.

However, exporters may remain cautious about applying the 30%-for-three-month treatment until they can establish that their trade falls within the qualifying framework. The same uncertainty limits how confidently investors can include the relaxation in project cash-flow and financing models.

Conclusion

PP No. 21 of 2026 provides a measurable change for qualifying mining-sector DHE SDA. Full repatriation remains mandatory, but minimum retention may fall from 100% for 12 months to 30% for three months, with the proceeds handled through a foreign-exchange bank designated under the Bank Indonesia framework, potentially including a non-BUMN bank.

The remaining uncertainty is how a bilateral or other recognised trade arrangement translates into eligibility for a particular exporter, contract, shipment or DHE SDA receipt.

Until that connection is formally explained, the financial treatment and banking channel are identifiable, but access to the relaxation remains open to interpretation.