Overview of the Natural Resource Export Foreign Exchange Control Policy (DHE SDA):
Recently, the Indonesian government's foreign exchange control policy has drawn significant attention.
On February 17, Indonesian President Prabowo issued Presidential Regulation No. 8 of 2025, announcing the Natural Resource Export Foreign Exchange Control Policy (DHE SDA). Starting from March 1, 2025, exporters in the mining, plantation, forestry, and fishery sectors are required to deposit 100% of their foreign exchange earnings into special accounts at state-owned banks for a period of 12 months, with the oil and gas sector being exempt. The new regulation marks a shift, requiring companies in these industries to retain 30% of their funds domestically for at least three months. Officials estimate that this move will increase Indonesia's foreign exchange reserves by $80 billion this year. Currently, the Indonesian government is seeking ways to boost the rupiah. Over the past three months, the rupiah has been one of Asia's worst-performing currencies against the US dollar, due to concerns over global trade tensions, slowing economic growth, and Prabowo's massive spending plans. The prolonged weakness has prompted Bank Indonesia to intervene in the market to reduce volatility and boost market confidence. Bank Indonesia Governor Perry Warjiyo stated that he expects the expanded export foreign exchange income regulations to promote domestic financing, help stabilize the rupiah, and improve the stability of the financial system.
Details of the Policy:
Prabowo stated that the regulation will take effect on March 1 this year and will be mandatory for mining exporters. He said: "The new regulation primarily targets the mining sector, excluding oil, gas, plantations, forestry, and fisheries, and requires foreign exchange from natural resource exports to be deposited into special accounts at state-owned banks. Oil and gas will continue to follow the provisions of Government Regulation No. 36 of 2023. In this revision, the government has further strengthened previous regulations." Prabowo explained several key amendments:
1. The government mandates that all foreign exchange from natural resource exports must be deposited within Indonesia's financial system for a period of 12 months. These funds will be stored in special accounts at state-owned banks. Additionally, for oil and gas, the previous provisions under Government Regulation No. 36 of 2023 still apply;
2. Payment of taxes, non-tax state revenues, and other government obligations in foreign currencies is allowed;
3. Payment of dividends in foreign currencies is permitted;
4. Payment in foreign currencies for the procurement of raw materials, auxiliary materials, or capital goods that are unavailable or partially available domestically is allowed;
5. Repayment of loans in foreign currencies for the procurement of capital goods is permitted.
Prabowo explained that exporters who fail to comply with the regulation will face sanctions. In the future, non-compliant exporters may face administrative penalties, such as suspension of export services. Additionally, he stated that the Indonesian government still provides room for exporters to maintain business continuity, allowing them to use foreign exchange funds deposited in special accounts at domestic banks for certain business needs. For example, foreign exchange can be converted into rupiah at the same bank for operational activities and business continuity. Prabowo stated that this decision aims to optimize the utilization of Indonesia's natural resources and promote economic development. It holds significant importance from the perspectives of development financing, domestic capital flow, increased foreign exchange reserves, and exchange rate stability.
Impact of the Policy on the Nickel Industry:
According to SMM, the regulation currently mainly targets natural resources such as coal and does not directly restrict the export of Indonesian nickel processing products (e.g., MHP, high-grade nickel matte, high-grade NPI). Therefore, there is no direct impact on China's imports of Indonesian nickel processing products. However, Indonesia's foreign exchange control may increase costs for miners and smelting, thereby affecting the global supply of commodities. For instance, nickel processing requires the import of smelting equipment or chemicals, and increased difficulty in obtaining foreign exchange may implicitly raise investment costs, leading to project delays or capacity constraints. Additionally, foreign exchange controls have significant impacts on exchange rates and market sentiment, potentially causing price fluctuations in commodities and affecting the global nickel supply chain. At the same time, this policy is expected to enhance the competitiveness of Indonesian nickel product exports.
Meanwhile, resources such as coal, which are restricted by this regulation, may further promote the implementation of a new pricing logic for Indonesian coal. Previously, Indonesian coal miners used the ICI index for export pricing. Following the introduction of the new regulation, the HBA price may gain significant traction.
