Increased Yields: BI Increases Rate to 5.5%
Bank Indonesia (BI) and the Finance Ministry on Saturday agreed to increase yields on Indonesian assets to attract portfolio inflows and support the rupiah, after the currency hit record lows in the past few weeks. The central bank and the Finance Ministry “will increase the attractiveness of yields” on Indonesian assets “so that portfolio inflows return” to the country, BI Governor Perry Warjiyo told a press conference at parliament building. Warjiyo did not provide any details on the plan. He took questions but didn’t give any clearer answers. (Jakarta Post)
The Bank Indonesia Board of Governors agreed on 9th June 2026 to increase the BI-Rate by 25 bps to 5.50%, while also raising the Deposit Facility (DF) rate by 25 bps to 4.50% and the Lending Facility (LF) rate by 25 bps to 6.25%. The increase represents a further measure to strengthen Rupiah exchange rate stabilisation against the impact of heightened global turmoil triggered by the war in the Middle East, as well as a preemptive measure to maintain inflation within the Government-set target corridor of 2.5±1% in 2026 and 2027. The measure also aims to enhance yields to attract foreign portfolio investment inflows to Indonesia.
Strong Loan Growth
The banking industry saw loan growth approaching double-digits in April, even as growth remained sluggish in the micro, small and medium enterprise (MSME) segment, according to the Financial Services Authority (OJK). The authority reported that overall bank credit grew 9.98 percent year-on-year (yoy) to Rp 8.7 quadrillion (US$482.6 billion) in April, slightly higher than the 9.49 percent increase recorded in March. Investment credit registered the strongest growth among all categories at 19.48 percent, while working capital and consumer loans posted significantly lower growth at 6.04 percent and 6.13 percent, respectively. (Jakarta Post)
Tax Revenue Up
Tax revenue in the first five months of this year recorded a considerable growth from the previous year, pointing to as an indication of economic recovery, Finance Minister Purbaya Yudhi Sadewa said on Friday. Speaking at a press conference in Jakarta on June 5, Purbaya revealed that tax revenue grew 22.1 percent year-on-year (yoy) until the end of May. “All this shows that there’s real improvement in the economy. When there are critiques saying that the economy is only good on paper but not on the ground, I don’t turn a deaf ear to those comments. I check all the data, including this one, and ask if they’re true,” he said. (Jakarta Post)
Halt to New Kitchens in Free Meals Program
The newly appointed National Nutrition Agency (BGN) head has pledged sweeping efficiency measures and a moratorium on new kitchens, signaling a major reset of President Prabowo Subianto ’s flagship free nutritious meal program following a corruption scandal. The agency will temporarily halt approvals for new nutrition fulfillment service units (SPPGs), the kitchens responsible for preparing meals under the program, while reviewing spending and reassessing how many facilities are needed across regions, BGN head Nanik Sudaryati Deyang told a press conference on Thursday. “The main thing we have discussed and prepared a work plan for is budget efficiency,” Nanik told reporters. Nanik, previously the agency’s deputy head, replaced Dadan Hindayana after President Prabowo removed him and two deputies, Sony Sonjaya and Lodewyk Pusung, with prosecutors later detaining all three as suspects in a corruption probe tied to the program. (Jakarta Post)
Chinese Nickel Investors Eye Alternatives to Indonesia
Chinese companies that helped build Indonesia’s nickel industry into the world’s dominant producer are looking as far afield as Africa for longer-term alternatives as rising policy pressure tests the investment model that reshaped global supply. Tsingshan Group is considering a major development in Madagascar, the country’s mines ministry said, while Lygend Resources, opens new tab is looking at a project in Tanzania as well as restarting the Koniambo operation in New Caledonia, according to industry sources. The Chinese companies were among those that developed the smelters and industrial parks that turned Indonesia into the center of global growth for the metal used in stainless steel and electric-vehicle batteries after Jakarta banned ore exports in 2020. The low-cost Chinese-backed output pushed the nickel market into surplus, lowered prices and forced higher-cost producers elsewhere including Glencore, opens new tab, BHP, opens new tab and Sumitomo, opens new tab to close or suspend operations or seek buyers. But since taking office in late 2024, Indonesian President Prabowo Subianto has focused on raising state revenue and spending, including a $20 billion free meal plan.
In late May, he outlined plans to bring exports of coal, palm oil and ferro-alloys under centralized state control. Nickel pig iron, the main nickel product by volume for Chinese producers, was later said to be excluded, but the proposal added to investor concerns over policy stability. Even before that plan, tighter nickel ore mining quotas, proposed tax hikes and a sharp upward revision to Indonesia’s benchmark mineral price had unsettled investors and led the China Chamber of Commerce in Indonesia to write a strongly worded letter to Prabowo warning the measures could deter future investment. “It’s definitely negative for the industry,” said Tim Hoff, a senior mining analyst at Canaccord in Perth. “If you have the government adding bureaucracy and controlling what you can sell your commodities for, then that will impact the scale of your investment.” Foreign direct investment into Indonesia fell 6 percent in 2025, compared with 19 percent growth a year earlier. Investment in mining peaked in 2024, while new investment into base metals refining has also plateaued since then. Overseas endeavors Tsingshan, the world’s biggest stainless steel producer, has submitted a proposal worth several billion dollars to build an industrial park covering a wide range of minerals including nickel to Madagascar’s government, the country’s mines ministry told Reuters. Madagascar Mines Minister Karl Andriamparany said the proposal was inspired by Tsingshan’s Morowali and Weda Bay nickel operations in Indonesia, but remained under review and no mining permits had been granted. (Jakarta Post and other sources)
New Mineral Exchange
An interesting announcement from Indonesias’ Parliament was released this week.The government plans to launch a new exchange for minerals and strategic commodities next year. The initiative will allow Indonesia to establish benchmark prices and is hoped will strengthen the country’s position as a key global minerals producer, as well as enhance transparency in commodity trading. Mukhamad Misbakhun, chairman of House Commission XI, which oversees financial affairs, revealed the plan on Thursday as the House passed a revision of the Financial Sector Development and Strengthening Law (P2SK). The new exchange is expected to help Indonesia become a trading hub of various strategic commodities, with governance modeled on best practices from other countries. “We are discussing how minerals and strategic commodities are traded in Indonesia, so that people are informed about our minerals, their price levels. It will also serve as a binding contract,” Misbakhun said.