AmCham Update Vol. 7 #070

Questions Raised over Danantara Infrastructure Fund, Kids Evade Social Media Restrictions, ICW Reports BGN Leadership and Gov’t Cuts Cooperatives Goal in Half, Australian Firm to Build Indonesia’s first EV Battery Precursor Factory, Mystery Envelope Draws KPK Attention to Forestry Minister, Biometric Verification Now a Must to Register a SIM Card

Jul 06, 2026

Questions Raised over New Danantara Infrastructure Fund

Indonesia’s state asset fund, Danantara, has opened a new investment arm that could use the state budget to tackle President Prabowo Subianto’s infrastructure projects.

Experts caution that grafting a development unit onto Danantara’s existing commercial mandate could open risks for the state budget, as has happened in the past with projects like the money-losing Whoosh high-speed rail line, which is now being restructured by Danantara.

The new entity, PT Danantara Development Management Fund (DDMF), was established with little fanfare in April, under Government Regulation 19/2026, which allows Danantara to establish additional investment holding companies to pursue national development and public service projects.

In 2025, when Danantara was launched, its mandate was to manage around $900 billion in state assets held by more than 1,000 state-owned enterprises. The promise was that it did not need state budget funding.

Unlike the agency’s commercial investment arm, DDMF may receive state budget funds and become a state-owned “fiscal instrument” under the regulation.

Danantara chief technology officer Sigit Puji Sentosa is expected to lead DDMF, while Rachmat Kaimuddin, currently deputy for basic infrastructure coordination at the Office of the Coordinating Infrastructure and Regional Development Ministry, has been appointed to its executive team.

The government has identified several of the president’s favored projects to be aided by the fund, including the Giant Sea Wall; a railway network through Sumatra, Kalimantan and Sulawesi; and the construction of three million homes.

The Giant Sea Wall along Java’s northern coast is expected to require around $80 billion in investment. The proposed Trans-Sumatra railway is estimated to cost Rp 350 trillion ($19.5 billion).

So far, little information on DDMF has been made public. The regulations creating it have yet to be released publicly. A House of Representatives Commission XI meeting on July 1 to discuss the new fund’s budget was closed to the public.

Commission XI chairman Mukhamad Misbakhun told reporters after the meeting that the new fund would focus on sectors deemed less attractive for private investors.

This has revived questions about how the government finances large infrastructure projects, with experts warning that governance of the new fund is crucial.

“The chain of government intervention [must] become stronger,” NEXT Indonesia think tank executive director Herry Gunawan told The Jakarta Post on July 1.

Deni Friawan, an economic researcher at the Centre for Strategic and International Studies (CSIS), said the government must ensure that state capital injections are governed in a way that prevents losses from ultimately falling back on the state budget.

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Indonesian Kids Evading Social Media Age Restrictions

In a development that would not surprise most parents of tech-savvy offspring, children are bypassing new Indonesian government age restrictions on the use of social media.

Three out of five children in Indonesia alter their age information to access social media, according to a survey cited by Deputy Minister of Communication and Digital Affairs Nezar Patria. The findings highlight the challenges in implementing Government Regulation (GR) 17/2025 on Electronic System Governance for Child Protection, widely known as PP Tunas.

Under PP Tunas Indonesia restricts children under 16 from holding accounts on platforms deemed "high-risk," such as TikTok, YouTube, Instagram, Facebook, X and Roblox.

The system relies in part on age verification systems operated by individual digital platforms, creating enforcement challenges when children misstate their age. The government has urged platforms to strengthen age assurance technologies while complying with personal data protection principles.

“We have already conveyed this challenge to digital platforms, as the platform is the party that can regulate this through the technological solutions they offer. However, age verification must still comply with the principles of personal data protection,” Nezar told reporters on July 5.

Nezar said several platforms have begun using stricter systems, including algorithms that can identify account usage patterns suggesting an account may belong to a child under 16, particularly when used to access inappropriate content.

He said parental involvement remains critical to protecting children online. The government is promoting the use of parental companion accounts to support supervision of children’s digital activity.

Nezar said Indonesia is the first country in Southeast Asia to introduce a dedicated framework for child protection in digital spaces. “Prior to Indonesia, Australia has implemented such a mechanism, while Malaysia is reportedly preparing a comparable policy. Other states in the region are now closely watching how Indonesia advances child protection in digital spaces,” he said.

The government said it remains committed to working with digital platforms to ensure effective implementation of the regulation while prioritizing child safety online.

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ICW Reports BGN Leadership, Gov’t Cuts Cooperatives Goal in Half

Indonesia Corruption Watch (ICW) has reported the Head and Deputy Head of the National Nutrition Agency BGN to the Ombudsman for concurrently serving as commissioners and directors in state-owned enterprises (SOEs).

The report was issued on July 2, according to the Head of the ICW Law and Investigation Division, Wana Alamsyah. Wana said all the main BGN leaders were violating rules banning the practice of holding concurrent SOE positions.

Meanwhile, President Prabowo Subianto’s government has scaled back the rollout of its Red and White cooperatives program by half. The government now plans to have 40,000 cooperatives in place by October.

The partial retreat reflects continuing problems with the president’s massive populist programs, like free meals and cooperatives.

"Around 36,000 [cooperatives] have made significant progress, but we are preparing up to 40,000 this year," Coordinating Food Minister Zulkifli Hasan said on July 4, as quoted by Antara. "The priority is to make sure they operate properly. Next year, we will evaluate progress before deciding on further expansion."

Included in the dual-positions list cited by ICW are new BGN Head Nanik Sudaryati Deyang, who also serves as a commissioner of PT Pertamina (Persero); Deputy Head of BGN Agustina Arumsari, who is a vice commissioner of PT Pertamina Patra Niaga, Deputy Head of BGN Trenggono, who is also deputy president director of PT Agrinas Pangan Nusantara.\

The latest accusation further muddies the waters for BGN, the administrator of the government’s massive Free Nutritious Meals (MBG) program, which is ensnared in a corruption scandal involving BGN’s former head and numerous others, including a police general working for BGN.

"The double positions of the BGN leaders has the potential to violate the provisions in Law Number 25 of 2009 on Public Service," said Wana on July 4.

He said the BGN leaders are providers of public services because they are responsible for the MBG. Therefore, they should be subject to the provisions of Article 17 of the Public Service Law that prohibits those implementing public services from concurrently serving as commissioners of business organizations.

ICW asked the Ombudsman to examine the issue and publish a recommendation to dismiss officials violating the double-office provisions.

The double positions “open the space for conflict of interest and abuse of authority." said Wana.

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Australian Firm to Build Indonesia’s first EV Battery Precursor Factory

An Australian company, Pure Battery Technologies (PBT), plans to invest $350 million to build Indonesia’s first precursor cathode active material (pCAM) plant, filling a gap in the electric vehicle battery supply chain as the country pushes deeper into nickel processing.

The new plant will process mixed hydroxide precipitate (MHP) into pCAM, an intermediate step before assembling lithium-ion EV batteries.

“Indonesia already has HPAL [high-pressure acid leach] and will soon have battery cell manufacturing. The remaining links are pCAM and cathode materials. This is where investments such as Pure Battery Technologies become crucial in completing a fully integrated battery ecosystem,” Deputy Investment and Downstream Minister Todotua Pasaribu said in a statement on July 2, after meeting PBT chairman Stephen Wilmot in Sydney.

Indonesia’s goal is to become an EV manufacturing hub by attracting investment in the battery supply chain after imposing a 2020 export ban on raw nickel ore. The country has attracted billions of dollars in investments for downstream nickel processing.

According to Todotua, domestic HPAL facilities are already producing MHP (mixed hydroxide precipitate) and battery cell manufacturing facilities are under development.

However, battery precursor manufacturing is still lacking despite the fact that it generates the highest value in the nickel industry.

Unable so far to manufacture pCAM and cathodes, domestic producers have been left with no alternative but to send intermediate materials overseas for processing prior to final assembly.

The planned investment from PBT will allow more value-added domestic processing, Todotua said.

Indonesia has around 10 HPAL plants that produce MHP with a combined capacity of up to 440,000 metric tons. Most are Chinese joint ventures with domestic partners.

To help support prices this year, the government announced plans to cut mining output quotas for several minerals including nickel, prompting complaints from the industry. In June, Energy Minister Bahlil Lahadalia bowed to pressure and said he would adjust ore production levels in the 2026 work and budget plan (RKAB) to match the needs of domestic smelters and “protect the investment climate.”

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KPK Seeks Answers from Forestry Minister over Mystery Envelope

Forestry Minister Raja Juli Antoni is facing scrutiny from both the Corruption Eradication Commission (KPK) and lawmakers after acknowledging that he received, then returned, a sealed envelope from a regional official who has since been named a corruption suspect.

House of Representatives (DPR) lawmakers plan to seek an explanation from the Forestry Ministry after Raja Juli, who is also Secretary General of the Indonesian Solidarity Party (PSI), acknowledged receiving the envelope from Suhardiman Amby, the Regent of Kuantan Singingi.

Raja Juli said the envelope was left behind after a meeting at the Forestry Ministry on June 2, which discussed Kuantan Singingi’s proposal to include approximately 3,800 hectares in the Tanah Objek Reforma Agraria (TORA) program. He said he did not know what was in the envelope and instructed his aide to return it directly to Suhardiman rather than report it to the KPK.

The envelope was returned on June 12 with assistance from the Riau Police and documented through a signed receipt, according to Raja Juli. However, the handling has prompted questions over whether it complied with Indonesia’s anti-corruption rules, which require state officials to report suspected gratuities to the KPK within 30 working days.

Raja Juli said he has never issued any decree approving forest-area releases in Kuantan Singingi and pledged to cooperate with investigators. “If documents are needed, if I need to be summoned, God willing, we will comply,” he said in a statement on July 2.

The KPK said investigators are examining whether the envelope was connected to alleged payments linked to applications for limited production forest (HPT) permits. Acting Director of Investigations Achmad Taufik Husein said on July 3 that the agency has so far obtained testimony only from Suhardiman regarding the envelope and may summon Raja Juli if required.

Investigators also said the money was allegedly sourced from profits distributed by village cooperatives before being handed to the regent for processing recommendations at the ministry.

Separately, members of DPR Commission IV said they would request clarification from the Ministry of Forestry and continue coordinating with the KPK as the investigation proceeds. “The proper way to return gratuities is to the KPK, not to the giver,” Golkar Party lawmaker Firman Soebagyo said on July 5.

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Komdigi Introduces Biometric Verification for SIM Card Registration

In an effort to curb digital fraud and identity misuse, the Ministry of Communication and Digital Affairs (Komdigi) has introduced mandatory biometric facial recognition for all new SIM card registrations starting July 1 under Ministerial Regulation 7/2026, replacing registration based solely on the National Identity Number (NIK) and Family Card Number (KK).

"We hope the new system will make subscriber data more accurate, accountable and transparent, while enabling mobile operators to provide better services to verified customers who have completed biometric registration," Komdigi Minister Meutya Hafid said on June 30.

To support the rollout, the Home Affairs Ministry's Directorate General of Population and Civil Registration (Dukcapil) has discontinued NIK and Family Card verification for SIM registration after finding that some operators were still using the previous mechanism.

Komdigi Director General of Digital Ecosystem Edwin Hidayat Abdullah said the new system is designed to strengthen protection against identity misuse, digital fraud and cybercrime.

The Indonesian Telecommunications Providers Association (ATSI) welcomed the policy but urged the government to lower the Rp 3,000 verification fee. "We hope the fee can be made more affordable so people can access communication services more easily," ATSI Executive Director Marwan O. Baasir told The Jakarta Post on July 2. The association also opposed mandatory re-registration for existing subscribers.

Meanwhile, Indonesian Telematics Society (Mastel) Head of Telematics Infrastructure Sigit Pramono warned that poor implementation could exclude between 30 million and 50 million people vulnerable to digital crime. The policy's success should be measured by reductions in cybercrime losses rather than the number of biometric registrations, he told The Jakarta Post on July 1.

The biometric system uses facial recognition with Presentation Attack Detection (PAD) technology to prevent identity fraud and can verify users in under a minute. Komdigi has cited the Indonesia Anti-Scam Center and Illegal Financial Activities Eradication Task Force data showing reported digital fraud losses reached Rp 9.5 trillion ($527 million) as of April 2026.

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Update is AmCham’s regular newsletter on developments related to investment, the economy, regulations and issues related to doing business in Indonesia. It comes out three times a week. It is edited by AmCham Managing Director Donna Priadi and written by the AmCham Staff.

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