AGP Executive Report

Disaster Response: Indonesia’s Flores region was hit by a deadly 7.7-magnitude earthquake, with the death toll rising to at least 47 as rescuers search rubble and aftershocks continue; a tsunami warning was issued then lifted, while minor tsunami waves were reported and landslides blocked access to the hardest-hit Nagekeo area. Government Coordination: Indonesia’s disaster agency (BNPB) says aid is being rushed in—tens of thousands of relief packages—while helicopters and rescue teams are deployed as communications and power outages complicate operations. International Solidarity: Leaders and governments including Bangladesh, Pakistan, Azerbaijan, Venezuela, and others sent condolences and offered support as the crisis unfolds. Energy Policy: President Prabowo used the 2027 budget presentation to push a major shift in power generation—adding 30 GW of solar and phasing out 13 GW of diesel-fired plants in 2026—framing it as a move toward energy self-reliance for remote islands. Regional Watch: Separately, reports also track US carrier redeployments tied to the Iran focus, underscoring shifting attention in the broader region.

Disaster Response: Indonesia’s 7.7-magnitude quake off Flores has killed at least 38 people, with BNPB reporting two seriously injured, 11 with minor injuries, and around 2,000 evacuees as rescuers struggle to reach Nagekeo due to landslides and disrupted communications; a tsunami warning was issued then lifted after sea-level checks. Presidential Aid: President Prabowo ordered agencies to speed up relief and dispatched 50,000 presidential aid packages of basic necessities to Maumere, with ministries and state firms mobilized for healthcare, infrastructure restoration, and logistics via BNPB. International Support: The EU said it stands ready to help with “eyes in the sky” through Copernicus for search and rescue and damage assessment. Regional Safety Update: Sri Lanka’s meteorology department said there is currently no tsunami threat to its coasts after a separate 6.8 quake in northern Sumatra. Politics & Society: Miss Earth Indonesia 2025 Putri Andriani Juficha died at 25; her death was announced on what would have been her birthday, with no public cause given.

Earthquake Response: A magnitude-7.7 quake struck off eastern Indonesia near Flores, killing at least two and injuring others, with buildings damaged and hospitals evacuating patients; Indonesia issued a tsunami warning for parts of the archipelago, then lifted it after monitoring showed no dangerous sea-level changes. Commodity Governance: President Prabowo says Indonesia will launch a Strategic Mineral and Commodities Exchange by early 2027, with rules set by mid-September, to publish reference prices and tighten state oversight of key exports like nickel, coal, palm-linked products, and more. Budget & Priorities: Prabowo’s 2027 budget proposal targets 6% growth, a 2.4% deficit, and higher spending for eight national priority programmes, including food sovereignty, energy and water self-sufficiency, education, health, infrastructure, housing, and disaster resilience. Defense & Diplomacy: Indonesia and China’s naval drills east of Taiwan drew criticism from Taiwan and warnings from the US, underscoring how regional security tensions keep shaping Jakarta’s international balancing act. Digital-Policy Push: Indonesia unveiled a “full-stack” AI development strategy built around energy, infrastructure, chips, talent, and applications, aiming to move beyond adoption toward domestic capability and supply-chain participation.

State Budget Push: President Prabowo unveiled Indonesia’s 2027 draft budget, targeting 6% growth, 2.5% inflation, and a 2.4% deficit, with spending aimed at food sovereignty, energy and water self-sufficiency, education, health, infrastructure, housing, and industrialisation. SOE Crackdown: In the same State of the Nation address, he vowed to shut down over 750 “unproductive” state-owned enterprises and floated an ad hoc special court to investigate SOE boards, alongside an amnesty idea for those who “repent.” Indonesia Financial Center: Prabowo announced plans for an Indonesia Financial Center in Jakarta, with Bali as a follow-up, to build an international hub for investment, fintech, arbitration, and commercial dispute resolution. Citizenship Reform: He also proposed limited dual citizenship for selected diaspora talents (including doctors, AI experts, artists, and football players), to be tabled in parliament. Healthcare Expansion: The government plans to build or revitalize 441 regional general hospitals and expand village-level clinics, while claiming JKN premium coverage for 96.8 million underprivileged people. Education Upgrade: Prabowo said Indonesia will create centralized remote-learning studios and expand foreign-language teaching from primary school, supported by more interactive classroom screens. BRICS Diplomacy: Iran’s President Masoud Pezeshkian is expected to visit India in September for the BRICS summit, with Indonesia also part of the expanding bloc.

Budget Credibility Test: President Prabowo will deliver Indonesia’s 2027 budget proposals on Friday amid falling approval ratings and investor doubts, with scrutiny focused on commodity export controls, fiscal discipline, central bank independence, and the free-meals program after cuts and mismanagement allegations. Electric Mobility Push: Prabowo launched Molinas, a national electric motorcycle program, promising incentives like lower financing rates, no down payments, and trade-in schemes, while targeting broader EV ecosystem buildout including electric car mass production in West Java by 2028. Gold Market Reform: The IDX rolled out Indonesia’s first Shariah-compliant gold ETFs, aiming to connect insurers, bullion banks, dealers, and custodians to deepen bullion investment options. Carbon Trading Drive: Indonesia is building a greenhouse-gas reduction ecosystem using carbon trading and results-based payments, with the SRUK system positioned to keep credits transparent and credible. Regional Security Flashpoint: The US State Department criticized China-Indonesia naval drills east of Taiwan as destabilizing, while Indonesia said it was routine passing coordination—raising fresh cross-strait tension. Defense Cooperation: India and Indonesia held 12th Army-to-Army staff talks in Lucknow to expand joint training and deepen military ties. Wildfire Fallout: Indonesia’s wildfire season continues to worsen, with haze spreading toward Malaysia and growing pressure on regional air quality responses.

Electric Mobility Push: President Prabowo launched Molinas, Indonesia’s homegrown electric motorcycle push in Bekasi, urging private firms and SOEs to scale output toward 2 million units and promising consumer financing tweaks like lower installment interest and possible zero down payments. Industrial Policy: The government framed Molinas as “Indonesia Incorporated,” tied to a West Java EV industrial complex with mass production targeted by 2028. Carbon Market for Cooperatives: The Environment Ministry and Cooperatives Ministry moved to bring village cooperatives into carbon trading, citing the rollout of a cooperative-owned CPO plant as a model. Disaster Recovery in Aceh: Indonesia is accelerating rehabilitation of 40,000 hectares of damaged rice fields, irrigation, and watersheds in Aceh, with the first phase over halfway done and universities set to speed up the next phase’s surveys and designs. Maritime Security & Diplomacy: Indonesia condemned the Bab Al-Mandeb attack on the MV Tihamah, confirming two crew accounted for and one missing, while urging steps to prevent escalation. Index Watch: MSCI’s August review removed CPIN and GoTo from its flagship MSCI Global Standard Index, with no replacements added. Defense Posture: The US is pushing “peace through strength” in Southeast Asia, with Under Secretary Colby touring the region and emphasizing practical cooperation and sovereignty.

Maritime Safety Under Scrutiny: Indonesia’s ferry KM Putri Yasmin caught fire in the Lombok Strait on Aug. 12, with 212 rescued and one death reported; officials said the SAR effort was hampered by an inaccurate manifest, raising questions about whether recent safety reviews are changing operations. Conservation & Rights: Indigenous groups filed a new Constitutional Court challenge to parts of Indonesia’s 2024 conservation law, arguing it could let the state designate ancestral lands as conservation areas without community consent. Defense Modernization: Indonesia is drafting a roadmap to accelerate unmanned aerial vehicle development, including interoperability standards, training facilities, and a national data/AI ecosystem for drones. Immigration Policy for Digital Nomads: Immigration is reviewing work-visa rules and considering tax adjustments for foreign remote workers, reflecting the policy tension of people living in Indonesia while working for overseas employers. Budget Oversight: The Finance Ministry is tightening on-the-ground monitoring of the free nutritious meal program using its treasury network, citing site-level administrative and operational gaps. Environment & Public Health: Wildfires across peat regions have burned over 107,000 hectares, with haze spreading to Malaysia and schools in affected areas closing or shortening hours as El Niño intensifies. Regional Security Signaling: Taiwan condemned a planned China-Indonesia naval drill east of the island, calling it a sovereignty “provocation.”

Taiwan-China-Indonesia Naval Tensions: Taiwan condemned China’s planned naval drill with Indonesia east of the island, saying Beijing is trying to create a “false impression” of jurisdiction; Taiwan asked Jakarta for clarification after China announced a “passage/navigation exercise,” while Indonesia framed it as routine maritime cooperation. Red Sea Security Shock: A Houthi “double-tap” attack on the Tanzania-flagged cargo vessel Tihamah near Bab al-Mandeb killed six, including three Pakistanis and one Indonesian, with two rescue workers also reported dead after a follow-up strike; the incident is the first reported fatalities from such attacks in over a year. Middle East Escalation: The U.S. disabled a Panama-flagged ship in the Gulf of Oman with Hellfire missiles after it ignored warnings tied to the Iran-port blockade, as Iran and the Houthis keep hardening positions around Hormuz and regional shipping. Energy Policy & Markets: The Philippines’ Semirara coal auction was delayed again as regulators revise terms to prioritize domestic power supply and adjust government royalty shares, underscoring how regional energy rules are shifting. Indonesia Defense & Mobility: Indonesia’s Defense Ministry outlined eight steps to accelerate drone development, while Immigration fast-tracked visas for Guns N’ Roses and BTS concerts to support major events.

EV Policy Push: Indonesia is speeding up the rollout of public electric vehicle charging stations (SPKLUs) to match fast EV growth, with the energy ministry coordinating cross-stakeholder expansion. Disaster Response & Public Safety: Authorities say they’ve contained Bromo wildfire hotspots after about 900 hectares were affected, with crews working to stop further spread and reduce smoke impacts. Regional Security Shock: In the Bab al-Mandeb strait, Yemen’s coastguard reports a Houthi missile attack that killed at least six people, including three Pakistanis and one Indonesian crew member, and also struck rescue operations. Indonesia’s Diplomatic Trade Ties: Indonesia’s ambassador to Kuwait says bilateral trade rose from $547.5 million (2024) to $606 million (2025), and both sides are pushing for a free trade agreement track with the GCC. Anti-Corruption Cooperation: Indonesia’s anti-graft experience is being shared internationally, with ICPC efforts highlighting Indonesia’s KPK-style lessons for strengthening enforcement. AI Governance Debate: A Southeast Asia-wide discussion warns that AI’s next bottleneck is not ideas but the physical infrastructure—data centers, power, and connectivity—needed to run it.

Banking Leadership: President Prabowo has nominated Destry Damayanti as the sole candidate to lead Bank Indonesia, with Finance Minister Purbaya Yudhi Sadewa saying they have a strong working relationship and track record. Fuel Subsidy Reform: The government is moving toward phased restrictions on Pertalite subsidies for higher-income deciles (9–10), aiming to protect the state budget while keeping subsidized prices stable amid oil volatility. Digital Payments & BRICS: Bank Indonesia’s policy debate is echoed by RBI Governor Sanjay Malhotra, who says BRICS is discussing links between fast payment systems and CBDCs to cut remittance costs and speed up cross-border transfers. Land Governance Crackdown: Indonesia is accelerating land service integration (NIB and NOP) to close loopholes exploited by land mafia and land grabbers. Security Coordination: Top Indonesian police and security leaders met with Navy commanders to tighten interagency coordination amid shifting political and security dynamics. Wildfire Response: Firefighters have mostly contained the Mount Bromo blaze, but schools in affected areas remain closed due to smoke. Regional Trade & Halal: Indonesia and Sweden signed a halal certification recognition deal to streamline halal trade and strengthen cooperation. Migrant Worker Protection: Indonesia’s migrant worker protection ministry and IOM plan to renew their partnership to expand support beyond overseas deployment. Energy Transition Talk: Malaysia’s investment chief says ASEAN faces a capital coordination problem in the energy transition, calling for stronger regional mechanisms like an integrated power grid. Maritime Security: Reports of Houthi attacks in the Bab el-Mandeb Strait killed crew members, including an Indonesian, underscoring renewed shipping risks. Anti-Drug Enforcement: Malaysian narcotics investigators are in Indonesia to question a detained Malaysia Airlines pilot, as authorities trace an alleged international syndicate.

Bank Indonesia Leadership: President Prabowo has nominated acting BI governor Destry Damayanti as permanent governor, sending the presidential letter to the DPR as the central bank prepares its next phase after Perry Warjiyo’s resignation. Wildfire & Haze Risk: Indonesia is ramping up fire control to curb smoke spreading to neighbors, with multi-agency efforts tackling blazes that have scorched about 107,000 hectares and prompted national park closures and stricter penalties. Regional Elections Reform: A proposal is gaining traction in the DPR to change local elections by having voters elect only governors, mayors and regents, while deputy regional heads would be appointed later—aimed at reducing disharmony and extra political costs. Independence Day Politics: Cabinet reshuffle talk is resurfacing ahead of Aug. 17, but the State Secretary says there’s no plan yet, only minister evaluations and filling vacant posts. Papua Security & Civilians: TNI evacuated villagers from OPM-affected areas in Central Papua and handed them to conflict-response teams, while the Baliem Valley Festival resumed peacefully after a shooting injured two civilians. Digital Security: Deputy Communication Minister Nezar Patria warned of “harvest now, decrypt later” risks from quantum and AI threats, urging post-quantum cryptography readiness. Environment Restoration: Indonesia targets restoring 15,000 hectares of degraded ecosystems in 2026, including peatlands and mangroves. Health Tech Milestone: RSCM and HeartSpan successfully implanted the world’s smallest LVAD heart assist device, signaling a new capability for advanced heart failure treatment. Governance & Public Trust: A fact-check effort says viral protest videos on X were often shared out of context, with claims pointing to earlier dates.

Central Bank Politics: President Prabowo has nominated acting Bank Indonesia governor Destry Damayanti as the sole candidate for the permanent role, with the presidential letter sent to the DPR for the next legal steps. Forest-Fire Response: Indonesia is ramping up coordinated firefighting as El Niño worsens risk, with aerial water-bombing and preparations for weather modification once suitable clouds appear; officials say burned areas have reached about 107,000 hectares and hotspots remain in several provinces plus Bromo Tengger Semeru National Park. Regulatory Push for Mobility: The government is finalising a presidential regulation for “ojol” (online motorcycle taxis) ahead of Aug. 17, classifying driver-partners as MSMEs to unlock incentive schemes and set clearer rules for two-wheeled passenger and logistics services. Capital Markets Reform: OJK is moving ahead with IDX demutualisation, drafting rules that could allow state institutions such as Danantara, the Finance Ministry and Bank Indonesia to become shareholders. Green Transport Investment: V-Green and HKR will develop a large EV Charging Hub in Kemayoran, Jakarta, aiming to start operations in October. ASEAN Security Cooperation: ASEAN is tightening its stance against cyberscams as regional governments coordinate crackdowns on cross-border criminal networks. Energy & Industry: Indonesia’s BRIN, with the Finance Ministry, launched the Prima program to drive science-based applied research into policymaking across ministries. Trade & Finance Deal: JBS agreed a US$2.5 billion joint venture with Indonesia’s sovereign wealth fund arm Danantara to expand protein production across multiple markets.

Bank Indonesia Governor Race: President Prabowo has not yet sent formal nominations for the vacant BI governor post to the House, with interim governor Destry Damayanti widely seen as a frontrunner—an outcome investors may read as continuity and technocratic policy. Digital Infrastructure & AI: Indonesia is pushing ahead with a large AI computing plan, including an “AI Factory” (Zankore) targeting 1GW capacity within three years in Batang, Central Java, to strengthen the country’s bid to become a regional AI hub. Maritime Security: The Indonesian Navy tightened border maritime security after seizing 1.3 tons of suspected ketamine, signaling a tougher stance on smuggling corridors. Disaster & Public Safety: Mount Bromo in East Java was closed to tourists as wildfires spread, while Jakarta also moved to restore public services after a government building fire disrupted operations. BRICS Cultural Diplomacy: Indonesia’s Culture Minister Fadli Zon called for stronger cultural exchange with Iran during BRICS culture meetings in Bhopal. Economy Watch: Indonesia’s Q2 growth came in at 5.29% y/y, but analysts warned the rebound looks “resilient but uneven,” with reliance on government spending.

Transport Safety Oversight: Indonesia is stepping up intercity and interprovincial bus checks after data showed more than half of monitored departures were flagged for violations, with monitoring via terminal online systems across 115 Type-A terminals. Independence Day Public Access: Jakarta will hold a People’s Festival at Monas and an Independence Carnival along the Monas–Sarinah–HI route, while Jakarta Governor Pramono Anung sets government-managed transport fares at just Rp1 on Aug. 17. Regional Diplomacy & Trade: Indonesia and Thailand are pushing a US$20B trade target by 2030 after a strategic partnership roadmap, with H1 2026 trade already near US$9.8B. Aviation Security Scrutiny: Malaysia’s detention of a co-pilot in Indonesia is prompting calls for tighter airport screening and upgraded scanners, with Indonesia’s home minister saying scanning tech will be reviewed nationwide. Drugs & Maritime Security: Indonesia seized 1.3 tons of ketamine from a foreign vessel near Batam, and the navy says it will tighten patrols in smuggling corridors. Environment & Disaster Response: East Java’s Mount Bromo fires trigger stricter penalties and intensified aerial firefighting, with helicopters conducting daily water drops amid dry-season risk. Culture Cooperation: Indonesia and Iran are expanding cultural ties in film, literature, heritage, and academic exchanges, including extending a cultural exchange program. Geopolitics: Israel’s Netanyahu rejects a Palestinian state and rules out Gaza withdrawal until Hamas disarms, complicating a US-backed peace plan.

High-Speed Rail Rescue: Indonesia will take over a controlling 60% stake in the China-funded Whoosh Jakarta–Bandung bullet train operator PT KCIC, via a ministry agency that will handle loan repayment, with the deal targeted for completion by mid-September after delays and cost overruns. Railside Relocation in Jakarta: Jakarta’s railway communities are being moved into newly built housing, starting with Pasar Senen, as residents weigh promised safety against rent and job impacts. Aviation Security Crackdown: Malaysia Airlines is moving to mandatory drug screening for all pilots and cabin crew after a colleague’s Indonesia arrest, while regional authorities link cases to broader smuggling recruitment patterns. BRICS Trade Push: Indonesia’s trade minister urged BRICS members to collaborate amid global trade shifts at the Jaipur Trade Ministers’ Meeting, as ministers also discussed market connectivity and MSME support. BRICS Culture Roadmap: BRICS culture ministers adopted the Bhopal Declaration, including cooperation on cultural property provenance research and AI-based tracing tools, with Indonesia among participants. Defense Industry Milestone: Indonesia began domestic physical construction of its first French-designed Scorpène Evolved submarine at PT PAL, marking a step toward defense-industrial autonomy. Tourism Payments: Indonesia is trialing QRIS with Saudi Arabia and India to make Bali transactions easier for foreign visitors as tourism grows.

Aviation Security Crackdown: Malaysia Aviation Group will require mandatory drug screening for all 1,260 Malaysia Airlines pilots after an Indonesia arrest, with Malaysia’s anti-drug agency backing tighter detection, training, and cross-agency information sharing. ASEAN Unity Push: ASEAN marked its 59th anniversary in Jakarta with calls for unity, resilience, and stronger centrality as regional risks—from West Asia tensions to climate and food/energy insecurity—spill across borders. Free Meals Oversight: Indonesia’s National Nutrition Agency plans to add a “consumption time limit” label to the MBG nutritious meal trays after a Jayapura food-poisoning incident linked to undercooked tempeh bacem. Independence Day Readiness: Around 11,000 personnel joined unity preparations in Jakarta ahead of the 81st Independence Day, stressing coordination between government, TNI, and police. Drug Probe in Surabaya: Surabaya police will submit case papers to prosecutors next week over a Malaysian suspect arrested with meth and ecstasy at Juanda Airport. Defense Cooperation: India’s Air Force said it “mastered the skies” and completed its Pitch Black 2026 mission in Australia, highlighting strengthened interoperability with partner air forces. BRICS Culture Track: Indonesia participated in the XI BRICS Culture Ministers’ Meeting in Bhopal, which adopted the Bhopal Declaration to expand cultural cooperation.