Indonesia will build trustworthy commodity exchange, chief supervisor candidate says

The commodity bourse is set to start operations on January 1, and is part of an effort by the government to exert more influence over the prices of its commodities, some of which dominate global markets.

Resource-rich Indonesia is the world’s biggest exporter of thermal coal, palm oil and nickel. It is also a major supplier of tin, copper, bauxite, and coffee beans.

“People will always assess the market, whether it is transparent, fair, orderly, liquid, or not,” Sarjito said at a “fit-and-proper” hearing conducted by parliament’s financial committee for the role,in which he will be responsible for supervising and regulating trade at the new bourse.

“If the market is not deep, has no integrity, industry players and traders would not trust it,” said Sarjito, who goes by one name.

He is President Prabowo Subianto’s sole candidate for the position of chief supervisor of commodity trading at the financial services authority, which is known locally as OJK.

Sarjito, who retired in 2024 as the OJK’s deputy commissioner of consumer protection, the highest position for a bureaucrat at the authority, needs parliamentary approval to secure the position.

Parliament, controlled by Prabowo’s big-tent coalition, is likely to give the nod to his appointment, especially after the financial committee gave him its endorsement following Monday’s hearing.

Sarjito told lawmakers that the OJK, the bourse, clearing agencies, warehouses and other stakeholders must immediately work to build market trust.

“The exchange does not have to become huge on its first day, but it has to be trusted from the first transaction,” he said.

FAIR PRICING

Prabowo has launched a series of policies to address what he calls commodity shipment leakages, accusing exporters of practices such as under-invoicingand transfer pricing to shift profits abroad.

In May, he announced a controversial plan to centralise exports through a single company under sovereign wealth fund Danantara, a policy that rattled commodity markets.

He later watered down the plan and said commodity exports would be monitoredand not controlled by Danantara.

As the country pursuesits objective to become the price maker for its major commodities, Sarjito said the prices offered on the exchange should still be fair.

He said a presidential regulation will be issued detailing the commodities that must be traded in the exchange, without offering any further details.

He said trading through the exchange would be mandatory, but he did not make it clear whether this would cover export-bound sales or domestic ones.

There are already two privately owned commodity future exchanges in the country, handling transactionsin commodities like gold, tin and palm oil as well as forex.

Sarjito said that in his view, there should only be a single commodity exchange in Indonesia, adding he would evaluate the future of existing bourses.