Indonesia, a major exporter of palm oil, coal, and nickel, is taking steps to enhance the credibility of its commodity sector. Workers are seen loading oil palm fruit bunches as part of the country's vast export operations. The newly established Danantara Sumberdaya Indonesia (DSI) is tasked with overseeing export shipments of coal, palm oil, and ferroalloys.
The creation of DSI aims to curb under-invoicing and other illegal export practices that have led to significant government revenue losses. When Indonesia first announced plans to consolidate key resource export processes, market participants voiced concerns that government intervention could disrupt the trade flows of commodities like coal and palm oil.
Luke Mahoney, who oversees export operations worth hundreds of billions of dollars, explained that the agency's founding purpose is the opposite of what some in the market initially feared. Mahoney serves as the head of DSI, which was established in May as the export control arm of Indonesia's sovereign wealth fund, Danantara. The fund manages assets totaling approximately $1 trillion.
On the surface, DSI was created to prevent losses in government revenue caused by export under-invoicing and various illegal activities. However, the new state-owned enterprise's precise role and functions remain somewhat unclear. Indonesia's sudden move to regulate exports of coal, palm oil, and ferroalloys—which together account for about a quarter of the nation's total export value—has generated unease in the market. Participants worry that existing trade contracts could be rewritten, potentially alienating overseas buyers and disrupting trade flows.
In an interview, Mahoney clarified that DSI's role is that of a market supervisor, not a direct participant in trading. "The first principle of our work and institutional design is that export trade must continue to run smoothly," he stated. Mahoney, a seasoned industry veteran who previously worked at mining giant Vale Indonesia, said the agency's ultimate goal is to build credibility and transparency for Indonesia's commodity markets. "The physical flow of goods and the movement of funds still occur directly between buyers and sellers. We do not directly participate in transactions, nor do we take ownership of the goods. That is not part of our initial operating model."
The agency has stated that it will recognize all existing trade contracts but will conduct reviews to identify structural under-invoicing or revenue losses caused by manipulation or inefficiencies. This commitment has temporarily calmed market anxieties, though industry observers remain watchful of how DSI will implement its authority. The agency's board members have yet to be announced, and its five-year development plan is still in the drafting stage.
Economists at Bank of America noted in a recent report, "The degree of DSI's involvement in commercial export processes remains highly unclear at this point." As Indonesia is a major global supplier of palm oil, coal, nickel, and other critical commodities, the agency's actions will have worldwide implications.
DSI is still refining its positioning, with Mahoney describing it as a coordinating intermediary between regulators and market participants. He stated that this role is well-suited to address various inefficiencies in the country's commodity markets. "We can track the full lifecycle of commodities—from the moment goods leave Indonesia until the funds return to the country—and identify where value is created or lost along the way."
President Prabowo Subianto has indicated that trade manipulation and false export declarations cost Indonesia up to $908 billion in economic losses between 1991 and 2024. Analysts at Goldman Sachs noted in a recent report that effectively addressing export invoice misreporting could not only fill government fiscal gaps but also improve Indonesia's balance of payments position.
Coal serves as a typical example: Goldman Sachs data shows that from 1995 to 2024, Indonesia's recorded coal export values were $46.2 billion lower than the import values reported by its trading partners, with the discrepancy widening annually. In contrast, palm oil export data shows the opposite trend, with Indonesia reporting $17.7 billion more in export value than its trading partners' import records.
Mahoney stated that as a state-owned enterprise, DSI has the regulatory capacity to cover the entire chain and can resolve such data imbalances. The CEO noted that since June, DSI has reviewed over 7,000 export shipments, analyzing approximately 100 outbound cargo vessels daily as part of its oversight framework. A significant portion of the team's daily work involves engaging with producers, traders, overseas buyers, and various government agencies to understand where the market hopes DSI can create value.
"We communicate extensively with all market participants, and they have contributed to the design of some DSI systems and frameworks. Producers need operational certainty, so they are willing to engage with us, share their business processes, and explain the practical challenges they face." Incorporating input from market participants will significantly help ease concerns about new export policies.
DSI's initial operating funds come from its parent sovereign fund, Danantara. In the future, it will charge service fees to importers and exporters to cover administrative operating expenses. Mahoney emphasized that this fee is not a tax, and the fee structure will be set at a market-acceptable level based on the services provided and value created. "We are currently finalizing the fee structure, benchmarking against reasonable reference ranges."
Whether DSI can fulfill its mission and transform Indonesia into a preferred trading hub for commodity dealers remains to be seen. For Mahoney, the measure of DSI's success is not its balance sheet profits or losses, but the credibility it brings to the Indonesian market. "As long as Indonesian commodities achieve fair market prices while maximizing export volumes... that is the ultimate measure of success."