Indonesia wants more sway over commodity prices - here’s how its new exchange can win over market

Indonesia seeks enhanced control over key commodity prices through a new exchange that is set to launch on January 1. President Prabowo Subianto, in his 2027 budget speech, emphasized that the nation has long produced essential commodities but their prices are often determined abroad in other exchanges. He questioned lawmakers if they want this situation to continue.

The success of the exchange will depend on building a credible benchmark and convincing producers and traders to utilize it. Commodity exchanges are organized marketplaces where producers, manufacturers, traders, and financial institutions come together to buy and sell commodities or contracts linked to them. The industry has been mixed in its response, with some associations welcomed the plan while others preferred direct dealings with buyers.

Indonesia, with its vast nickel reserves, is the largest exporter of thermal coal and palm oil. The new exchange aims to address challenges such as declining nickel prices and unlawful trade practices that deprive state coffers. The Indonesian Commodity Exchange, or Icomex, will serve as a reference for many institutions, including customs and tax offices.

Experts believe that having its own exchange will allow Indonesia to better reflect the strategic value of its minerals and commodities, but authorities need to convince producers and traders to shift away from established exchanges. With its potential to wield greater influence, the exchange could become a leading global benchmark for industrial metals and other commodities.