Indonesia’s plan to centralize coal exports under state-controlled PT Danantara Sumberdaya Indonesia (DSI) is drawing increasing scrutiny from mining industry experts, who question whether the government is fully prepared to manage one of the world’s largest thermal coal export businesses through a single export channel.
Industry observers warn that the proposed policy could create major operational, contractual and investment risks if implemented without adequate preparation and transition measures.
Chairman of Industrial Relations at the Indonesian Mining Experts Association (Perhapi), Ardhi Ishak Koesen, said the sheer scale of Indonesia’s coal export industry makes the proposed one-door export mechanism extraordinarily complex.
Indonesia is currently the world’s largest exporter of thermal coal, shipping hundreds of millions of tons annually to major markets such as China, India and other Asian countries.
According to Ardhi, managing such enormous export flows through one centralized entity would require massive logistical, administrative and commercial capabilities.
“There are more than 300 million tons of Indonesian coal that will be exported overseas from inland areas in Sumatra and Kalimantan,” Ardhi said on Monday.
“This process involves tens of thousands of barges and thousands of vessels for transportation.”
He noted that coal shipments from Indonesia involve a highly fragmented and dynamic logistics network stretching across multiple islands, ports and mining regions.
In addition to transportation challenges, Ardhi said the government would also face difficulties handling the enormous number of export contracts currently managed by individual companies.
“There will be hundreds of sales contracts that must be managed, each with different specifications and contractual clauses,” he explained.
“The contract value alone could reach at least US$1.8 billion this year.”
Data from the Ministry of Energy and Mineral Resources showed Indonesia produced around 817 million tons of coal in 2025, with exports accounting for approximately 522 million tons.
More than 300 million tons of thermal coal exports were shipped to China, Indonesia’s largest coal buyer. Chinese imports of Indonesian coal reached 390.93 million tons throughout 2025.
The scale of the trade has fueled concerns that introducing a centralized export system could disrupt supply chains that have been built over decades between Indonesian producers and overseas buyers.
Ardhi questioned whether PT DSI possesses the operational infrastructure, manpower and commercial expertise needed to manage contracts and shipments previously handled by hundreds of independent exporters.
He warned that shifting to a single export channel could create serious inefficiencies and potentially generate disputes over pricing, delivery schedules and contract obligations.
“There has never been a monopoly-style sales practice like this anywhere in the world,” he said.
“Perhaps Indonesia will become the first country to implement such a system.”
The government’s proposal is part of broader efforts to strengthen state oversight over Indonesia’s natural resource exports and reduce alleged manipulation in commodity trading.
Authorities argue that centralized exports could improve transparency, strengthen foreign exchange earnings and prevent practices such as transfer pricing, underinvoicing and overinvoicing.
However, critics fear the policy could undermine market competitiveness and reduce investor confidence in Indonesia’s mining sector.
Executive Director of the Center for Energy and Mining Law Studies (Pushep), Bisman Bachtiar, said the policy could potentially reduce demand from overseas coal buyers, particularly if implementation becomes too bureaucratic or costly.
“Yes, there is potential for declining demand,” Bisman said.
“However, in the short term, the market will likely adopt a wait-and-see approach first.”
He explained that the government’s proposed export restructuring has been introduced very quickly, with almost no transition period for industry players to prepare operational adjustments.
Bisman warned that international buyers could become concerned about supply reliability, pricing transparency and contract continuity during the transition process.
According to him, uncertainty alone may already be enough to encourage some buyers and investors to reconsider their long-term commitments to Indonesia.
“If the single export mechanism does not function properly, becomes overly bureaucratic, or results in higher costs, then investors could accelerate their exit from Indonesia,” he said.
He stressed that while investors are unlikely to withdraw immediately, prolonged operational uncertainty could damage confidence in Indonesia’s business climate.
“Investors may not leave immediately,” Bisman said.
“But if implementation fails, the chances of investors pulling out will become very large, and that would certainly affect employment.”
The mining sector remains one of Indonesia’s largest sources of jobs and export earnings, especially in coal-producing regions across Kalimantan and Sumatra.
Industry observers fear disruptions to exports could eventually trigger layoffs if mining operations slow down or overseas demand weakens.
Concerns about the policy also come at a time when global coal markets are facing uncertainty due to energy transition policies, slowing economic growth in some countries and fluctuating commodity prices.
Although coal demand remains strong in several Asian economies, competition among exporters is increasing.
Indonesia’s ability to maintain reliable supply chains and competitive pricing has long been one of its key advantages in global markets.
Critics worry that introducing additional layers of bureaucracy could weaken that advantage.
The government, however, insists the policy is intended to improve governance and maximize benefits from Indonesia’s natural resources.
Danantara Chief Executive Officer Rosan Roeslani previously stated that existing coal contracts would still be respected under the new system.
However, he emphasized that the government would review those agreements to ensure pricing aligns with prevailing market benchmarks.
“Existing contracts will still be honored, but fundamentally we will review whether the pricing truly reflects current market indices,” Rosan said during a hearing at the House of Representatives in Jakarta on May 20.
He argued that Indonesia should not allow natural resource commodities to be sold significantly below international market prices.
“We can openly see global indices,” Rosan said.
“Prices should not be far below those benchmarks.”
According to Rosan, PT DSI is intended to function as a “marketing facility” capable of strengthening supervision over export transactions and minimizing financial leakages.
He specifically highlighted concerns about underinvoicing and transfer pricing practices that allegedly reduce Indonesia’s export earnings and foreign exchange inflows.
“How do we reduce violations and potential violations such as underinvoicing and transfer pricing?” Rosan said.
“I believe industry players themselves already know these practices exist.”
“This is what we want to reduce as much as possible. If possible, zero underinvoicing and zero transfer pricing.”
The government believes tighter export controls could help retain more export proceeds inside Indonesia and improve oversight of commodity transactions.
However, mining industry players argue that such goals should not come at the expense of efficiency and competitiveness.
Some experts have also raised concerns about whether the centralized system could create excessive concentration of market power and reduce transparency in other ways.
Others warn that the policy may face legal and practical challenges because coal exports involve numerous private companies, international buyers and complex commercial agreements governed by international trade rules.
The proposal also arrives amid broader debates about the future role of state intervention in Indonesia’s strategic industries.
President Prabowo Subianto’s administration has signaled stronger ambitions to increase state control over natural resources and maximize domestic economic benefits from commodity exports.
Supporters of the policy argue that Indonesia should exercise greater authority over the pricing and marketing of its natural resources, particularly given the strategic importance of coal exports to state revenues.
But opponents caution that overly centralized control risks creating inefficiencies and discouraging private sector investment.
For now, many coal producers and international buyers appear to be waiting for further clarity regarding how the policy would actually operate in practice.
Questions remain over how contracts will be administered, how pricing decisions will be made, how logistics will be coordinated and how disputes would be resolved under a centralized structure.
Industry participants are also seeking assurances that export flows will not be disrupted during implementation.
As debate intensifies, the government faces growing pressure to provide clearer technical details and transition plans before moving forward with one of the most ambitious overhauls ever proposed for Indonesia’s coal export industry.
