Jakarta. Finance Minister Purbaya Yudhi Sadewa has responded to a letter from the China Chamber of Commerce addressed to President Prabowo Subianto, which outlines a series of concerns over the country’s investment climate, including export revenue rules, mining royalties, and regulatory uncertainty.

The letter highlights multiple policies that Chinese businesses say are adding pressure to operations in Indonesia, ranging from foreign exchange retention rules for natural resource exporters, nickel ore quotas, forestry enforcement, work visa procedures, and electric vehicle incentives.

One of the main concerns centers on Indonesia’s planned requirement for exporters of natural resources to park a portion of their foreign exchange earnings domestically. Under the proposed policy, companies would be required to place 50% of their export proceeds in state-owned banks for at least one year.

Chinese business representatives said the rule could disrupt corporate cash flow and liquidity.

Responding to the concerns, Purbaya said the policy would include exemptions designed to reduce the burden on companies operating in Indonesia.

“If companies do not borrow money in Indonesia, they can be exempted from the foreign exchange retention requirement. There will be such exceptions, so China should not have a problem,” Purbaya said in Jakarta on Wednesday.

The policy is scheduled to take effect on June 1, 2026, although detailed technical guidelines have yet to be released. It is expected to require resource exporters to convert up to 50% of foreign currency earnings into rupiah and place funds in accounts at state-owned banks.

The China Chamber of Commerce also raised concerns over rising taxes and levies in the mining sector. It said repeated increases in mineral royalties, tighter tax inspections, and large penalties have created uncertainty among firms.

"Taxes and fees, including mineral resource royalties, have been raised repeatedly, accompanied by intensified tax inspections and even hefty fines amounting to tens of millions of US dollars, creating panic among enterprises," the group wrote.

Purbaya said some of the proposed fiscal measures, including royalty adjustments and export duties, have not yet been implemented and remain under consideration. He stressed that Indonesia will prioritize national interests in managing its natural resources.

The Chinese business group also pointed to cuts in nickel ore production quotas under Indonesia’s work plan and budget system (RKAB). It said reductions of more than 70% in some cases could affect downstream industries, including stainless steel and new energy sectors.

Forestry enforcement actions were also cited in the letter, including a reported $180 million fine imposed on a Chinese-linked investment company over forest-use permits.

Separately, the group said several large infrastructure projects, including hydropower developments, have been suspended due to environmental concerns and allegations of forest damage and flooding risks.

Work visa procedures were also criticized as increasingly complex, costly, and restrictive, with companies saying tighter requirements are limiting the mobility of technical and managerial staff.

The letter further warned about potential future policy shifts, including new export duties, reduced incentives for electric vehicles, and changes to tax exemptions in special economic zones.

Purbaya said Indonesia’s investment relationship with China should be viewed as reciprocal, adding that Jakarta has also raised concerns about illegal business practices involving some Chinese firms operating in the country.

“I have also complained to them. Many Chinese businesses here are operating illegally. I asked them to address it, and they promised to warn them. So it goes both ways,” he said.

He stressed that Indonesia remains open to foreign investment, including from China, but expects all companies to comply with national laws.

“We will not interfere with any business as long as it operates legally. If it is illegal, we will take action,” he concluded.

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