Indonesian political rhetoric targeting neighbours aimed at distracting from domestic pressures

Mr Made questioned whether Indonesia’s downstreaming programme could generate sufficient demand for the gas amid a sluggish global economy and domestic economic strain.

“If downstreaming fails to materialise, domestic demand for gas will naturally decline. In that case, would terminating the contract with Singapore actually be advantageous?” he asked.

Mr Ramadhito of RSIS noted that Singapore’s natural gas sources are well diversified, while Indonesia also faces economic risks in reducing exports.

“Rerouting exports domestically can widen the budget deficit, as gas sold at lower domestic prices reduces revenue for Pertamina, which is already under strain because subsidies keep energy prices artificially low during the Iran war,” he said.

Pertamina is Indonesia’s state-owned oil and natural gas conglomerate.

He highlighted that economic nationalism is an ideology the Prabowo administration has espoused, through sovereign investment fund Danantara and the re-routing of commodity exports to state-owned firms such as Danantara Sumberdaya Indonesia (DSI).

DSI is a part of the administration’s plan to centralise exports of key commodities such as coal, palm oil and ferroalloy to tackle concerns about under-invoicing and transfer pricing.

“These remarks should be read in that context. The haze issue simply inflamed nationalist tendencies in a government that believes the economy is too exposed to foreign capital and interests,” said Mr Ramadhito.