As the EU moves toward full implementation of its Carbon Border Adjustment Mechanism () — a policy that places a carbon price on imports based on the emissions generated during their production — exporters around the world are confronting a new reality: Access to the European market will increasingly depend not only on price and quality, but also on the carbon intensity of manufacturing. CBAM was introduced by the EU to prevent “carbon leakage,” in which companies shift production to countries with weaker climate regulations to avoid stricter environmental costs in Europe.

For countries like Indonesia, the implications are especially significant. The EU remains an important for Indonesian industrial goods, including steel, aluminum and other carbon-intensive manufactured products. At the same time, Indonesia’s industrial sector still heavily on coal-powered energy, making many of its exports vulnerable to higher carbon costs under the EU system.

For exporters in these sectors, CBAM is no longer a distant Brussels regulation; it is becoming a market access requirement. The question is not whether Indonesian industry will adapt, but whether that adaptation will be orderly and cooperative, or chaotic and punitive.

That is why Brussels and Jakarta should immediately establish an EU–Indonesia CBAM Working Group — a formal platform that brings together government agencies, industry representatives, technical experts and exporters from both sides to coordinate compliance, share standards and prepare industries for the transition to carbon-based trade rules.

Without such coordination, the risks are substantial. Indonesian exporters could face rising compliance costs, declining competitiveness and gradual exclusion from one of the world’s largest markets. Europe, meanwhile, risks turning a climate policy designed to encourage global decarbonization into a source of geopolitical resentment and trade friction with emerging economies.

The case for a working group

A working group would help turn that potential friction into structured coordination. The benefits of such a working group would extend beyond avoiding trade disputes. If designed properly, it could become a practical mechanism to help Indonesia’s industry transition to a carbon-regulated global economy while ensuring that Europe’s climate agenda does not alienate key economic partners.

Its first priority should be solving the biggest practical challenge facing Indonesian exporters: . For many firms, especially outside multinational supply chains, the main barrier is not the carbon price itself, but rather the technical complexity of compliance. Companies will need to calculate and report the emissions embedded in their products, provide verified production data and meet European reporting standards in order to continue exporting smoothly to the EU market once CBAM enters full implementation in 2026.

Emissions accounting, product-level data, accredited verification, default values and the treatment of indirect emissions are not minor bureaucratic details. They will increasingly determine which companies remain globally competitive and which struggle to access foreign markets.

Second, the working group could help ensure that decarbonization efforts in countries like Indonesia are not overlooked. Indonesian industries are in cleaner production, carbon market development and renewable energy integration. But without structured coordination with European regulators, many of these efforts may not translate into lower compliance burdens under CBAM. A formal bilateral platform could help develop mutual understanding on reporting standards, carbon accounting methodologies and potential recognition mechanisms before disputes emerge.

But achieving these outcomes will require the working group to be designed as more than a narrow diplomatic forum. It should be industrial, not merely governmental. That means bringing together not only officials from Brussels and Jakarta, but also manufacturers, industry associations, financiers, technical experts and exporters themselves. Too often, trade dialogues remain confined to ministries while companies are left to navigate complex regulatory transitions alone. In the case of CBAM, that approach would almost certainly fail.

The group’s mission should therefore be practical and industry-focused: developing sector-specific road maps, expanding technical training, coordinating emissions verification systems, supporting smaller exporters and creating early-warning mechanisms for future regulatory changes as the EU gradually expands CBAM’s scope.

Balancing domestic reforms and international compliance

Skeptics that Indonesia should focus primarily on strengthening its own domestic carbon pricing system rather than building special coordination mechanisms with Europe. But this is a false choice.

Indonesia indeed needs stronger domestic climate governance and more credible carbon market reforms. Those efforts will be essential for the country’s long-term industrial competitiveness in a decarbonizing global economy. Yet domestic reform alone will not solve the immediate compliance pressures Indonesian exporters will face when CBAM enters full implementation.

Many companies do not have the luxury of waiting for ideal policy sequencing. They will soon need to comply with complex European reporting standards, emissions verification requirements and carbon accounting rules in order to maintain access to EU markets.

Some policymakers and business groups in both Europe and Indonesia also that existing trade dialogues, chambers of commerce and occasional industry seminars are already sufficient to manage the transition. Their assumption is that CBAM compliance will gradually evolve through market adaptation, as companies learn to adjust over time without the need for a dedicated bilateral mechanism. But that underestimates the scale and speed of the transformation now underway.

CBAM is not simply another technical trade regulation involving product labeling or customs procedures. It directly links market access to carbon emissions, industrial energy systems and climate governance. That means the transition will affect not only exporters, but also investment decisions, manufacturing competitiveness and long-term industrial strategy.

Occasional consultations and fragmented business forums are unlikely to provide the level of coordination required for such a structural shift. Without a more institutionalized framework, misunderstandings over compliance standards and uneven readiness across industries could quickly escalate into wider trade tensions.

Coordination matters more than ever

History offers several warnings about what happens when major regulatory or environmental standards are introduced without sufficient coordination between developed and developing economies. European restrictions on palm oil linked to deforestation, for example, years of political backlash in Indonesia and Malaysia, where policymakers viewed the measures as discriminatory trade barriers rather than cooperative climate policy. The lesson is clear: When global rules are imposed without meaningful adjustment mechanisms or institutional dialogue, they often harden into geopolitical grievances.

CBAM risks creating a similar dynamic if countries like Indonesia are left to navigate complex compliance requirements alone. But if Europe and Indonesia instead build structured coordination early — through technical cooperation, industrial transition planning and regular dialogue — the mechanism could evolve into something more constructive: a framework that supports decarbonization while preserving trust between advanced and emerging economies.

Europe CBAM is designed to prevent carbon leakage, not erect green trade walls. Establishing an EU–Indonesia CBAM Working Group would be the clearest way to prove it. Because by 2026, carbon policy will no longer sit at the margins of trade. It will be trade.

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Analysts warn that oil prices could surpass a barrel if the tanker flows are not restored quickly, a prospect that has sent a chill through the corridors of power in Jakarta. As a net energy importer, Indonesia is particularly exposed to major disruptions in the Middle East. Countries across Southeast Asia are scrambling to reduce their dependence on imported oil, accelerating the shift toward renewable energy with a renewed sense of urgency.

�ٲ��Բ��Գٲ�����’s defining test

For Indonesia, managing this shock will require not only sound fiscal policy but also a decisive role from the Danantara Sovereign Wealth Fund (SWF). One of the largest SWFs in the world by claimed assets, Danantara is now under pressure to demonstrate its value, and jump-starting a long-term transition to renewables could be its defining test.

While the Indonesian government is oddly indifferent to the issue — with senior ministers reportedly saying that the country is not at risk of an energy crisis — if Danantara can jump-start a permanent, long-term transition to renewables, it could reduce dependence on imported fuel.

While efforts to transition Indonesia’s energy mix from coal to renewables have gained an unexpected endorsement from the top, feasibility and governance remain significant challenges. 

From ambition to acceleration: Indonesia betting on solar

During first anniversary celebration in mid-March, President Prabowo Subianto set a striking target: 100 gigawatts of solar power capacity to be installed within two years. He also established a special task force on renewable energy and energy conservation to drive the initiative forward.

The president said, as quoted by local media, that the 100 gigawatts is a strategic step to accelerate Indonesia’s energy transition and reduce reliance on imported fossil fuels — now more costly due to disruptions tied to the US-Israeli war on Iran. It was not an entirely new idea; the 100 gigawatts figure had been floated since 2025, but the current circumstances have given it fresh urgency and explicit presidential backing.

That backing has a track record behind it. At the inauguration of renewable energy projects in 15 provinces in , President Prabowo expressed his intention for Indonesia to achieve energy independence, emphasizing solar energy as the primary solution for achieving energy sufficiency in remote areas. 

Then, in , Energy and Mineral Resources Minister Bahlil Lahadalia outlined how the government seeks to bring electricity to 5,700 villages and 4,400 hamlets across the archipelago by 2030. Bahlil, the president, said the villages will have solar power plants in cooperation with the private sector and the state utility company  Perusahaan Listrik Negara (PLN). The plan calls for 80 gigawatts of distributed solar photovoltaic (PV) systems paired with 320 gigawatt-hours of Battery Energy Storage Systems (BESS), managed by the Merah Putih Village Cooperatives (KDMP), alongside 20 gigawatts of centralized solar.

Ambition, legality and capacity to deliver

Solar ambitions run into legal cracks and questions about the government’s ability to deliver. The plan itself is not without flaws. Indonesia’s Constitutional Court has held that electricity for public use must remain under state control. Yet the village solar scheme leans toward an “unbundled” model — one that separates generation, transmission, distribution and retail into distinct businesses. That tension is more than a regulatory technicality; projects built in rural communities can profoundly transform local life for better or worse, and getting the legal framework wrong could jeopardize both the communities and the program itself.

The government’s broader capacity to execute large-scale programs has also come under scrutiny. The Free Nutritious Meals (MBG) initiative and the Merah Putih Village Cooperatives (KDMP) show what the administration can mobilize when it chooses to do so. But more than 21,000 of food poisoning linked to the MBG program serve as a sobering reminder of what happens when ambitious schemes are launched before they are ready.

Capital flows in, but details stay scarce

Danantara’s solar bet draws fresh capital, but the details behind the deal remain thin. So far, the country’s newest sovereign wealth fund, Danantara, seems to be upbeat about the initiative. Danantara on March 5 said that it received in investment to accelerate solar power plant development, but Danantara did not address this properly with enough details. 

CEO Rosan P. Roeslani said only that the investment was made in 2025 as part of the 100 gigawatts effort and would fund a facility expected to take a year and a half to build. The source of the funds, the nature of the facility, its location, the technology involved and its projected impact on surrounding communities were all left unaddressed.

Despite the expected shortcomings, though, the timing could not be better. A significant sum to support renewable energy is a much-needed boost for Indonesia’s ambitious energy transition. Not only does it signal to international partners that Jakarta is serious about turning its long-standing transition pledges into tangible investment on the ground, but it also comes at a time when the global energy supply is under significant strain and Indonesia requires alternatives.

Turning crisis into a catalyst

Rising fuel costs are forcing Jakarta’s hand, but turning the crisis into lasting change will take more than momentum. In the near term, the government is likely to resist raising prices for subsidized fuel and the ubiquitous three-kilogram liquified petroleum gas (LPG) canisters. But if the conflict in the Middle East persists, tighter quotas and eventual price adjustments are all but inevitable. That pressure, uncomfortable as it is, creates a political opening.

This moment can be used as a catalyst, a valid reason for the administration and the lawmakers to come up with a strong, accelerated shift to renewables as part of the efforts to reduce reliance on the global supply chain. But catalysts only work if they produce lasting structural change. That means improving transparency about the solar program’s progress, making investors’ identities public, and being clear about the technologies chosen. Without accountability, ambitious targets have a way of quietly fading when the sense of crisis passes.

Indonesia’s clean energy promises and the road ahead

The targets are set, and the tools exist, but Indonesia has yet to match its clean energy promises with action. Indonesia has an ambitious energy transition target, but it harbors skepticism due to slow progress, continued reliance on coal and conflicting policy priorities. Our leaders set ambitious targets and brag about them at international summits. Besides Indonesia’s net-zero emissions (NZE) by 2060 or sooner,  President Prabowo has publicly promised a coal within 10–15 years and shift to 100% renewable energy within a decade.

Indonesia needs to take this opportunity to make its energy sovereignty dream come true. Domestic renewables rely on local resources, so once they are built, they will be immune to fuel price swings in the Middle East.

Policy tools are already available. We do indeed seek a higher share of renewables in the primary energy mix. Now we need to realign the Electricity Supply Business Plan (RUPTL) with Just Energy Transition Partnership (JETP) and the National Energy General Plan (RUEN), accelerate coal retirement, avoid new fossil capacity, prioritize grid upgrades outside Java–Bali and invest in storage so that solar and wind can displace oil and gas.

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If Indonesia is serious about turning pledges into progress, it should take concrete, immediate action. One of these actions is to negotiate a concessional financing facility with the Japan Bank for International Cooperation (JBIC) to retire a first tranche of coal capacity, targeting roughly 500 megawatts. Not as a grand gesture, but as a proof of concept.

Why start small?

Indonesia is not short on transition frameworks. The Asian Development Bank’s Energy Transition Mechanism (ETM) is precisely to blend concessional and commercial capital to buy out and retire coal plants early. Similarly, climate funds have already pilot programs aimed at retiring gigawatts of coal capacity over time. 

What’s missing is execution at scale — and that begins with a deal that actually closes.

A 500-megawatt retirement, financed through JBIC concessional lending, would do three things at once. First, it would establish a replicable financial template. Early coal retirement is expensive because plants are often locked into long-term power purchase agreements, with revenues guaranteed for decades. Concessional capital — cheaper, longer-tenor and risk-tolerant — is essential to bridge that gap.

Second, it would align Japan’s evolving climate finance posture with Indonesia’s needs. JBIC has already a shift toward supporting decarbonization and energy transition projects in Indonesia, including partnerships with state entities and utilities. The institution’s mandate to support both economic development and climate goals makes it a natural anchor for such a facility.

Third, it would send a signal to markets that coal retirement is bankable. Right now, investors remain skeptical. One reason is structural: Indonesia’s power sector is governed by rigid contracts and planning assumptions that continue to favor coal. Just Energy Transition Partnership (JETP) analyses have to “policy distortions” and financing structures that rely too heavily on commercial debt rather than concessional capital. 

In that environment, no private investor wants to be first. A JBIC-backed facility could change that calculus.

Why JBIC — and why now?

Japan has long been a central player in Indonesia’s power sector, financing and supporting infrastructure for decades. That legacy is both a liability and an opportunity. On the one hand, Japanese institutions have historically supported coal projects. On the other hand, they now have the capacity — and arguably the responsibility — to help unwind them.

JBIC’s existing cooperation agreements with Indonesian institutions, including PT Sarana Multi Infrastruktur, a state-owned enterprise that finances national infrastructure development, and the State Electricity Company, already the energy transition. A concessional early-retirement facility would be a logical extension of that cooperation.

Timing matters as well. Indonesia has set ambitious emissions reduction targets and a long-term goal of net-zero by 2060. But ambition without near-term milestones risks eroding confidence. A first-tranche retirement — visible, measurable and financed — would anchor those long-term goals in reality.

The politics of early retirement

Of course, retiring coal plants early is not just a financial challenge; it is a political one. Coal remains deeply embedded in Indonesia’s economy, providing jobs, revenues and energy security. Any transition must be “just,” ensuring that workers and communities are not left behind.

But that is precisely why starting with a modest 500-megawatt tranche makes sense. It allows policymakers to test compensation mechanisms, workforce transition programs and regulatory adjustments on a manageable scale before expanding.

Moreover, the alternative — delay — carries its own risks. The longer Indonesia waits, the more new coal capacity locks in emissions and financial liabilities. Early retirement becomes harder, not easier.

From pilot to platform

A JBIC concessional facility should not be seen as a one-off transaction but as the foundation of a broader platform. Once the first deal is completed, the same structure could be scaled up, blended with other sources of concessional capital, and integrated into Indonesia’s ETM and JETP frameworks. In other words, 500 megawatts is not the goal. It is the beginning.

Indonesia’s energy transition will ultimately be judged not by announcements but by assets retired, emissions reduced and clean capacity built. The gap between ambition and implementation remains wide — but it is bridgeable. A single, well-structured deal could start to close it.

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The economic consequences are immediate. Oil prices have already jumped as markets price in the risk of supply disruption and prolonged instability. Analysts that a prolonged conflict could push oil prices above $100 per barrel and intensify inflation across import-dependent economies.

For Indonesia, the war presents a clear danger. The country still relies heavily on imported crude oil and refined fuels. When global prices surge, Indonesia’s fiscal burden through fuel subsidies and higher import bills. Yet crises often create opportunities for structural change. The current oil shock could become a catalyst for Indonesia to accelerate its long-delayed energy transition.

A global oil crisis should not be treated only as a short-term emergency. It should also be treated as a catalyst for a faster shift toward cleaner, more resilient energy systems. Indonesia, as well as the rest of the world, must invest in this change now before it is too late.

Renewable energy expansion

The most immediate step is electrification. Indonesia’s transport and logistics sectors remain deeply on diesel fuel. Trucks, buses and delivery fleets vast amounts of imported petroleum. Electrifying these systems would reduce exposure to global oil volatility. Electric buses for urban transport, electric freight corridors for logistics and electric two-wheelers for urban mobility could significantly reduce oil demand. When electricity increasingly comes from renewable sources, the economic benefits multiply.

The power sector is equally important. Many regions across Indonesia still on diesel-fueled generators, particularly in remote islands. This diesel-based electricity generation is expensive and heavily reliant on fuel logistics. Replacing these plants with renewable systems would deliver immediate gains.

Indonesia also has enormous renewable energy . Solar energy alone could reach around 100 gigawatts through the large-scale deployment of panels across the archipelago. Wind energy has the potential to provide roughly 154.6 gigawatts of capacity, with hydropower resources potentially contributing another 89.3 gigawatts. The technology and human resources already exist; what remains is decisive government policy.

A major renewable expansion would also reduce the burden of energy subsidies. Diesel imports expose the state budget to global price spikes, and renewable energy systems operate without fuel imports once installed. The result is more predictable electricity costs and greater fiscal stability.

Government policy should therefore focus on accelerating investment in renewable energy, particularly in the power sector. Fiscal incentives can support the installation of solar panels, wind turbines and hydropower plants. Tax credits, concessional financing and long-term power purchase agreements would attract both domestic and international investors.

Indonesia has already set a target of at least renewable energy in the national energy mix. That level should be seen as a minimum threshold rather than a ceiling. The higher the renewable share, the stronger Indonesia’s buffer against external shocks such as oil price spikes. However, not all policy responses move in that direction.

The environmental and energy security trade-offs

One frequently proposed response to rising oil prices is expanding biodiesel blending mandates. The idea of moving toward B50 — a 50% palm oil biodiesel blend with diesel fuel — is often as a solution to energy security. However, it is not an ideal solution, as palm oil blending still relies on petroleum diesel. The system continues to depend on imported fossil fuels. That is the policy’s fundamental weakness. Blending reduces diesel demand, but it does not eliminate it.

Environmental consequences also deserve attention. Expanding palm oil plantations can worsen deforestation and ecological degradation. The recent flooding in parts of Sumatra has already raised concerns about the loss of natural water absorption areas linked to plantation expansion. Several companies whose permits were revoked were connected to plantation related environmental violations.

Further expansion of plantations could create new risks. In Papua, large-scale palm oil development raises fears of land conflicts with local communities and further deforestation. A cleaner strategy lies elsewhere: Solar farms, wind projects and hydropower installations reduce fossil fuel demand without triggering the environmental tradeoffs associated with large-scale plantation expansion.

Indonesia should also strengthen its international commitments to move away from fossil fuels. Joining the Fossil Fuel Non-Proliferation would provide a clear roadmap to reduce dependence on crude oil while accelerating investment in renewable energy systems.

The time to diversify

The war in the Middle East is a geopolitical crisis with global consequences. Oil prices are rising sharply; trade routes remain unstable; import-dependent countries are starting to feel the pressure. For Indonesia, the lesson is straightforward: Energy security cannot depend on imported fossil fuels vulnerable to distant conflicts.

The current war may destabilize energy markets, but it may also provide the political urgency needed to accelerate Indonesia’s transition toward renewable power. Crises often force choices that normal politics would otherwise delay, and Indonesia now faces one of those moments. The only question now is whether Indonesia will seize this opportunity to diversify its energy supply or remain dependent on oil.

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In addition to Walujo, Director of Public Affairs and Communications Ade Mulyana, and Commissioners Pablo Malay and Winanto Kartono, have tendered their resignations.  

The market may interpret the leadership change as a preparation for something significant that requires someone with a different view, yet seasoned and familiar enough to take the helm at a critical period focused on merger execution and continued profitability. 

Hans Patuwo, who is set to replace Walujo, has led various business lines within the company. As the chief operating officer and president of on-demand services, he oversaw all operations across the ecosystem. Patuwo was once credited by his team as the reason behind the growth, strength and transformation of GoTo’s fintech arm GoPay, thanks to his focus on problem-solving. 

As the merger between Southeast Asian giants GoTo and Grab is gaining steam, it’s time to look closer at the potential deal that would dramatically reshape the region’s ride-hailing and food delivery industry. It has direct effects on customers, online drivers, merchants and competitors. However, with Indonesia’s sovereign wealth fund Danantara in the mix, the proposed merger has become a lot more interesting to watch.

Begin (again)

The GoTo-Grab merger speculation began as comes-and-goes industry chatter in the past couple of years, captured initially only by niche business media. Earlier this year, DealStreetAsia the resurfacing of talks between the two tech majors, only to be called off in September.

Competition between GoTo and Grab has been costly for both parties due to intense price wars and investments in technology, marketing and expansion. For example, and have spent 34.5 trillion rupiah (about $2 billion) and 23.55 trillion rupiah (about $1.4 billion), respectively, on sales and marketing expenses to date. That is, on average, about 85% and 19% of their quarterly revenues, respectively. 

It indeed makes sense for both companies, as a merger can be seen as an effort to strengthen the balance sheet. The new entity can cut operating expenses, freeing up capital for innovation and expansion. That could mean wider geographical coverage, an unrivaled logistical and digital network. 

The merger may restore investor confidence. GoTo could benefit from access to Grab’s stronger international presence and broader capital resources, while Grab could tap into the scale and grasp GoTo has in Indonesia. It remains unclear whether Grab would absorb GoTo or vice versa. Still, data suggests that Grab has much bigger liquidity. By absorbing GoTo, Grab can remove its biggest rival, solidifying dominance in ride-hailing and delivery.

In an interesting turn of events, State Secretary Prasetyo Hadi that either a merger or an acquisition is afoot between GoTo, Gojek, Tokopedia and Grab Holdings — and that Daya Anagata Nusantara Investment Management Agency (BPI Danantara) is involved to realize such a plan. 

Hadi, as quoted by CNBC Indonesia, said the plan was the result of a three-way meeting between President Prabowo Subianto, GoTo and Grab representatives as part of the efforts to create better services for the public, to keep the company running and to create jobs.

Shares of GoTo and Grab had a slight uptick on the next trading day following Hadi’s comment on the potential merger on Friday, July 11th. The following Monday, GoTo’s shares went up to 67 rupiah apiece from 61 rupiah previously. Grab’s shares went up to $5.90 apiece, from $5.56 apiece previously. That being said, both shares are still far below their Initial Public Offering (IPO) prices.

Public concerns

Being the first and largest ride-hailing players in Southeast Asia, GoTo and Grab could control a significant share of the ride-hailing and online food-delivery markets in the region. In other words, a monopoly. In hindsight, it threatens consumer choice and gives the combined entity a potentially unchecked power over pricing and data.

The national commission overseeing business competition in Indonesia, also known as KPPU, can’t do much at this stage. According to , KPPU can only assess mergers and acquisitions that have already happened. In a to the media, KPPU Chairman M. Fanshurullah Asa said the commission is open for GoTo and Grab to hold a voluntary consultation with the agency.

KPPU has begun conducting independent research to identify potential impacts from the merger. If the transaction is finally notified to KPPU, the agency can immediately conduct a set of assessments. However, the question remains. If the state is involved and millions of dollars and precious time have been spent to make this merger come true, how far would KPPU maintain its ground?

On the other side, there is also a real possibility that the authority in Singapore will move to block or impose conditions on a merger between GoTo and Grab, especially if the deal risks unfairly reducing competition in the city-state. 

The Competition and Consumer Commission of Singapore (CCS) is of media reports about the potential merger, but it has not received merger notifications from either of the companies. 

�ٲ��Բ��Գٲ�����’s involvement is another point of concern. Danantara, Indonesia’s new sovereign wealth fund with 1,000 trillion rupiah (about $59 million) in capital, needs nine months to set up a proper website that includes basic information such as its management and official statements.

As the public continues to question its transparency, the new Sovereign Wealth Fund (SWF) is reportedly exploring a potential minority stake in the combined entity. Danantara is poised to play a government-driven strategic role to ensure commercial return and market balance. 

It is still fresh in the memory how the state-owned mobile operator also intended to make a strategic investment in Indonesia’s digital economy by injecting billions of rupiah into GoTo through convertible bonds and equity purchases between 2020 and 2021. It, however, resulted in a major financial loss after GoTo’s shares plunged following its IPO.

The transaction received public criticism, not only due to the massive loss but also because of the potential . Prominent businessman Garibaldi Thohir, who was an independent commissioner of Gojek and later became GoTo’s president commissioner, is the sibling of State-Owned Minister Erick Thohir. Bono Daru Adji, Telkom commissioner, was a legal consultant for GoTo’s IPO. 

A name who’s involved in both Telkomsel’s investment in GoTo and potential �ٲ��Բ��Գٲ�����’s investment in the GoTo-Grab entity is Pandu Sjahrir. Sjahrir was a commissioner for Indonesia’s Stock Exchange. He has been an early investor in Gojek and later became the president commissioner of GoTo’s financial services arm. These roles placed him, arguably, on the “GoTo side” of the relationship due to his close association with the company. 

Now, being the CIO of Danantara, Sjahrir the media that the transaction will be a business-to-business one. The optics are already murky. Danantara has to ensure nobody has financial or relational ties to GoTo and Grab. The SWF should ensure that no one uses this agency to secure positions or bail out existing positions in GoTo under the cover of “national interest.”

Securing local interests

For Danantara to take a stake in the merged GoTo-Grab entity, one would argue that it signals a major step in state involvement over the nation’s digital economy. It’s clear Danantara has the full support of the state. 

Knowing that the foreign entity has access to larger capital, �ٲ��Բ��Գٲ�����’s involvement in this potential transaction may be the right way to secure Indonesia’s interest in the deal. It can address concerns over strategic assets and the direction of the digital market. �ٲ��Բ��Գٲ�����’s stake could mean safeguarding data sovereignty, ensuring jobs and innovation stay onshore and securing regulatory compliance for the new entity.

However, having Danantara — along with its political influence and access to government data — invest in the new entity, the competition will be a bit tougher, if not impossible, for other ride-hailing companies. The merger itself would arguably create a near-monopoly, giving the platform far greater power to cut incentives, raise commissions and limit alternatives if conditions worsen for drivers, merchants and customers. Political backing will fuel this dominance even more. 

Fewer incentives, higher commissions and insensitivity to complaints are detrimental to both the drivers and their customers. The latter would pay more, yet the drivers could get less. In the grand scheme of things, the potential impact could be rising inflation, dropping purchasing power and worsening quality of life.

As the combined entity could control the majority of the ride-hailing market in the region, it will be harder for online drivers — and to some extent merchants and customers too — to voice and advocate their rights. The potential merger has received from the Indonesian Transport Workers Union (SPAI) and . They’ve sensed the potential decline of their take-home pay following this merger. 

There are looming questions on the deal structure itself: which one will become the surviving entity? What does it mean to have either of the entities as the surviving one? Where would it be based? What kind of taxes should it pay? How much share will Danantara have? Even if it’s not a majority stake, are there any government officials taking positions in the new entity? If so, what will their responsibility be? 

There are also questions regarding the customers, the merchants, and the online drivers. What does this merger mean to them? Do they need to pay more to use the ride-hailing service? Will it be more convenient for customers but less bargaining power for merchants? 

Just like KPPU and CCS, the public will have to wait for new developments and watch the results closely.

[ edited this piece.]

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Still, for Indonesia, the partnership could matter a great deal if it is implemented with intention.

The MOU is a framework, not a project list. It specifies no funding volume, no country allocation and no thematic quotas. Instead, it allows QFFD to cofinance ADB-led projects using ADB’s existing pipelines, safeguards and relationships with recipient governments. Projects are expected to begin in 2026, following individual approvals by both institutions and host countries.

This structure gives the partnership flexibility. It also leaves outcomes largely contingent on choices yet to be made, particularly in large, energy-hungry countries like Indonesia.

Transition goes beyond financing

Indonesia’s energy transition remains uneven. Coal continues to the power sector, renewable deployment stated targets and fiscal constraints limit the government’s ability to finance large-scale change. In this context, new development partnerships are often presented as potential solutions. But financing alone does not guarantee transition.

The ADB–QFFD partnership emphasizes concessional financing, typically in the form of loans with lower interest rates and longer maturities. These instruments can help close financing gaps, but they also add to public debt. For Indonesia — where energy transition investments often produce public rather than commercial returns — debt-heavy financing risks slowing progress rather than accelerating it.

If the partnership is to benefit Indonesia’s energy future, QFFD would need to go beyond concessional lending. Grants, equity participation and risk-sharing instruments would be better suited for renewable energy deployment, grid upgrades and early coal retirement. Without such flexibility, Indonesia may gain infrastructure, but not transition.

Challenges and opportunities

Coal remains the central constraint. Indonesia’s decision to the early retirement of the Cirebon-1 coal-fired power plant illustrated how fragile its transition commitments remain. Without retiring coal assets, emissions reductions will be marginal, regardless of new renewable investments.

While the MOU does not address coal explicitly, the partnership could support Indonesia’s transition if it aligns future financing with coal phase-down efforts. Financing new infrastructure alongside operating coal plants risks undermining climate and economic resilience objectives.

Governance will also determine whether Indonesia benefits. Under the , ADB remains the lead implementing agency. QFFD can choose to be a passive financier or an active partner in project design and oversight. If it opts for the former, it will inherit ADB’s long-standing challenges, particularly around social safeguards and community engagement in large infrastructure projects.

A more active role for QFFD, as a project coordinator rather than merely a source of capital, could help improve project quality and accountability, especially in energy projects that affect land use and local livelihoods.

Project selection is another open question. ADB’s in Indonesia have historically favored capital-intensive projects such as geothermal power. Geothermal energy is considered an abundant renewable resource, but it often creates conflict with local communities in many areas. Meanwhile, distributed renewable solutions such as rooftop solar, community-scale solar and micro-hydropower remain underfinanced despite their suitability for Indonesia’s archipelagic geography.

The partnership could become an opportunity for Indonesia if project selection shifts toward these locally appropriate solutions. This would require a bottom-up approach, informed by community needs rather than institutional preferences.

Finally, who participates in decision-making matters. ADB typically works through central ministries, leaving subnational governments with limited influence. In a decentralized country like Indonesia, this approach often disconnects projects from local energy needs.

QFFD could encourage trilateral coordination among ADB, the central government and subnational authorities. Greater local involvement would increase the likelihood that projects support Indonesia’s actual energy transition rather than abstract development targets.

The ADB–QFFD partnership does not promise Indonesia an energy transition. But it creates a window. If financing moves beyond loans, if coal retirement is not sidelined, and if communities and local governments are meaningfully involved, the partnership could help Indonesia reshape its energy future. If not, it risks becoming another well-funded initiative that leaves the fundamentals unchanged.

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At the same time, coal companies failed to use the last five years to prepare for this shift. Their reluctance to invest decisively in solar, hydropower, battery storage or other clean technologies has left them exposed, underperforming and increasingly asking governments for relief rather than reinventing themselves.

Falling exports and prices reveal industry strain

The data makes the severity of their situation clear. In the first four months of 2025, Indonesia only about 150 million tons of thermal coal abroad — roughly 12% less than in the same period in 2024. China and India, Indonesia’s two biggest coal customers, have both their imports: China because of increased domestic production and tighter environmental rules, India due to similar motivations plus stronger domestic alternatives.

Meanwhile, in the first half of 2025, Indonesia’s coal production about 357.6 million tons — just under half its annual target of 739.7 million tons. Of that output, 238 million tons went to exports, 104.6 million tons to domestic market obligations and 15 million tons remained in inventory.

Simultaneously, coal prices have sharply — by about 30% globally for key benchmarks. In Indonesia, authorities have acknowledged that coal selling prices are low and the drop in revenue is “significant.” But coal executives often shift blame onto renewables. They say solar and wind are undermining coal demand. That claim ignores the timing: renewables were becoming more cost-competitive only gradually, and coal companies had a window years ago to pivot. Rather than shift capital into solar farms, hydro or energy storage, many instead doubled down on coal capacity expansion.

The Institute for Energy Economics and Financial Analysis’s (IEEFA) review of seven major Indonesian coal producers (Adaro, Bayan, Geo Energy, Harum, Indika, Indo Tambangraya Megah [ITMG], PT Bukit Asam [PTBA]) that even after record profits in 2022 — $8.4 billion — and strong profits in 2023 — $4.4 billion — several of those companies are planning further expansion of coal production. Bayan Resources and Geo Energy alone are eyeing increases of up to 58 million tonnes of new coal capacity.

The consequence is that coal is growing more expensive to produce, while renewables are becoming cheaper. Mining costs rise with regulation, tougher environmental requirements, land acquisition challenges, labor, overburden removal and increasingly remote locations.

At the same time, solar panels, inverters, balance-of-system costs, and installation costs in Indonesia are dropping. For example, wholesale solar panel prices in recent assessments are in the range of about $0.07 to $0.28 , depending on efficiency, type, volume and supplier. That makes solar increasingly competitive, especially for new generation capacity. When coal companies insist that renewables are undercutting them, the claim misses that renewable energy’s (RE) competitive edge has been building slowly, whereas coal’s cost pressures have escalated sharply.

Profit margins erode as markets shift

Coal’s profitability is slipping. Lower prices, falling export volumes and rising domestic costs squeeze margins. Export revenues have fallen; in March 2025, for example, coal export value about 23% year-on-year, while volumes also slid. Being over-reliant on coal, especially for export, leaves companies vulnerable not only to market cycles but also to shifting policies in importing countries — such as environmental regulation, demand for higher calorific value (CV) coal, carbon pricing and climate goals. China and India are buying less of Indonesia’s medium- and low-CV coal in favor of higher-grade coal from other sources.

The strategic error is clear. Rather than build significant capacity in renewables when profits peaked, many coal firms either postponed or made modest, symbolic moves. Their expansion plans remain heavily coal-focused. Some invest in nickel smelting or aluminum, yet even those downstream moves do not substitute for generative RE capacity.

The result is declining profitability, shrinking market share and a risk that these firms will become increasingly dependent on state interference — higher domestic market obligation (DMO) prices (the minimum price coal-fired power plants pay), regulatory relief, subsidies, perhaps even bailing out stranded coal assets. If these become the primary tools, the public cost will grow, and the sector will remain locked in its decline.

A narrow window for energy transition

Indonesia is at a turning point. Its government has set targets for renewable energy, and there are international commitments, such as the Just Energy Transition Partnership (), that aim to accelerate clean power deployment. To meet these, policy must shift: incentives should favor RE deployment (tax breaks, auction mechanisms, streamlined permits), coal subsidies must be phased out and the regulatory regime should penalize carbon externalities rather than shielding coal producers.

Coal companies must accept that the era of business‐as‐usual is over. The path forward lies in pragmatism: reallocate future capital expenditure to solar, hydro and storage; form partnerships with established RE developers; acquire or build internal RE expertise; develop clear transition roadmaps for investors and stakeholders.

If coal firms do not change their strategy, they risk becoming legacy utilities propped up by protective policy rather than generating profits from competitive markets. Those that act decisively — recognizing that global and domestic trends are against coal — will have a chance to survive, or even to lead in Indonesia’s energy transition. But time is not a luxury. The longer the delay, the harder the pivot, and the greater the cost — for companies, for government and for ordinary Indonesians.

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The views expressed in this article are the author’s own and do not necessarily reflect 51�Թ�’s editorial policy.

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