Welcome to Foreign Policy’s Southeast Asia Brief.

The highlights this week: Indonesia’s Prabowo grabs control of resource exports, the Philippines and Japan build defense ties, Malaysia demands missile refund from Norway, and Singapore hearts AI.

Welcome to Foreign Policy’s Southeast Asia Brief.

The highlights this week: Indonesia’s Prabowo grabs control of resource exports, the Philippines and Japan build defense ties, Malaysia demands missile refund from Norway, and Singapore hearts AI.

Indonesia to Nationalize Resource Exports

Indonesia will force all exports of selected raw materials to be conducted via a single state-owned enterprise. President Prabowo Subianto made the shock announcement last week in a speech to parliament.

The announcement left not just companies but Prabowo’s own government scrambling. It was reportedly kept under such tight wraps that key officials supposed to implement the policy were only informed of it the day before.

The rationale offered by Prabowo in his speech is that it is a measure to raise revenue by combating under-invoicing. This is when companies declare the value of their exports to be lower than their true value, often selling to related companies abroad and thereby shifting their profits to lower-tax jurisdictions.

To be fair to Prabowo, this is a genuine problem. In 2016, a study estimated the government lost $6.5 billion in revenue because of under-invoicing.

But Prabowo suggested Indonesia could raise $150 billion a year by combating this, which seems optimistic.

Indonesia is in increasingly tight fiscal straits, made worse by the fuel crisis.

Prabowo’s expansive social programs, including a free lunch program, have strained the budget. Last year saw massive cuts to other government spending, from local government and higher education to infrastructure, to try to balance the books.

Yet at the start of the year, analysts predicted Indonesia would breach its 3 percent budget deficit rule. The surge in fuel prices, which will cost Indonesia billions as long as the government stubbornly sticks to fuel subsidies, will only worsen the problem.

Attempts to improve Indonesia’s weak tax collection have fallen flat. So, instead the government has begun resorting to what we might politely term more irregular ways of raising revenues—with state-owned companies playing a central role.

Early in Prabowo’s term, all state-owned companies were placed under the control of a single holding company, Danantara Indonesia, which reports directly to the president.

(The idea, while not necessarily a bad one, was sprung so suddenly that sources told me the Ministry of State-Owned Enterprises was utterly blindsided.)

Danantara then became the beneficiary of a number of unusual developments.

Over 4 million hectares of plantations and a number of mines, which were often turned over to state-owned companies, have been seized. Indonesia’s........

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