New Presidential Regulation to Enhance Fertilizer Industry Efficiency

Addressing Previous Inefficiencies

Indonesia's Coordinating Minister for Food Affairs, Zulkifli Hasan, has announced that the newly implemented Presidential Regulation No. 113/2025 is expected to significantly improve efficiency in the national fertilizer industry. This regulatory update directly addresses the inefficiencies previously identified by the Financial Audit Board (BPK) in their recent evaluation of the subsidized fertilizer sector. The new regulation represents an important step in optimizing the country's fertilizer production and distribution processes.

Key Changes in Subsidized Fertilizer Procurement

The most significant change introduced by Perpres 113/2025 is the modification of the subsidized fertilizer procurement payment mechanism. Under the new system, the government will now provide upfront payment for raw materials before the production and distribution process begins. This change is designed to alleviate the financial burden on Pupuk Indonesia, the state-owned enterprise responsible for fertilizer production.

Impact on Industry Operations

By changing the payment structure, the regulation aims to eliminate the need for Pupuk Indonesia to bear the interest costs associated with working capital financing for raw material procurement. This measure is expected to improve the company's cash flow and overall operational efficiency. The new mechanism requires review and verification by the BPK before implementation, ensuring transparency and proper financial management.

Regulatory Evolution

The newly implemented Perpres 113/2025 builds upon and refines the previous Presidential Regulation No. 6/2025. This latest regulatory update demonstrates the government's commitment to continuously improving the management of subsidized fertilizers in Indonesia. The evolution of these regulations highlights the ongoing efforts to create a more efficient and sustainable fertilizer industry framework.