The controversial omnibus law will change how foreign investment is managed within the country.

As Indonesia seeks to solidify its global business position with a new omnibus law, critics are strongly objecting the legal changes. There are valid reasons behind Indonesia’s drive to streamline legislation, but the new law is creating controversy over its impact on workers, the environment and political corruption. To stay competitive, Indonesia needs to update its bureaucracy, but business development must be balanced with the protection of people and the environment. In this article, we delve into the controversy surrounding Indonesia’s new omnibus law.

We may brave human laws, but we cannot resist natural ones.” — Jules Verne

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Anybody familiar with Indonesia knows that doing business within the country is fraught with regulatory difficulties. A bloated bureaucracy, corruption and prohibitive regulations present barriers to investment. However, a new business climate is driving Indonesia to make significant changes to its investment legislation. These changes represent challenges for a country with the world’s fourth-largest population. …

Electric vehicles will drive the growth of Indonesia’s commodity sector.

Indonesia has extensive plans to leverage its commodity deposits to develop a thriving electric vehicle industry within the country. The nation has a basket of valuable minerals which are being viewed with enthusiasm in light of the growing international demand for electric vehicles. Not only will this demand facilitate new industries within Indonesia, but it will also strengthen Indonesia’s existing commodities supply chains. As international markets for electric vehicles expand there are significant new opportunities to capitalise on within Indonesia’s mining sector.

“The lithium is two percent of the cell mass [in our batteries]. So it’s like salt in the salad; it’s a very small amount of the cell mass and a fairly small amount of the cost. But it sounds like it’s big because it’s called ‘lithium ion’, but really, our battery should be called ‘nickel graphite’, because it’s mostly nickel and graphite.” …

Outdated commodities trading systems will soon be upgraded through blockchain technology.

As with so many other industries blockchain technology will soon have a significant impact on how commodities are globally traded. The technology is already impacting the process of commodities mining and as we have covered in a previous article, the implementation of blockchains will impact every stage of the supply chain. Some of the most interesting and lucrative opportunities will present themselves in the trading of commodities on emerging blockchain markets. Although his actions may not always have matched his eloquence, Barak Obama was correct when he said:

This is the moment when we must build on the wealth that open markets have created, and share its benefits more equitably. Trade has been a cornerstone of our growth and global development. But we will not be able to sustain this growth if it favours the few, and not the many.” …

As commodities begin to be represented on the blockchain they will add significant value to the industry.

The global adoption of blockchain technology is rapidly impacting a number of important industries including the market for commodities. As blockchain systems are implemented across the mining and commodities sector they promise to deliver efficiencies and liquidity that has been previously unattainable. Not only will blockchain technology add value to the industry but through a symbiotic relationship, commodities will bring value to the market for blockchain technology.

The circulation of commodities is the original precondition of the circulation of money” — Karl Marx

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In previous articles, we have discussed how blockchain technology will improve efficiencies in mine logistics across the commodity supply chain. The valuable contributions that it will bring to commodities mining will improve efficiencies, reduce risk and minimise losses for operators. These enhancements will allow commodities to reach the market with less friction and should ultimately reduce the cost of commodities mining. If these cost savings are passed down the supply chain the impact will be felt in numerous industries and ultimately by the consumer. …

New and innovative technologies are combining to improve mine efficiency.

Data integrity is the key to developing new technologies that enhance the ways we mine and manage commodities. The reliability of data is what allows critical processes to operate accurately across vast distances and complex implementations. Concepts such as the digital twin combined with IoT infrastructure, blockchain technology and AI are set to revolutionise how the mining industry operates. As these processes are refined in mining they will spread to other vital industries.

“Information is the oil of the 21st century, and analytics is the combustion engine” — Peter Sondergaard

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The digital twin will play a significant role in how we manage and develop mining systems. A digital twin is the replica of a process, product or business that can be used to predict behaviours over its lifecycle. There are numerous advantages to digital twinning but a core requirement is that the information utilised is accurate. It is here that the integrity of the blockchain becomes relevant to the development of this technology. …

Streamlining operational logistics for improved speed and profitability.

The implementation of blockchain technology promises to improve productivity and profit margins in the commodities mining industry. As we identified in our last article, the implementation of blockchain-based systems will soon impact every level of the commodity supply chain. One of the key ways to improve productivity and minimise loss is by improving the accuracy and reliability of logistics systems. At The Enegra Group, we are directly involved with assisting mine logistics in Indonesia and developments in this sector are of particular interest to us.

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Global logistics operations are estimated to be worth a staggering USD $8.1 trillion annually and this figure is expected to double within the next three years. This lucrative industry suffers from losses associated with inefficiency, theft, middlemen, cyber-attacks and product degradation. Lost or stolen cargo is believed to cost the marine shipping industry up to $50 billion a year and the same problems impact commodity mining supplies. Innovative implementations of blockchain technology are now set to improve profits and reduce risks across the industry. …

From mine operations to commodity financing, the blockchain will improve how mining is managed.

The entire process of commodity management could soon be impacted by blockchain technology. As the industry begins to implement blockchains, opportunities are appearing which will change the commodities business from the mine operations to capital markets. New approaches to managing transactions will become feasible and open the industry to greater community participation.

Here at The Enegra Group, we engage with traditional mining operations but are also deeply invested in the blockchain ecosystem. We have tokenised 100% of our equity and believe in the benefits of blockchain implementation throughout the mining supply chain. …

A corporate profile.

The Enegra Group was founded in 2011 to deliver operational expertise to Southeast Asia’s commodity trading sector. The company’s operations have focused on trade financing assistance, commodities trading, coal sourcing and the management of coal off-take agreements.

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Enegra has negotiated long-term coal supply agreements within Indonesia for up to 60 million tonnes per year. Many of these agreements have terms of 20 years or until the end of the mine’s lifespan. Coal is the largest contributor to Indonesia’s energy grid and delivers around 60% of the nation’s power production. …

Intelligent positioning should cement Indonesia’s role in global industry.

Indonesia contains an abundance of natural and human resources that have drawn traders to the archipelago for hundreds of years. Technological developments are creating new opportunities for the country allowing it to capitalise on its abundant mineral resources. Indonesia is gearing up to position itself not only as a supplier of raw materials but also as a key producer of smart technologies. The intention is to develop industries which will draw revenue into the country.

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Parts of Indonesia used to be known as the Spice Islands and would attract traders from around the world to their supply of precious spices. Today Indonesia sits on mineral reserves that play a vital role in a number of developing global technologies. …

The growth of the global electric vehicle industry presents opportunities and challenges for Indonesia.

Tesla has revolutionised the ways in which we view and use electric vehicles. As we drive towards increasing sustainability in our transport industry a balance must be found between the environmental impacts of transport and the sustainability of mineral mining operations. As legislation is being formed there are now opportunities to address the challenges in this new industry.

It is evident that Indonesia will play a pivotal role in this process due to its extensive mineral deposits and sustainability in mining operations will require cooperation from both industry and regulators. …


Matthew Averay

Managing Director of Enegra Group Ltd, a commodity trading company based in South East Asia

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