Indonesia's Seafood Export Regulations: Navigating Policy Uncertainty in Agri-Food Supply Chains

The Indonesian government's 2025 regulatory overhaul of its seafood export sector has created a seismic shift in how investors and businesses approach capital allocation and supply chain management. At the heart of this transformation is Government Regulation No. 8 of 2025 (GR 8/2025), which mandates a 100% onshoring requirement for export proceeds from fisheries and other natural resource sectors, retaining funds in the Indonesian banking system for 12 months, according to a JDSupra analysis. This policy, a stark departure from the previous 30% retention rule under GR 36 of 2023, has introduced significant liquidity constraints and operational complexities for exporters, reshaping investment dynamics in the agri-food sector.

Policy Uncertainty and Liquidity Constraints

The 100% onshoring rule has forced companies to rethink their financial strategies. For instance, PT Bumi Resources, a major player in the sector, has flagged temporary liquidity risks as delayed access to foreign exchange proceeds limits reinvestment capacity, according to a Lexology note. Exporters now face a 12-month lock-in period for earnings, which contrasts sharply with the prior three-month requirement. This has led to a surge in discussions between businesses and lenders to restructure financing terms, with banks adjusting to accept onshore accounts as collateral, according to an Ashurst analysis.

The Ministry of Trade's Regulation No. 9 of 2025 further complicates matters by tightening export licensing timelines, adding administrative burdens, as noted in an Arma Law update. These changes have created a climate of uncertainty, prompting some firms to delay expansion plans or pivot to domestic sales to mitigate cash flow pressures. For example, small-to-medium enterprises (SMEs) with export values below USD 250,000-exempt from the 100% rule-are increasingly prioritizing local markets, according to a SeafoodSource article.

Supply Chain Restructuring and Market Diversification

The regulatory environment has accelerated supply chain adjustments. With the U.S. imposing a 19% reciprocal tariff on Indonesian goods under President Trump's trade policies, companies are actively diversifying export destinations, according to SeafoodSource. The European Union (EU) has emerged as a key target, but meeting its stringent quality and traceability standards-such as HACCP certification-requires significant investment in processing infrastructure, as noted by Lexology.

This shift is evident in the data: Indonesia's fisheries exports to the EU reached $350 million in the first ten months of 2024, but volume growth remains constrained by compliance hurdles, according to a DFW report. Meanwhile, shrimp exports saw a modest 2% year-over-year increase in Q3 2024, reflecting the sector's struggle to balance regulatory compliance with global demand fluctuations, DFW reports.

FDI Trends and Agritech Adaptation

Despite regulatory headwinds, Indonesia's agri-food sector has attracted foreign investment, driven by agritech innovations. Platforms like TaniHub and eFishery have leveraged digital infrastructure to streamline supply chains, contributing to a 10.52% growth in the agriculture sector in Q1 2025, according to Market Research Indonesia. However, FDI flows to developing countries, including Indonesia, declined by 7% in 2023, partly due to geopolitical tensions and reduced international project finance, SeafoodSource reports.

The government's push for biofuel mandates (e.g., B35 and B40) adds another layer of complexity, as agri-food companies must align with sustainability goals while navigating export restrictions, as JDSupra notes. This duality-balancing environmental targets with export competitiveness-has led to a rise in corporate restructuring cases, with 538 PKPU (debt restructuring) petitions filed in 2024, DFW reports.

Conclusion: Strategic Implications for Investors

Indonesia's regulatory landscape underscores the need for agile capital allocation strategies. Investors must weigh the long-term benefits of onshoring-such as strengthened foreign exchange reserves and rupiah stability-against short-term liquidity challenges, as noted by Lexology. For agri-food firms, diversifying markets, adopting digital tools, and engaging in policy dialogue with regulators will be critical to navigating uncertainty.

As implementing regulations from Bank Indonesia and the Ministry of Finance remain pending, according to an Orrick analysis, the sector's trajectory will depend on how swiftly stakeholders adapt to this evolving framework. For now, the message is clear: policy uncertainty is reshaping Indonesia's agri-food supply chains, and resilience lies in flexibility and innovation.