Last week, the nine fractions in Commission VII of the Indonesian parliament (DPR) approved Law No. 4 of the 2009 Mining Law (on Minerals and Coal Mining), which bans the export of unprocessed minerals, forcing miners to build (joint) smelters. The new law aims to increase the value of exports while reducing the country's dependence on raw commodities, thereby becoming less vulnerable to price downswings on the international commodities market.

The expected minerals trade deficit in 2014 and 2015 is expected to ease and change into a surplus by 2016 as more smelters start production from 2014 onward. Currently, 28 new smelters are under construction.

The export ban on raw minerals will also temporarily pressure the country's current account deficit. This deficit has been a big concern to most investors although eased from USD $9.8 billion in the second quarter of 2013 to USD $8.4 billion in the third quarter.

Further Reading:

Go-Ahead for Indonesia's Controversial Ban on Unprocessed Mineral Exports
Indonesia's Current Account Balance Improved in Q3-2013
Indonesia's October 2013 Trade Surplus Provides a Glimmer of Hope