After a 20-year hiatus, Indonesia has once again opened the gates for sea sand exports. The announcement, made by Trade Minister Zulkifli Hasan, brings into effect Regulation No. 20 of 2024 and Regulation No. 21 of 2024, marking the official restart of sea sand exports. This move offers a fresh opportunity for investors and exporters but has also faced significant backlash and criticism from various quarters.

Previously banned since 2004 due to environmental concerns and the potential damage to coastal ecosystems, sea sand is now a legal commodity for international trade. This development, revealed in August 2024, has been met with enthusiasm from industry players, entrepreneurs, and target countries.

President Joko Widodo initially lifted the export ban through Government Regulation No. 26 of 2023, which was enacted in May 2023. It took a year for the Ministry of Trade to formalize the regulations that now make sea sand exports legal once again in Indonesia.

With the reopening of sea sand exports, new opportunities arise for Indonesian businesses. Companies involved in mining, processing, and exporting sea sand can now expand their markets and boost their revenue. This could also create new jobs in related sectors and attract foreign investment.

For importing countries, especially in Southeast Asia and the Middle East facing sea sand shortages, Indonesia provides a much-needed solution. Indonesian sea sand is known for its high quality and meets international standards for various industrial applications.

Historical Context of Indonesia’s Sea Sand Exports

Indonesia’s sea sand export history dates back to the 1970s, initially serving Singapore’s needs. However, President Megawati Soekarnoputri halted these exports in 2003 due to environmental concerns.

According to Tempo magazine’s report on June 11, 2023, the Ministry of Industry and Trade at that time recorded daily sea sand exports reaching 2 million cubic meters, with only 900,000 cubic meters being legal. This led to an estimated annual loss of 330 million USD for the government.

President Megawati’s decision was driven by the need to prevent environmental degradation and the submergence of small islands due to sand dredging.

In recent years, calls to resume sea sand exports resurfaced during President Jokowi’s first term. Herry Tousa, Chairman of the Sea Sand Entrepreneurs Association (APPL), was among those advocating for the revival of this policy, citing the stagnation of many sea sand mining licenses.

The idea of resuming sea sand exports was included in the Job Creation Law. Its derivative regulations, PP No. 5 of 2021 on Risk-Based Business Licensing, effective February 2, 2021, identified sea sand utilization as a business activity under marine spatial management based on risk analysis.

Jokowi’s Government Regulation No. 26 of 2023 modified the export ban, and two Trade Ministerial Regulations were introduced as legal extensions of this policy.

Beneficiaries of Indonesia’s Sea Sand Exports

The policy has been welcomed by both local and international business entities. Economists predict that Singapore will be the biggest beneficiary of Jokowi’s sea sand export policy. Before the ban, Indonesia was Singapore’s primary sea sand supplier, averaging over 53 million tons per year between 1997 and 2002.

Andry Satrio Nugroho, Head of the INDEF Center for Industry, Trade, and Investment, speculates that Singapore may have lobbied for the reopening of Indonesia’s sea sand exports.

He notes that this policy could potentially reduce Indonesia’s territorial area and increase Singapore’s land area.

“The primary beneficiary here is Singapore, as they are the main importer of sea sand,” Andry said, as quoted from CNN Indonesia.

The government has detailed the specifications for sea sand exports. According to the regulations, exportable sea sand must meet specific criteria, including grain sizes and chemical composition.

Strong Opposition from Various Sectors

The decision to resume sea sand exports has faced strong opposition. Marine expert Rignola Djamaludin from Sam Ratulangi University warned of permanent damage from large-scale dredging, including habitat destruction, coastal erosion, loss of small islands, and threats to fishermen’s livelihoods.

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Dani Setiawan, Chairman of the Indonesian Traditional Fishermen’s Union (KNTI), criticized the policy as a brutal effort by the government to increase state revenue through the exploitation of marine resources, benefiting foreign companies more than local fishermen.

“This policy favors large-scale commercial interests over traditional fishermen and could disrupt marine ecosystems and fishing areas,” Dani told Pro 3 RRI.

Clarification from the Government

In response to the criticism, President Jokowi clarified that the government is only exporting sediment, not sea sand per se. The sediment, he explained, includes material obstructing ship navigation.

“Once again, it’s not sea sand being exported but sediment that disrupts ship pathways. Sediment is different from sea sand, even though it may look similar,” Jokowi stated at Danareksa Building on September 17, 2024.

Additionally, Isy Karim, Director-General of Foreign Trade at the Ministry of Trade, emphasized that sea sand exports are permitted only if domestic needs are met and regulations are adhered to.

Minister of Marine Affairs and Fisheries Sakti Wahyu Trenggono highlighted that domestic reclamation needs are significant, but the use of sea sand has been environmentally damaging, leading to the regulation of sediment use instead.

Minister of Maritime Affairs and Investment Luhut Binsar Pandjaitan also expressed confidence that the policy will not harm the environment. He argued that sea sand exports could support economic activities and industries, particularly in deepening shipping lanes.

Despite the backlash, Indonesia’s decision to resume sea sand exports represents a strategic move with significant economic potential and new business opportunities. However, this comes with the responsibility to ensure sustainable mining practices and environmental protection.

Effective regulation and collaboration among government, businesses, and communities are essential to balancing economic benefits with environmental sustainability. If you’re considering exploring business opportunities in Indonesia or need assistance with licensing, Bizindo is here to help. We offer professional services for licensing, visa processing, and company establishment in Indonesia. With our support, you can focus on your business development without administrative concerns. Contact us today at www.bizindo.com for more information!