Sector

Mining
Indonesia, a country rich in natural resources, boasts a mining sector that is undeniably one of its leading sectors. With vast reserves of mineral and non-mineral mining resources, the country stands as a global powerhouse in the mining industry. As of 2022, Indonesia’s mining industry contributed Rp2.3 quadrillion to the national GDP, accounting for 12.22 percent.
View more
Mining
Indonesia, a country rich in natural resources, boasts a mining sector that is undeniably one of its leading sectors. With vast reserves of mineral and non-mineral mining resources, the country stands as a global powerhouse in the mining industry. As of 2022, Indonesia’s mining industry contributed Rp2.3 quadrillion to the national GDP, accounting for 12.22 percent.
Mining flourishes across various regions of the country, each contributing to the nation’s economy. It is present in regions such as South Sumatra, Riau, Riau Islands, Bangka-Belitung, Central Kalimantan, East Kalimantan, South Kalimantan, and North Kalimantan. Additionally, mining is also prevalent in Southeast Sulawesi, Central Sulawesi, West Nusa Tenggara, North Maluku, Papua, and West Papua.
Indonesia’s wealth of mineral resources offers a wide variety of materials available for mining. From abundant reserves of gold, bauxite, tin, and copper concentrates to nickel ore, the country’s rich mineral resources signify significant potential for economic growth and development. In addition, Indonesia is also rich in coal mining, with its abundant coal reserves catering to the energy needs of both domestic and international markets.
The country's mining sector thrives on these resources. In 2023, mineral resources such as bauxite reached a production of 28 million tons, gold at 85 thousand kilograms, tin concentrate at 57 thousand metric tons, copper concentrate at 3 million metric tons, along with nickel ore at 98 million metric tons.3 Meanwhile, Indonesia’s coal production reached 775.2 million tons in 2023, almost double than ten years earlier when coal production stood at 421 million tons.
Additionally, Indonesia is home to oil and gas exploration and exploitation, although its output has been dwindling. Once an exporting country of oil and gas, Indonesia has transitioned into a net importer of these commodities since 2008 when consumption surpassed outputs, which stood at around 1 million barrels per day (bpd). In the first semester of 2023, Indonesia’s oil output stood at 615 bpd.
Subsequently, the government has worked hard to reverse the trend of falling oil output and has set a target to restore oil lifting to 1 million bpd in 2030, alongside a gas production target of 12 billion standard cubic feet per day (BSCFD). As of January 2023, Indonesia’s documented oil reserves were 2.41 billion barrels, and its natural gas reserves stood at 35.5 trillion cubic feet.
As for investments, Indonesia secured US$30.3 billion for the energy and mining sector in 2023, marking an 11 percent increase from the previous year. That same year, the oil and gas sector led the way,
achieving US$15.6 billion in investments, followed by mineral and coal at US$7.46 billion, electricity at US$5.8 billion, and renewable energy at US$1.5 billion.
Latest News
The deal on tariffs between Indonesia and the United States, as announced by President Donald Trump last week, has put Indonesia on the good side of Washington, shifting its position in the current big power rivalry away from China, at least momentarily.
For the last decade or so, Indonesia has been widely perceived to be leaning closer to China, some would say too close for comfort, that any shift away now would be welcomed in some quarters who are worried about Jakarta becoming too dependent, certainly economically, on the Asian giant that could undermine its claim to non-alignment.
When President Prabowo Subianto took over the helm in October, he further pushed Jakarta closer to Beijing, first by joining BRICS, an alliance of emerging economies that include China and Russia; and second, by making high-profile visits to Beijing and Moscow. He even had the audacity to turn down an invitation to attend the Group of Seven (G7) summit of Western major powers in Canada as a special guest in June, choosing to visit Russia instead.
In his posting on his Truth Social media on July 16, Trump said that following his phone conversation with Prabowo, the two had struck a “great deal” over tariffs. But now that more details of the agreement have emerged, as provided by the US government, Indonesia may have given away too much.
Responding to critics, Prabowo said he had the national interest in mind, including protecting jobs at home, in the negotiations with Trump. He also said he was safeguarding Indonesia’s non-alignment status by striking the deal.
The deal means Indonesian exports to the US will be subject to a 19 percent tariff while all US exports, which include goods and services, into Indonesia will face zero tariffs. Jakarta has also pledged to remove all non-tariff barriers for US imports and to spend huge sums on US-made planes, agricultural products, and energy.
The agreement followed intensive negotiations going back to April when Trump threatened to impose a 32 percent tariff on all Indonesian exports, the rate which he calculated was necessary to cut the huge trade deficit with Indonesia, estimated at over US$18 billion in 2024.
The government has yet to explain the implications for the economy, including job gains and losses, but officials said the deal was better than the 20 percent that Vietnam got. The Philippines got 19 percent during the visit of President Ferdinand Marcos Jr. to Washington on July 24. In Southeast Asia, only Singapore had the better deal, with 10 percent.
It is not clear from any statement from either the Indonesian or the US governments whether Trump will impose an additional 10 percent tariff on any country that joined BRICS, which has been campaigning to reform the US-dominated global financial system and to reduce international trade’s dependency on the US dollar.
Indonesia joined BRICS in January and Prabowo made his debut at the group’s summit in Brazil earlier this month.
Indonesia applied to join the Organisation for Economic Co-operation and Development (OECD), a grouping of primarily wealthy industrial countries, before its decision to join BRICS. But while admission to BRICS was automatic, at least for Indonesia, accession to the OECD must go through a lengthy process requiring the government to adjust some of its policies.
The US is Indonesia’s second-largest export market after China, and more importantly, the exports include footwear, textiles, and electronics that employ hundreds of thousands of workers, as well as semi-processed raw materials, including crude palm oil.
It remains to be seen whether or not the tariff deal will actually shift Indonesia’s position closer to the center between the US and China. Much depends on the realization of the agreements and their implementation.
Many had assumed before his October inauguration that, given his military background, Prabowo would shift Indonesia closer to the US. As defense minister in 2019-2024 under president Joko “Jokowi” Widodo, he saw Indonesia engaging in more security cooperation with the US than with China, putting the brake on Indonesia from tilting too far toward China.
But Prabowo had also been blacklisted from visiting the US because of the poor human rights record of the Army’s Special Forces, which he commanded in the 1990s. The ban was only lifted when he became defense minister in 2019.
Where Indonesia-US relations are heading will become clearer when Prabowo visits Trump in the White House, currently scheduled for September.