Sector
Agriculture
Indonesia, with its archipelago of volcanic soil and plentiful rainfall, offers a natural abundance that sustains the nation and plays a crucial role in its economic prosperity. One of the country’s leading sectors is agriculture, supporting the livelihoods of millions and making a significant contribution to Indonesia’s Gross Domestic Product (GDP). From rice paddies to coffee plantations, this diverse range of crops reflects the country’s unique geography and climate, making it a powerhouse in the global agricultural market.
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Agriculture
Indonesia, with its archipelago of volcanic soil and plentiful rainfall, offers a natural abundance that sustains the nation and plays a crucial role in its economic prosperity. One of the country’s leading sectors is agriculture, supporting the livelihoods of millions and making a significant contribution to Indonesia’s Gross Domestic Product (GDP). From rice paddies to coffee plantations, this diverse range of crops reflects the country’s unique geography and climate, making it a powerhouse in the global agricultural market.
In 2022, Indonesia’s agricultural sector generated approximately Rp2.4 quadrillion in GDP. This sector alone accounts for 12.4 percent of the country’s GDP, underlining its importance to the national economy. The following year, the country experienced a steady growth rate of 1.3 percent in this sector.
Agriculture serves as a key sector for the national economy in various Indonesian provinces, including Aceh, North Sumatra, West Sumatra, Riau, Jambi, Bengkulu, and South Sumatra. Additionally, the provinces of Lampung, Bangka Belitung, West Java, Central Java, East Java, and West Kalimantan, among others, also consider agriculture as a key sector.
This sector offers a rich variety of commodities, including paddy, corn, soybean, sweet potato, and cassava – all staple commodities that play a vital role in sustaining Indonesia’s food supply. Additionally, crops such as cocoa, coconut, coffee, and palm oil are essential for export income and providing job opportunities. In terms of employment, the agriculture sector employs nearly 28 percent of the country’s workforce.
The country’s agricultural sector has also attracted significant foreign investment in 2023, with roughly US$2 billion in direct contributions. With this sector helping sustain Indonesia’s food supply, the country’s paddy production statistics that same year indicate that roughly 10.2 million hectares of land were harvested, yielding an estimated 56.63 million tons of dried unhusked rice (GKG). Once processed for consumption, this translates to approximately 30.9 million tons of rice available for the population.
In a move to strengthen its agricultural foothold within Southeast Asia, Indonesia seeks to expand cooperation with Vietnam in both agriculture and aquaculture. Indonesia and Vietnam are forging a partnership to modernize their agriculture and aquaculture industries. This collaboration will leverage digitalization for improved efficiency and invest in research and development to enhance the quality and global competitiveness of their agricultural and fishery products.
Latest News
Morgan Stanley Capital International (MSCI) has temporarily frozen Indonesia’s February market status review and warned of a potential downgrade from Emerging Market to Frontier Market, citing persistent structural and governance weaknesses in the equity market. Key concerns include opaque ownership structures, limited disclosure of ultimate beneficial owners, and significant price distortions in several heavily weighted stocks, particularly conglomerate- and state-owned enterprise-linked names, which have pushed the Jakarta Composite Index (JCI) higher without corresponding improvements in fundamentals.
MSCI has also pointed to weak enforcement against market manipulation and coordinated price formation, which it views as undermining market integrity and investability.
The announcement immediately rattled markets. After MSCI froze rebalancing due to investability concerns, the JCI plunged 7.35 percent to close at 8,320.56 on Jan. 28, falling well below the 8,880–8,780 support range ahead of the market open. In response, the Indonesia Stock Exchange (IDX) and the Financial Services Authority (OJK) stressed their ongoing coordination with MSCI, highlighting steps to improve transparency, including the publication of more comprehensive free-float data and continued engagement to address MSCI’s feedback rather than dismiss it.
Concerns over price manipulation are not new to policymakers. In October 2025, Finance Minister Purbaya Yudhi Sadewa announced that the government was intensifying efforts to crack down on and prosecute individuals involved in market manipulation, commonly referred to as “pump-and-dump” schemes. At the time, the IDX requested fiscal incentives to support the market, but Purbaya declined to grant them immediately, arguing that incentives should only follow a cleanup of manipulative practices to ensure adequate protection for retail investors.
The stakes are high. MSCI is a global index provider whose country classifications, developed, emerging, or frontier, serve as benchmarks for trillions of dollars in active and passive investment funds worldwide. Indonesia’s inclusion in the MSCI Emerging Markets Index determines its eligibility for investment by a large pool of institutional investors whose mandates are strictly tied to that classification.
The MSCI episode has, unsurprisingly, intensified a growing perception among market participants that Indonesia’s financial watchdog has failed to keep pace with the mounting structural risks in the equity market. For years, foreign investors have raised concerns over selective enforcement, tolerance of extreme price movements in illiquid stocks, and the absence of credible deterrents against coordinated trading and insider-driven speculation.
MSCI’s explicit reference to weak enforcement and price distortions has now effectively elevated these critiques to the international stage, lending them far greater weight than domestic complaints from analysts or minority shareholders.
These concerns have been further amplified by the recent decision of OJK chief commissioner Mahendra Siregar to step down, with rumors from investors circulating that Mahendra had not been prepared to manage the capital market.
