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
The administration of President Prabowo Subianto has issued Presidential Regulation (Perpres) No. 26/2026, which expands the role of public service agencies (BLU) in energy imports, blurring the traditional boundaries between government agencies, state-owned enterprises (SOEs) and private sector players. While the new regulation appears intended to strengthen Indonesia’s energy security amid growing global uncertainties, it could create overlapping responsibilities, increase operational risks and expose the country to greater geopolitical pressures.
Article 2 of the Perpres states that the regulation’s aim is to maintain good governance in the procurement of crude oil, fuel oil (BBM) and liquefied petroleum gas (LPG), whether sourced domestically or imported. It also seeks to improve the continuity, reliability and resilience of the national energy supply.
Under Article 4, imports of oil and gas products, including gasoline and LPG, may be conducted through agreements between Indonesia and foreign governments, cooperation between the government and foreign energy producers or partnerships between domestic energy companies and overseas suppliers, subject to certain restrictions.
Article 4 further stipulates that imports under bilateral cooperation schemes may be executed either by energy SOEs such as Pertamina or by the Oil and Gas Testing Center (Lemigas) of the Energy and Mineral Resources Ministry. It also authorizes the government to direct Lemigas to import oil and gas products to support strategic energy reserves and operational stockpiles.
During emergencies, Article 5 allows Lemigas and energy SOEs to independently procure oil and gas if domestic supplies are disrupted by geopolitical developments, price surges due to supply fluctuations or domestic reserves fall below established thresholds. The article also permits import contracts to include price differences based on volume, product type, country of origin and delivery schedules.
Meanwhile, Article 9 allows Lemigas, energy SOEs and private energy companies to import oil and gas products for storing in Free Trade and Free Port Zones (KPBPB) such as Batam or at bonded logistics centers (PLB). These facilities provide logistics and storage services while allowing deferred payment of selected duties, taxes and excise.
Granting Lemigas the authority to import oil and gas products marks a significant departure from the center’s traditional role. Historically, Lemigas has focused on research, certification, consulting, field surveys and testing services for the oil and gas industry.
The energy ministry says this expanded authority is intended to facilitate government-to-government (G2G) energy transactions, including potential agreements with Russia that could involve as much as 150 million barrels of crude oil.
Economists have argued that the new regulation risks creating overlapping procurement responsibilities between Pertamina and Lemigas, now designated as a public service agency. Assigning a commercial function outside the center’s core expertise could increase the risk of execution failures, complicate coordination in oil and gas procurement and distract Lemigas from its primary functions of research and testing.
Industry players have also suggested that granting import authority to Lemigas may serve as a way to bypass certain procurement restrictions Pertamina faces. The state-owned energy giant previously issued global bonds in the United States that restrict its involvement in illicit oil transactions, including purchases from countries such as Russia that are subject to sanctions by the US and its allies.
The energy ministry has acknowledged that facilitating such transactions is among the considerations behind the policy.
Meanwhile, National Energy Council (DEN) member Muhammad Kholid said the oil and gas that Lemigas imported could be stored at SOE-owned facilities, including those operated by Pertamina subsidiary PT Pertamina Patra Niaga or private energy companies. However, Kholid encouraged Lemigas to prioritize facilities run by SOEs, arguing that storage costs could be minimized through adjustments to asset use arrangements approved by the Finance Ministry.
Allowing Lemigas to import oil and gas products reflects the government’s concern over potential energy supply disruptions amid the country’s continuing dependence on fossil fuels. However, this policy should have been introduced earlier and tested through Pertamina before actually authorizing an institution with limited experience in commercial procurement.
Moreover, facilitating transactions involving sanctioned producers risks drawing needless scrutiny from Washington and its allies. It may also create a perception of foreign policy inconsistency following the significant concessions in Indonesia recently extended to the US.
