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
Surging global oil prices and tightening domestic fuel supplies have thrust Indonesia’s long-running electrification agenda back into the spotlight. Policymakers are increasingly portraying the shift, especially in the motorcycle sector, as the most practical and immediate way to curb fuel consumption. As part of this, the government is raising targets for its electric motorcycle conversion program, aiming to gradually electrify more than 120 million gasoline-powered motorcycles nationwide.
Energy and Mineral Resources Minister Bahlil Lahadalia explains that the government plans to significantly accelerate the fuel-to-electric motorcycle conversion program, also known as the retrofit program, to approximately 6 million units per year, a sharp increase from the current annual target of about 200,000 units. The expansion, he noted, is supported by advances in conversion technology that make large-scale implementation more feasible.
To support the accelerated rollout, the government has established a dedicated energy transition task force to coordinate implementation across ministries and agencies. The task force is expected to speed up the conversion of Indonesia’s conventional motorcycle fleet, which is estimated at around 120 million units.
The urgency behind this policy shift is underscored by the severity of the current fuel situation. Global oil prices have surged above US$100 per barrel, driven by the United States-Israeli war with Iran. This has prompted the government to consider demand-side measures to contain consumption and ease supply pressures.
Electrifying motorcycles, which remain the dominant mode of transport in Indonesia, is one of the key measures under consideration. At the same time, the government is also exploring more aggressive steps, including the possible reintroduction of nationwide work from home (WFH) arrangements to temporarily reduce fuel demand.
The oil shock has also revived scrutiny of earlier initiatives such as the Agrinas program, which aimed to import trucks and other vehicles to support the rollout of Red and White Cooperatives (KMP) across regions. Conceived prior to the recent spike in oil prices, the KMP program was designed to strengthen logistics and distribution networks at the grassroots level, with plans involving large-scale procurement of vehicles to support cooperative activities nationwide. In the current context of elevated fuel costs, however, the program’s reliance on conventional vehicles raises new questions about its economic and energy efficiency.
The situation also casts uncertainty over other automotive ambitions, including the long-discussed national car (Mobnas) initiative. While the project has been framed as part of Indonesia’s industrial and technological advancement, its direction remains unclear, particularly as the government has yet to specify whether the vehicle will be developed as an electric model in line with its broader energy transition goals or continue to rely on conventional internal combustion engine technology.
The last substantive update on the initiative dates back to last year, when state-owned defense manufacturer PT Pindad was tasked with leading the design and development of the national car. Beyond that mandate, however, little detail has emerged regarding the project’s technical specifications, production timeline or potential partners.
