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
President Prabowo Subianto ’s administration has begun feeling the pressure of the global energy crisis, with state-owned energy company Pertamina raising prices for several unsubsidized fuel and liquefied petroleum gas (LPG) products. The move appears necessary to protect fiscal stability and Pertamina’s operations amid supply disruptions caused by the United States-Israeli war on Iran.
The US-Iran conflict has driven a sharp increase in global crude oil prices. West Texas Intermediate (WTI) crude futures rose from $67.02 per barrel on Feb. 27 to $112.95 per barrel on April 7. Both benchmarks declined following a ceasefire on April 8, with Brent and WTI falling to $94.75 and $94.41 per barrel, respectively. Meanwhile, according to the Energy and Mineral Resource (ESDM) Ministry, the Indonesia Crude Price (ICP) surged from US$68.79 per barrel in February to $102.26 per barrel in March, reflecting movements in global crude futures. From a pre-war level of $72.48 per barrel on Feb. 27, Brent Crude futures climbed to $118.35 per barrel on March 31.
Accordingly, PT Pertamina Patra Niaga, a subsidiary of state-owned energy company Pertamina, announced on April 18 that it would adjust prices for Pertamax Turbo, Pertamina’s research octane number (RON) 98 gasoline, as well as Dex and Dexlite, Pertamina’s cetane number (CN) 53 and CN 51 diesel products. The price of Pertamax Turbo increased from Rp 13,100 (US 76 cents) per liter to Rp 19,400 per liter. Dex rose from Rp 14,500 per liter to Rp 23,900 per liter, while Dexlite increased from Rp 14,200 per liter to Rp 23,600 per liter.
Pertamina Patra Niaga also raised prices for unsubsidized 12-kilogram LPG cylinders in Java, Bali and West Nusa Tenggara from Rp 192,000 to Rp 228,000 per cylinder, marking the first increase since 2023. Meanwhile, prices for unsubsidized 5.5-kg LPG cylinders in the same regions rose from Rp 90,000 to Rp 107,000 per cylinder. Prices in other regions will be adjusted based on distribution costs.
The ESDM Ministry reiterated the government’s commitment to maintain subsidized fuel prices until the end of 2026. However, it also acknowledged that a second phase of price hikes for other unsubsidized fuel and gas products may be necessary if crude prices remain elevated.
The Finance Ministry stated that maintaining fuel subsidies remains possible through budget reallocations from ministries and agencies, as well as the projected 2.9 percent fiscal deficit. The ministry also noted that the government has Rp 490 trillion in excess budget balances from the previous fiscal year that could serve as a buffer. According to its calculations, these reallocations would be sufficient to sustain fuel subsidies if crude prices average around US$100 per barrel in 2026.
However, that assumption remains risky. The 2026 state budget is based on an average crude oil price of just $70 per barrel, while state-owned Bank Mandiri estimates that every $1 increase in crude prices would add roughly Rp 10.3 trillion in energy subsidy and compensation costs. By comparison, every $1 increase in crude prices would generate only Rp 3.5 trillion in additional tax and royalty revenues. The government’s reluctance to raise subsidized fuel prices also reflects inflation concerns. For instance, every Rp 1 increase in the price of subsidized RON 90 Pertalite could raise inflation by 0.27 percentage points.
Pertamina’s decision to raise prices for selected unsubsidized fuel products appears unavoidable given the pressure on downstream operations. However, if the company is forced to raise prices across all unsubsidized products, inflationary pressure could intensify while increasing the fiscal burden as consumers shift to subsidized alternatives. With no clear end to the US-Iran standoff, broader fuel price hikes may ultimately become unavoidable.
