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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.
View moreAgriculture
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.
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With little fanfare, Indonesia’s labor movement has joined President Prabowo Subianto ’s big coalition government, giving it an inside track in the corridors of power to fight for its interests. Although some might argue that it has been co-opted to blunt the movement.
On May 1, Prabowo joined a huge labor rally at the National Monument (Monas) Square opposite the Presidential Palace complex in Central Jakarta, and top union leaders happily embraced him on stage. A week earlier, the President recruited prominent labor activist Muhammad Jumhur Hidayat to his cabinet, though as minister for the environment rather than for labor.
Labor is the missing piece in Prabowo’s big tent coalition government comprising not only most of the political parties, but also major special interest groups, particularly business, Islam, the police and the Indonesian Military (TNI). Time will tell whether joining the coalition means more leverage for the labor movement, or simply co-option.
May 1 is now celebrated in Indonesia as a national holiday and a time for labor unions to show their teeth by holding rallies throughout the country. The one at Monas, attended by hundreds of thousands, was the largest, though not the only one that took place that day.
If past presidents avoided May Day rallies, Prabowo has embraced them. He joined leaders from more than 20 unions on stage and even seen sang some of the Indonesian words to “L’Internationale”, the anthem of the global labor movement. He chanted “Long live labor, long live Indonesia!”, and raised his fist in solidarity with workers.
He took off his safari shirt and threw it to the crowd, and when reduced to a black undershirt, spent the next 15 minutes hugging and shaking hands with the crowd. The workers responded in kind while the song “Kowe Cen Istimewa” (Javanese for “You Are Special”) played in the background. He gave out t-shirts to celebrate Labor Day with the inscription “For you my country, our body and soul” produced by the Palace.
Prabowo has delivered on some of his promises. The bill on the protection of domestic workers, a promise he made at last year’s May Day rally, was endorsed by the House of Representatives in April. In November, he named Marsinah, a woman labor activist murdered by the TNI in 1993, a national hero. On May 1, as a Labor Day gift, he issued a presidential regulation limiting online companies that run ride-hailing services to 8 percent in commission, instead of the going rate of 20 percent, making sure that riders get 92 percent of their fares.
It is too early to conclude that Prabowo is a “pro-labor” president, as against the “pro-business” label given to past presidents. His cabinet is still staffed by many business types.
The former Army general has departed from the TNI tradition of viewing labor with suspicion, as representing the communist ideology. The government only recognized May 1 as Labor Day, and made it a national holiday, in 2013.
The labor movement in Indonesia politically remains small and weak, a reason why past presidents could afford to ignore it or gave only token participation in their governments. The movement has suffered from low unionization rates and fragmentation into groups that often compete against one another.
Statistics Indonesia (BPS) says the size of Indonesia’s workforce was 155 million out of a working-age population of 220 million as of February. Estimates of how many workers are members of labor unions range between 4 and 13 percent. The Manpower Ministry says there are 21 labor confederations, 198 federations and more than 12,000 union shops. The bulk of Indonesian workers, more than 60 percent, are in the informal sector, and not covered by unions.
The ineffectiveness of the labor movement was grossly exposed when the government of president Joko “Jokowi” Widodo swiftly pushed the Job Creation Law through the House in 2023, with little opposition from labor. Despite its name, the legislation is designed to give more concessions to investors, often at labor’s expense.
Several unions have elevated themselves into political parties, but they never got far in elections. Labor is simply not popular among voters.
Their fragmentation means that not all labor groups have joined the Prabowo administration. On May 1, several groups organized a separate rally in Jakarta outside the Senayan Legislative Complex in Central Jakarta to press their demands, including repealing the Job Creation Law, ending outsourcing and better protection for workers who are laid off.
With reports of more companies planning to lay off workers, embracing the labor movement may be not such a bad idea for President Prabowo.
