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.

View more

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

November 11, 2026

The government plans to shift energy import procurement from Pertamina to the Oil and Gas Testing Center, or Lemigas, a public service agency (BLU) under the Energy and Mineral Resources Ministry. The move could reshape control over the country's lucrative energy trade. The government argues that direct negotiations with supplier countries will speed up procurement, eliminate intermediaries and secure supplies, but will the new arrangement bring greater transparency and a shorter supply chain or merely add another industry player?

Coordinating Downstream and Energy Transition Minister Bahlil Lahadalia, who is concurrently the energy minister, has cited Presidential Regulation (Perpres) No. 107/2026 as the basis for the change. Lemigas is to procure crude oil, fuel and liquefied petroleum gas through government-to-government (G2G) or government-to-business (G2B) agreements, then sell the supplies to Pertamina.

Pertamina president director Simon Aloysius Mantiri backs the policy. Bahlil has clarified that private importers will not be required to use Lemigas. Pertamina's infrastructure remains essential for receiving, processing and distributing the imports. Purchasing decisions must therefore match refinery requirements, storage capacity and delivery schedules. Separating authority over contracts from responsibility for delivery makes coordination more important as negotiations become faster.

The same distinction between contractual changes and practical benefits applies to Bahlil's promise to eliminate "shell companies”. Intermediaries that provide financing, logistics or access to suppliers perform a different role from entities that merely add fees or conceal who benefits.

Removing a company from a contract does not eliminate its functions or the costs of replacing them. The real test is whether Lemigas can secure those services on better terms. Disclosing supplier identities, beneficial owners, selection criteria and third-party fees would make that assessment possible.

Financing illustrates why these underlying arrangements matter. Bahlil has said procurement will not draw on the state budget, without identifying an alternative source of funds. Yet these commitments leave payment obligations unexplained.

If Pertamina finances the purchases, it could bear risks from contracts negotiated elsewhere. If commercial partners provide financing, their charges and conditions must be included in procurement costs. Who pays suppliers, approves financing terms and absorbs losses will determine whether cheaper cargoes actually translate into cheaper deliveries.

The timing also deserves scrutiny.

Signed on April 30, Perpres No. 26/2026 enabled Lemigas to undertake imports. Officials initially justified the arrangement as a workaround for Pertamina's bond covenants, which complicated purchases of sanctioned Russian crude.

Its first cargo, around 770,000 barrels, arrived in late June at Lawe-Lawe, East Kalimantan, aboard a sanctioned tanker. Less than six months later, the government introduced Perpres No. 107/2026 making Lemigas the default channel for Pertamina's imports, a trade worth US$32.8 billion last year.

Yet the government has not explained whether the initial purchase delivered savings or reduced sanctions exposure, and the regulation's text was publicly unavailable when the change was announced. An exception is being expanded without a public account of whether it worked.

Will Lemigas remove a layer from the supply chain or become a new one? The center has a background in research and testing, and industry practitioner Hadi Ismoyo has questioned its trading experience.

It will need commercial partners, yet Bahlil has neither identified the companies selected to develop storage facilities nor explained how they were chosen. Perpres No. 26/2026's provision on pricing flexibility during urgent procurement makes contract scrutiny particularly important.

Removing existing traders offers little assurance of savings if replacements enter through equally opaque arrangements. The core problems remain transparency and accountability.

The government should publish the Perpres, identify partners and selection criteria, benchmark landed costs and open transactions to audit. Otherwise, the reform risks changing intermediaries while adding another contractual layer.

The government has made a case for stronger bargaining power but has yet to establish why centralizing procurement in Lemigas is the best way to exercise this.

The ministerial agency’s expanded role must justify itself through lower total costs, reliable deliveries and decisions that withstand public scrutiny. Until those benefits are demonstrated, the clearest change is who controls the contracts.

Greater state control can strengthen energy security, but only if the power to choose suppliers comes with a clear obligation to account for the results.

Read more
Load more