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 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.
Latest News
The new Labor Protection Law, approved by the House of Representatives on Oct. 6, promises stronger severance entitlements, tighter dismissal rules and greater employment security. But stronger legal protections mean little if employers circumvent restrictions on temporary employment or fail to pay compensation. The real test of the new law lies not in its promises but in whether its provisions translate into effective protection for workers when their livelihoods are most vulnerable.
The legislation moved from a House initiative to final approval in less than six weeks after formal deliberations began on Sept. 14. This compressed timetable enabled lawmakers to meet the Constitutional Court’s deadline but left little time for public scrutiny of its 313 articles. Consultations were held, but assessing their significance requires understanding how competing proposals were considered and incorporated.
Transparency over the agreed provisions is therefore essential. Pending access to the final text, government and union explanations provide a basis for assessing the reform’s direction, although its precise obligations and safeguards still require verification.
Manpower Minister Yassierli outlined 13 areas of reform covering employment protection, workforce development and enforcement. These include paid maternity and miscarriage leave, safeguards for workers with disabilities, a prohibition on withholding job applicants’ diplomas and protections for job seekers, trainees and apprentices. Other measures address flexible work arrangements, outsourcing at state-owned enterprises, competency certification, employment data and wage-setting institutions. Additional labor inspectors and a Labor Inspection Committee are intended to strengthen enforcement.
Across these reforms, two tests stand out: whether workers receive compensation when their employment ends and whether restrictions on temporary employment arrangements improve job security.
Severance protection brings the first test into focus. According to government explanations, the new law has removed a provision allowing severance payments to be reduced to half the prescribed amount. This strengthens workers’ financial entitlements, but a larger entitlement provides limited relief if payment remains uncertain.
The proposed severance reserve could address that gap by requiring funds to be set aside before dismissal occurs. Advance funding would reduce workers’ dependence on an employer’s financial condition at a time when its resources may already be depleted. It could also make employment costs more predictable for businesses by spreading funding obligations over time.
The reserve’s effectiveness, however, depends on its design. Contributions must reflect payment obligations, accumulated funds must be protected if an employer becomes insolvent, and workers need a clear mechanism for receiving timely payments. An accounting provision on a company’s balance sheet would not offer the same security as funds held separately and protected for workers.
Implementing regulations must establish how the reserve is funded, safeguarded and accessed, with consequences for employers that fail to contribute. They must also clarify how payments will be made when an employer disputes a dismissal or the amount owed. Otherwise, funds could be available while workers remain unable to access them.
Temporary employment presents a different challenge. Government and union explanations indicate that fixed-term contracts will be limited to four years and apprenticeships to six months. These limits could constrain prolonged temporary employment arrangements, but restricting the duration of individual contracts or placements does not necessarily change how employers fill permanent staffing needs.
