Sector
Trading
Indonesia, a developing country rich in natural resources and boasting the 4th largest population in the world, maintains an extensive trade presence. In 2023, the national trade balance reached US$480.7 billion, having grown significantly compared to the pre-pandemic period in 2019, when it stood at US$338.96 billion. Moreover, as of March 2024, the country has officially recorded a trade balance surplus for its 47th consecutive month.
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Trading
Indonesia, a developing country rich in natural resources and boasting the 4th largest population in the world, maintains an extensive trade presence. In 2023, the national trade balance reached US$480.7 billion, having grown significantly compared to the pre-pandemic period in 2019, when it stood at US$338.96 billion. Moreover, as of March 2024, the country has officially recorded a trade balance surplus for its 47th consecutive month.
In terms of exports, Indonesia’s top export commodity has historically been mineral-based fuels, especially coal. However, in the global market, Indonesia is a superpower in the exports of vegetable oils, particularly palm oil, having captured roughly 20 percent of the market with a total export value of US$35.2 billion in 2022. Behind that, Indonesia also leads in nickel exports, with a total export value reaching US$5.8 trillion or 14 percent of global exports.
In 2023, China emerged as Indonesia’s top partner for both exports and imports, with a total annual value of US$62.3 billion and US$62.2 billion, respectively. Meanwhile, the nation’s next top export destination is the US, with a total annual value of US$ 23.2 billion, while the next top import country of origin is Japan, with a total annual value of US$ 16.4 billion.
For trades on the level of individual consumers, the main driver of growth has been the rise in e-commerce throughout the past few years. E-commerce gross market value (GMV) grew by 20 percent from US$48 billion in 2021 to US$58 billion in 2022. This growth persisted to 2023, as e-commerce GMV grew by 7 percent to US$62 billion. E-commerce grew rapidly as it provided a means for Indonesian consumers to maintain access to goods and services during the pandemic period of 2020-2022. However, by the time the pandemic ended, e-commerce had grown ubiquitous and became a staple in the day-to-day lives of the average Indonesian.
Meanwhile, the domestic retail sector in Indonesia is driven by the sale of automotives. The retail of automotives alone in the country reached a gross domestic product (GDP) of US$174.35 billion in 2023, contributing to roughly 13.53 percent of Indonesia’s total GDP of US$1.3 trillion for that year at current market prices. Moreover, the country also achieved a per capita GDP of US$ 4,919.
Strong trade growth followed by increasing access to goods has bolstered local consumer confidence in Indonesia despite the period of uncertainty throughout 2023. According to Bank Indonesia’s monthly consumer confidence survey, Indonesians entered 2024 with high confidence, with the confidence index rising from 123.8 in December 2023 to 125.0 in January 2024. Moreover, this increase is even higher compared to same period the previous year, as a consumer confidence index of 123.0 was recorded for January 2023.
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Gold miner Agincourt Resources, part of diversified conglomerate Astra International, was recently given the go-ahead from the Environment Ministry and the Energy and Mineral Resources Ministry to resume operations at its Martabe gold mine in North Sumatra, following an earlier sanction over alleged environmental breaches. However, reports reveal that neither ministry had ever issued a decree to formally revoke Agincourt’s business permits.
To recap, Agincourt was among the 28 firms whose permits were revoked by the government following its probe into corporate actions linked to environmental damage that worsened the flooding and landslides in northern Sumatra last November, which killed at least 1,200 people. Another high-profile operator implicated in the case was North Sumatera Hydro Energy (NSHE), which operates the Batangtoru Hydroelectric Power Plant in South Tapanuli Regency, one of the worst-affected regions.
The government announced on Jan. 20 that it would revoke the license for Agincourt’s Martabe gold mine, but this decision soon encountered internal resistance. In February, energy ministry officials met with the forest area enforcement task force (Satgas PKH), which had been tasked with overseeing the permit revocation for the 28 firms. The ministry pushed back against the move, citing high risk of international arbitration and subsequent erosion of investor trust, as it could be interpreted as a contractual breach in relevant projects.
For Agincourt, which operates under a long-standing government contract, revoking the miner’s permits could expose the state to allegations that it had failed to uphold its own contractual commitments.
On the other hand, Satgas PKH argued that the firms had done measurable harm to the environment, highlighting that the work contracts of international companies would be deemed null if they were similarly found guilty of criminal activities.
As the talks stalled, the energy ministry offered a compromise: Agincourt and NHSE would be allowed to keep their licenses if they paid for the environmental damage. This arrangement was accepted and Agincourt fined Rp 200.9 billion (US$11.84 million) over environmental damage, while NHSE was fined Rp 200.6 billion. The two companies must also pay restoration costs.
Underlying this back-and-forth, however, is a more fundamental issue: the reactionary nature of the initial law enforcement effort. While both sides presented valid arguments, whether centered on contractual certainty or environmental accountability, the process appears to have been inverted. The push to revoke licenses came first, while the effort to substantiate environmental violations only gained momentum well after the alleged damage had occurred.
This raises a broader question about the effectiveness of enforcement mechanisms. It is reasonable to expect companies to operate within clear environmental and legal boundaries and that they be held accountable when those boundaries are crossed. Yet in cases such as this, there is an absence of clearly defined thresholds, leaving room for actions that may appear abrupt or disproportionate.
This inverted sequence has become a focal point of criticism, as the regulatory response comes off as reactionary, possibly driven by political motivations. This is especially so because on Jan. 28, Danantara COO Dony Oskaria said the state asset fund would take over management of the Martabe gold mine once its license had been revoked. As things stand, that scenario is unlikely to occur.
