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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The administration of Prabowo Subianto is reforming the disbursement of fuel and electricity subsidies to improve state budget efficiency. These subsidies have long been criticized for disproportionately benefiting upper-middle-class households, who consume more energy, rather than the poor and vulnerable groups they are intended to support. As a result, the government now aims to better target subsidy distribution and reduce its long-standing fiscal burden. The urgency to optimize subsidy spending has also grown amid rising expenditures for several major government programs.
Finance Minister Purbaya Yudhi Sadewa outlined the subsidy reform plan during a joint working meeting with state asset fund Daya Anagata Nusantara (Danantara) and House of Representatives Commission XI on Dec. 4. He acknowledged that the well-off, and even the ultra-wealthy, remain among the beneficiaries of energy subsidies. The reform aims to significantly reduce access for households in income deciles 8–10, redirecting support toward lower-income groups in deciles 1–4.
According to the National Integrated Social Economic Data (DTSEN), income deciles 1–5 cover individuals from extreme poverty to the middle-income bracket, while deciles 6–10 range from middle- to upper-income levels. The Finance Ministry has been given six months to finalize the subsidy distribution strategy, with the entire policy reform design expected to be completed jointly with Danantara within two years. Meanwhile, the Energy and Mineral Resources Ministry revealed that the reform will cover subsidies for liquefied petroleum gas (LPG) and electricity.
The subsidy reform will be formalized through a new presidential regulation (Perpres) that amends existing frameworks, including Perpres No. 117/2021, the third revision of Perpres No. 191/2014 on fuel provision, distribution and retail pricing, and Perpres No. 70/2023, which updates Perpres No. 104/2007 on the provision, distribution and pricing of 3-kilogram LPG cylinders.
On the financial administration side, the Finance Ministry has issued Ministerial Regulation No. 73/2025 on the provision, calculation, payment and accountability for compensation funds related to fuel pricing and electricity tariffs. Previously, compensation to Pertamina and PLN was disbursed quarterly or even semi-annually. Under articles 8 and 11 of the new regulation, Pertamina and PLN may now receive up to 70 percent of their compensation for subsidized fuel and household electricity tariffs following a monthly review by the Finance Ministry's Inspector General. The remaining portion will be disbursed after an annual audit by the Development Finance Comptroller (BPKP), as stipulated under Article 28. The initial compensation portion may also be adjusted based on overall budget conditions or previous audit findings from the Supreme Audit Agency (BPK).
Danantara CEO Rosan Perkasa Roeslani emphasized that energy subsidy reform would improve the cash flow of state-owned enterprises (SOEs) tasked with public service obligations. He noted that previous cooperation between Danantara and the Finance Ministry in shifting fertilizer subsidies toward a more market-based mechanism had progressed well.
As of October, realized government spending on subsidies reached Rp 314.9 trillion (US$18.91 billion), or 66.3 percent of the 2025 state budget allocation. This includes Rp 194.9 trillion in subsidies and Rp 120 trillion in compensation payments. Distribution of subsidized fuel reached 13,915 kiloliters (kL), or 72 percent of the 19,410 kL target; subsidized 3-kg LPG distribution reached 6.35 million kg (78 percent of the target); and electricity subsidies reached 42.5 million consumers, exceeding the target of 41.3 million.
Energy subsidy reform is necessary given the fiscal burden it imposes and the resulting constraints on priority government programs. However, overly aggressive cuts, an inherent risk amid current austerity, could have negative social impacts, weaken consumer spending and dampen economic growth. The government should explore ways to curb subsidy spending without introducing additional bureaucratic costs.
