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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.
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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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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.
