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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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The government is currently revising the subsidy scheme for the sea toll program amid concerns that it has fallen short of its objectives. Introduced by the administration of President Joko “Jokowi” Widodo, the program aims to improve national logistics connectivity and narrow price disparities between Western and Eastern Indonesia, where goods have been traditionally more expensive than on Java. After nearly a decade of implementation, however, price gaps have barely shifted, raising questions about the effectiveness of the subsidy.
The Transportation Ministry’s Sea Transportation Directorate General has announced that several routes currently operating under the subsidized shipping tariff scheme will be moved to a cargo consignment scheme. The ministry estimates this adjustment could save up to Rp 4.56 billion (US$271,000) in subsidy spending, with higher potential savings if the scheme is extended to cover subsidized fuel users, given that fuel accounts for around 40 percent of ship operating costs. For 2026, the subsidy allocation for the sea toll program amounts to Rp 524.98 billion of the Rp 4.74 trillion total budget for marine public service obligation (PSO).
Within this framework, the ministry has authorized 197 pioneer shipping routes under the 2026 PSO program, increasing sea toll routes from 39 in 2025 to 41 this year. These consist of 18 assigned routes and 23 routes procured through competitive tenders. These break down further into 12 assigned routes under the shipping subsidy scheme and six under the cargo consignment scheme of state-owned PT ASDP Indonesia Ferry. Meanwhile, seven procured routes are under the shipping subsidy scheme, and 16 others are under the cargo consignment scheme.
The legal framework for the program was established in 2015, with the latest rules outlined in Presidential Regulation (Perpres) No. 27/2021. Article 1 of the regulation stipulates the sea toll program to use a cargo PSO mechanism, which is clarified in Article 5 as a type of subsidy with the explicit objective of connecting disadvantaged, frontier and outermost (3TP) regions. Article 6 mandates the transportation minister to assign state-owned shipping companies, such as PT Pelayaran Nasional Indonesia (Pelni), to implement the program, while private operators are permitted to participate through public procurement mechanisms.
The types of subsidized cargo are also tightly regulated. Article 2 of Perpres No. 27/2021 limits full subsidies to basic necessities, important goods and other essential commodities for 3TP regions, including livestock, fish and return cargo. Additional provisions in Transportation Minister Regulation No. 5/2024 allow vessels with excess cargo capacity to carry other types of goods under the program, with the subsidy reduced by deducting a commercial tariff as calculated by the ministry.
In November-December 2015, goods transported under the sea toll program reached 30 tonnes and 88 twenty-foot equivalent units (TEUs). In 2025, the program recorded 756 voyages carrying goods totaling 2,003 tonnes and 32,732 TEUs to 104 ports nationwide. Realized spending for the sea toll program contributed Rp 623.37 billion of the Rp 5.04 trillion marine PSO budget realization for 2025. Pelni says the program helped reduce interisland price disparities by 20-40 percent.
Nevertheless, the Transportation Ministry acknowledged that the program had not significantly encouraged shipping companies to lower prices for basic goods in eastern regions relative to western regions. For instance, the wholesale price of premium rice on Kisar Island in Southwest Maluku is still around Rp 16,000 per kilogram. At the same time, the ministry recognized that the program had improved the flow of goods from Java to outlying regions and bolstered local economies by expanding logistics access, as observed in areas like Kalabahi, the capital of Alor regency in East Nusa Tenggara.
Experts have criticized the sea toll program’s current scheme as ineffective, as transportation accounts for only 15-20 percent of the broader logistics ecosystem. They therefore proposed replacing the subsidy with low-interest working capital financing, similar to models used in Singapore, contending that domestic shipping companies struggle to remain competitive while servicing loans with interest rates above 10 percent per annum and facing additional collateral requirements.
Given these limitations, the sea toll subsidy scheme warrants comprehensive review. While the program is important for maintaining interisland connectivity, its limited impact on price convergence suggests a necessity for reform.
In the short term, the government could expand the more cost-efficient cargo consignment scheme. Over the medium term, shifting from direct subsidies to low-interest working capital financing could reduce shipping companies’ dependence on state support and foster healthier industry growth. Ultimately, more balanced industrial development outside Java will be essential to address the structural causes of nationwide container imbalance.
