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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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Global coal oversupply and falling prices have prompted the Indonesian government to cut domestic coal production this year in an effort to stabilize the market. The move has raised concern among coal producers, who warn that smaller operational scales could reduce employment and non-tax state revenue (PNBP). At the same time, to secure coal supply for state-owned electricity company PT PLN, the government plans to increase the domestic market obligation (DMO). This dual pressure on producers raises an important question: will the production cut outlined in the 2026 annual work plan (RKAB) for the mining sector help restore prices, or will it create further challenges?
The Energy and Mineral Resources (ESDM) Ministry announced in January that Indonesia’s coal production target for 2026 has been reduced to 600 million tonnes (Mt), down from the 750-790 Mt realized in 2025, in response to weakening commodity prices. According to ESDM data, total coal production in 2025 consisted of 254 Mt for domestic consumption and mostly, 514 Mt, for exports. The remaining 22 Mt are stockpiled.
The Coal 2025 annual market report published in December 2025 by the International Energy Agency forecast global coal production to plateau from 9.1 billion tonnes in 2024 to 9.11 billion tonnes in 2025. Global coal trade is projected to decline by 5 percent year-on-year (yoy), reversing the positive growth from a record 1.54 billion tonnes in 2024 to nearly 1.47 billion tonnes in 2025. Indonesia’s coal export volume, dominated by thermal coal, is expected to fall by about 9 percent yoy from 555 Mt in 2024 to 505 Mt in 2025. As a result, Indonesia’s share of global coal trade would decline from 35.95 percent in 2024 to 34.4 percent in 2025, according to the IEA.
Thermal coal used for power generation is classified by calorific value into low CV below 4,200 kilocalories per kilogram, mid CV between 4,200 and 5,700 kcal/kg, and high CV above 5,700 kcal/kg. During January to August 2025, average prices stood at US$45 per tonne for low CV coal, $71 per tonne for mid CV coal, and $104 per tonne for high CV coal. High CV prices fluctuated between $92 and $122 per tonne during the period. Meanwhile, metallurgical coal used mainly for steel production averaged $186 per tonne.
The ESDM Ministry stated that companies holding first generation coal contracts of work (PKP2B) and state-owned enterprises with mining business permits (IUP) will not be subject to the 2026 production quota reduction. In exchange, these companies are required to fulfill their DMO commitments in the first half of 2026 to ensure sufficient supply for PLN, as many companies have not yet finalized their 2026 RKAB submissions.
Seven first generation PKP2B holders have converted their contracts into special mining business permits (IUPK), namely Adaro Indonesia, Arutmin Indonesia, Berau Coal, Kaltim Prima Coal, Kendilo Coal Indonesia, Kideco Jaya Agung, Multi Harapan Utama and Tanito Harum. Only Indominco Mandiri remains under a first generation PKP2B contract until October 4, 2028.
The ministry expects coal supply from first generation PKP2B companies and state-owned enterprises to reach 75 Mt in the first half of 2026. However, the government does not plan to increase DMO prices, which have remained at $70 per tonne for the electricity sector and $90 per tonne for the cement and fertilizer sectors since 2018.
The ESDM Ministry has also floated the possibility of raising the DMO requirement from 25 percent, as stipulated in Ministerial Decree No. 267.K/2022, to 30 percent. The ministry argues that the increase may be necessary to meet PLN’s thermal coal requirement of 240 Mt. With production capped at 600 Mt, a 25 percent DMO would fall short. Previously, Commission XII of the House of Representatives urged the ministry to raise the DMO to 30 percent for 2026.
The Indonesian Coal Mining Association (APBI-ICMA) reported that companies not exempted from the 2026 RKAB could reduce production by 40 to 70 percent. Some analysts estimate that the production cut could shave 0.09 percentage points off Indonesia’s 2026 gross domestic product growth. Non-tax revenue from the minerals and coal sector could decline by 19 percent year on year, equivalent to Rp 26.6 trillion. The reduction also risks job losses for approximately 16,000 workers in the coal sector and up to 610,000 workers across the broader economy.
The government should consider implementing a more moderate production cut to limit adverse impacts on the coal sector. It should also either maintain the DMO at 25 percent or increase DMO prices to better reflect market conditions. Given that the primary objective of the DMO is to secure supply for PLN, preferential pricing for the cement and fertilizer industries should be gradually reduced and eventually phased out. At the same time, the production adjustment presents an opportunity to accelerate Indonesia’s energy transition, which the government should strategically leverage.
