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 President Prabowo Subianto has issued Presidential Regulation (Perpres) No. 26/2026, which expands the role of public service agencies (BLU) in energy imports, blurring the traditional boundaries between government agencies, state-owned enterprises (SOEs) and private sector players. While the new regulation appears intended to strengthen Indonesia’s energy security amid growing global uncertainties, it could create overlapping responsibilities, increase operational risks and expose the country to greater geopolitical pressures.
Article 2 of the Perpres states that the regulation’s aim is to maintain good governance in the procurement of crude oil, fuel oil (BBM) and liquefied petroleum gas (LPG), whether sourced domestically or imported. It also seeks to improve the continuity, reliability and resilience of the national energy supply.
Under Article 4, imports of oil and gas products, including gasoline and LPG, may be conducted through agreements between Indonesia and foreign governments, cooperation between the government and foreign energy producers or partnerships between domestic energy companies and overseas suppliers, subject to certain restrictions.
Article 4 further stipulates that imports under bilateral cooperation schemes may be executed either by energy SOEs such as Pertamina or by the Oil and Gas Testing Center (Lemigas) of the Energy and Mineral Resources Ministry. It also authorizes the government to direct Lemigas to import oil and gas products to support strategic energy reserves and operational stockpiles.
During emergencies, Article 5 allows Lemigas and energy SOEs to independently procure oil and gas if domestic supplies are disrupted by geopolitical developments, price surges due to supply fluctuations or domestic reserves fall below established thresholds. The article also permits import contracts to include price differences based on volume, product type, country of origin and delivery schedules.
Meanwhile, Article 9 allows Lemigas, energy SOEs and private energy companies to import oil and gas products for storing in Free Trade and Free Port Zones (KPBPB) such as Batam or at bonded logistics centers (PLB). These facilities provide logistics and storage services while allowing deferred payment of selected duties, taxes and excise.
Granting Lemigas the authority to import oil and gas products marks a significant departure from the center’s traditional role. Historically, Lemigas has focused on research, certification, consulting, field surveys and testing services for the oil and gas industry.
The energy ministry says this expanded authority is intended to facilitate government-to-government (G2G) energy transactions, including potential agreements with Russia that could involve as much as 150 million barrels of crude oil.
Economists have argued that the new regulation risks creating overlapping procurement responsibilities between Pertamina and Lemigas, now designated as a public service agency. Assigning a commercial function outside the center’s core expertise could increase the risk of execution failures, complicate coordination in oil and gas procurement and distract Lemigas from its primary functions of research and testing.
Industry players have also suggested that granting import authority to Lemigas may serve as a way to bypass certain procurement restrictions Pertamina faces. The state-owned energy giant previously issued global bonds in the United States that restrict its involvement in illicit oil transactions, including purchases from countries such as Russia that are subject to sanctions by the US and its allies.
The energy ministry has acknowledged that facilitating such transactions is among the considerations behind the policy.
Meanwhile, National Energy Council (DEN) member Muhammad Kholid said the oil and gas that Lemigas imported could be stored at SOE-owned facilities, including those operated by Pertamina subsidiary PT Pertamina Patra Niaga or private energy companies. However, Kholid encouraged Lemigas to prioritize facilities run by SOEs, arguing that storage costs could be minimized through adjustments to asset use arrangements approved by the Finance Ministry.
Allowing Lemigas to import oil and gas products reflects the government’s concern over potential energy supply disruptions amid the country’s continuing dependence on fossil fuels. However, this policy should have been introduced earlier and tested through Pertamina before actually authorizing an institution with limited experience in commercial procurement.
Moreover, facilitating transactions involving sanctioned producers risks drawing needless scrutiny from Washington and its allies. It may also create a perception of foreign policy inconsistency following the significant concessions in Indonesia recently extended to the US.
