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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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In the quest to decarbonize the electric power industry, the private sector can play a major role in accelerating the transition to renewable energy, says Royal Golden Eagle (RGE) Managing Director Anderson Tanoto.
Speaking at a panel discussion on the electrification of the power sector at the Indonesia International Sustainability Forum 2024 on Sep. 5, 2024, Anderson revealed that a factory owned by Riau province’s largest pulp and paper producer APRIL Group, part of RGE, is powered 88 percent by biomass from renewable sources.
With an aim to reach a rate of 90 percent, the process began with the installation of solar panels at closed landfills three years ago at a rate of US$ 1 million per megawatt (MW). With coal prices hitting record highs in 2022 and solar panel costs coming down, he continued, the investment became a compelling economic reason on its own.
“It wasn't about going green, it was about saving money. The payback for the solar panel at that point in time, by generating power from the solar panel of 1 MW, was about six and a half years. Fast forward five years later, we've installed almost 26 MW of solar panels across all our landfill permits, and we were able to actually generate good return on investment on these projects,” he said, adding that Indonesia’s large surface area can be potentially used to generate approximately 3,000 gigawatts (GW) of electricity annually.
According to Anderson, for the transition to renewable energy to happen in the near future, the private sector must be willing to take the plunge, whether for sustainability or economic reasons.
“With this kind of lower prices of solar panels, as the private sector, the time to seize the opportunity is now.”
On a larger scale, he acknowledged the industry’s energy trilemma, in which stakeholders want energy to be simultaneously cheap, clean and secure. At the same time, he also highlighted the need for lower battery prices, noting that the main challenge in increasing the renewable energy capacity is the high battery and energy storage costs.
“What needs to happen in order for us to accelerate further is to have what has happened in the photovoltaic business also occur on the battery side, so that battery costs can continue to come down,” he explained.
With the energy transition’s capital intensive nature, Anderson also called for further support in financing through competitive rates, which will encourage more companies to turn towards renewables when coupled with a move towards a free market.
“The opportunities are immense from the private sector, and we're happy to be able to participate,” he concluded.
Anderson’s remarks today coincided with the announcement from RGE and Total Energies. Their joint venture, Singa Renewables, has received conditional approval from Singapore’s Energy Market Authority to import 1 GW of solar photovoltaic energy from Indonesia to Singapore.
