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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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Strengthening national defense has long been a priority for President Prabowo Subianto and dates back to his tenure as defense minister. There is no doubt about his administration’s focus on defense, given that the country has yet to achieve its 2009-2024 Minimum Essential Force (MEF) target. Yet the public continues to question whether the government’s efforts are genuinely aimed at safeguarding Indonesia’s sovereignty or attempts to extend military authority into civilian domains.
Defense spending has remained relatively high despite the administration’s budget efficiency policy. This year, the Defense Ministry received a whopping Rp 187.1 trillion (US$10.5 billion) from the state budget, making defense the second largest expenditure after the free nutritious meal program. The 2026 defense budget reflects a steady increase over the past five years. According to the Central Government Financial Report (LKPP), the Defense Ministry had a budget of Rp 125.9 trillion in 2021. This had grown to Rp 190.5 trillion by 2024, and its estimated realization stood at Rp 247.5 trillion for 2025.
As a symbolic demonstration of this defense strengthening strategy, on May 18 President Prabowo handed over six Rafale fighter jets, four Dassault Falcon 8X, one Thales mobile long-range radar and one Airbus A400M Atlas military transport aircraft to Indonesian Military (TNI) commander Gen. Agus Subiyanto during a ceremony at the Halim Perdanakusuma Air Force Base in East Jakarta. The handover came four years after Indonesia signed an $8.1 billion procurement agreement with France for 42 Rafale fighter jets, when Prabowo was defense minister.
Despite these historic hikes in nominal spending, Indonesia's defense budget remains chronically constrained when measured against total economic output, hovering at below 0.8 percent of gross domestic product. This lags considerably behind regional peers such as Singapore and Vietnam. This funding shortfall makes the military's expansion into nonconventional roles in domestic affairs particularly controversial, raising concerns among critics who view it as reminiscent of the New Order era, when the military controlled both the social and political spheres.
One notable example of this military shift is the government’s commitment to establish "territorial development battalions" across the country’s 514 regencies and municipalities. As of April, 155 of these battalions had been established. This initiative also has necessitated a significant increase in military recruitment, with around 24,000 enlisted soldiers (tamtama) to serve primarily in noncombat roles. The new battalions are tasked with supporting flagship government initiatives, including the free meals program, the Red and White Cooperatives, food security programs and local infrastructure development.
During a meeting on May 19 with House of Representatives Commission I, Defense Minister Sjafrie Sjamsoeddin said the members of territorial development battalions would also contribute to the social and religious life of surrounding communities. He explained that each battalion of approximately 1,190 troops included recruits with diverse backgrounds, from graduates of pesantren (Islamic boarding schools) to individuals trained in interfaith services.
Military involvement in civilian affairs is also creeping into local law enforcement. During a press conference at the Jakarta Police headquarters on May 22, authorities announced that the Jakarta Military Command would be actively involved in hunting down gangs of begal (street robbers) that were spreading fear across Greater Jakarta. While this might appear to be decisive response to public anxiety, mobilizing the TNI in a traditional policing role risks blurring constitutional boundaries and increasing potential human rights abuses.
Furthermore, the TNI is expected to extend its influence into higher education through the Finance Ministry’s Education Endowment Fund (LPDP), where soldiers will reportedly help instill nationalism among scholarship recipients.
Against this backdrop, the questions surrounding the steady increase in defense spending become harder to ignore. As the TNI increasingly extends its influence on civilian affairs despite limited resources, its future trajectory has emerged not merely as a rhetorical inquiry but also as a pressing national concern.
