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.
Latest News
President Prabowo Subianto sprang another foreign policy surprise, or a blunder depending on how one looks at it, by joining the Board of Peace which United States President Donald Trump launched last week as part of his Gaza peace plan.
The President is one of only a handful of head of states or their representatives who signed up to the board at its launch on the sidelines of the World Economic Forum in Davos. Other countries represented were Hungary, Turkey, Saudi Arabia, Qatar, Argentina, Pakistan, Kazakhstan and the United Arab Emirates
Typical of Trump, the event stole the show in the prestigious and high-powered annual business gathering in the Swiss hill resort. Prabowo’s maiden speech in Davos, in which he gave a rosy picture of Indonesia before global investors, got drowned out by the noise that came with the launch of the controversial board.
If this is considered a blunder that many foreign policy scholars have claimed, then it is the biggest one that Prabowo has committed, because of the unknown but likely dire consequences at home and abroad.
Critics say the board undermines international law and overrides the work of the United Nations; it lacks Palestinian involvement; and it confers too much power on its chair, who is none other than Trump, even going beyond his presidency, which ends in 2028.
The worst part of the deal is that it makes no mention of an independent Palestine state as one of the board’s objectives. This is hugely problematic for Indonesia, which has long and persistently campaigned for the creation of a sovereign nation for the Palestinian people.
It is so controversial that many other foreign leaders, including those from traditional US allies in Europe, declined to join the board.
To those who have followed Prabowo’s foreign policy acts, joining the board was actually almost a matter of course. He has wiggled his way to a carve a role for Indonesia in the Israel-Palestine conflict. He was among the eight leaders from Arab and Muslim-majority countries that Trump invited to New York in September to get a sneak preview of his Gaza peace plan. He attended the launch of the plan in Egypt in October. Now joining the Board of Peace fits the trend.
Prabowo has also offered to send up to 20,000 Indonesian soldiers to join the International Stabilization Force that Trump envisages to enforce his Gaza peace plan. Indonesia is the only country that has made that commitment. Earlier Prabowo also offered to take on up to 2,000 Gazans who are injured and traumatized by the war for treatment in Indonesia.
But it was Prabowo’s audacity in joining the board that raised questions about his willingness to go this far in dealing with the Israel-Palestine conflict. This puts him at odds with Indonesia’s long-held policy of consistently supporting the Palestinian people and ruling out opening ties with Israel until they get their homeland, not before.
What other surprises will he spring next?
Forming ties with Israel may not be all that far-fetched now with Israeli Prime Minister Benjamin Netanyahu also joining the board. Sitting on the same board opens a line of communication that has never existed before in the absence of diplomatic ties. Indonesia could be lined up to sign on to the Abraham Accords, a US initiative to bring Israel and Arab and Muslim-majority countries together.
Prabowo has come up with several foreign policy surprises, including one or two blunders, since he took office in October 2024, but none as serious as this one.
In November 2024 during a visit to Beijing, he signed on to a joint statement with his Chinese counterpart Xi Jinping to work on joint development cooperation in what the statement described as a disputed territory in the South China Sea. Indonesia officially rejected the word “disputed” since China’s claim is based on it being a traditional fishing ground, which, under international law cannot be used as the basis for a claim. The Foreign Ministry somehow was able to pull Indonesia out of that commitment.
Prabowo agreed to send home a Philippine woman on death row for drug smuggling during a meeting with Philippine president Ferdinand Marcos Jr. in November 2024. The government later came up with the idea of a bilateral-prisoner transfer deal to make it possible.
Some scholars say his decision to join BRICS, an intergovernmental organization led by China, Russia and India, with little discussion and preparations, was another blunder, although it has not been a disaster.
Many seriously doubt now that joining Trump’s Board of Peace will confer any benefit for Indonesia and may be a betrayal of the Palestinian people and undermine Indonesia’s standing at home and abroad. It looks like another blunder, but one from which neither Prabowo nor the Foreign Ministry will be able to extract Indonesia.
