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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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President Prabowo Subianto ’s administration has begun feeling the pressure of the global energy crisis, with state-owned energy company Pertamina raising prices for several unsubsidized fuel and liquefied petroleum gas (LPG) products. The move appears necessary to protect fiscal stability and Pertamina’s operations amid supply disruptions caused by the United States-Israeli war on Iran.
The US-Iran conflict has driven a sharp increase in global crude oil prices. West Texas Intermediate (WTI) crude futures rose from $67.02 per barrel on Feb. 27 to $112.95 per barrel on April 7. Both benchmarks declined following a ceasefire on April 8, with Brent and WTI falling to $94.75 and $94.41 per barrel, respectively. Meanwhile, according to the Energy and Mineral Resource (ESDM) Ministry, the Indonesia Crude Price (ICP) surged from US$68.79 per barrel in February to $102.26 per barrel in March, reflecting movements in global crude futures. From a pre-war level of $72.48 per barrel on Feb. 27, Brent Crude futures climbed to $118.35 per barrel on March 31.
Accordingly, PT Pertamina Patra Niaga, a subsidiary of state-owned energy company Pertamina, announced on April 18 that it would adjust prices for Pertamax Turbo, Pertamina’s research octane number (RON) 98 gasoline, as well as Dex and Dexlite, Pertamina’s cetane number (CN) 53 and CN 51 diesel products. The price of Pertamax Turbo increased from Rp 13,100 (US 76 cents) per liter to Rp 19,400 per liter. Dex rose from Rp 14,500 per liter to Rp 23,900 per liter, while Dexlite increased from Rp 14,200 per liter to Rp 23,600 per liter.
Pertamina Patra Niaga also raised prices for unsubsidized 12-kilogram LPG cylinders in Java, Bali and West Nusa Tenggara from Rp 192,000 to Rp 228,000 per cylinder, marking the first increase since 2023. Meanwhile, prices for unsubsidized 5.5-kg LPG cylinders in the same regions rose from Rp 90,000 to Rp 107,000 per cylinder. Prices in other regions will be adjusted based on distribution costs.
The ESDM Ministry reiterated the government’s commitment to maintain subsidized fuel prices until the end of 2026. However, it also acknowledged that a second phase of price hikes for other unsubsidized fuel and gas products may be necessary if crude prices remain elevated.
The Finance Ministry stated that maintaining fuel subsidies remains possible through budget reallocations from ministries and agencies, as well as the projected 2.9 percent fiscal deficit. The ministry also noted that the government has Rp 490 trillion in excess budget balances from the previous fiscal year that could serve as a buffer. According to its calculations, these reallocations would be sufficient to sustain fuel subsidies if crude prices average around US$100 per barrel in 2026.
However, that assumption remains risky. The 2026 state budget is based on an average crude oil price of just $70 per barrel, while state-owned Bank Mandiri estimates that every $1 increase in crude prices would add roughly Rp 10.3 trillion in energy subsidy and compensation costs. By comparison, every $1 increase in crude prices would generate only Rp 3.5 trillion in additional tax and royalty revenues. The government’s reluctance to raise subsidized fuel prices also reflects inflation concerns. For instance, every Rp 1 increase in the price of subsidized RON 90 Pertalite could raise inflation by 0.27 percentage points.
Pertamina’s decision to raise prices for selected unsubsidized fuel products appears unavoidable given the pressure on downstream operations. However, if the company is forced to raise prices across all unsubsidized products, inflationary pressure could intensify while increasing the fiscal burden as consumers shift to subsidized alternatives. With no clear end to the US-Iran standoff, broader fuel price hikes may ultimately become unavoidable.
