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Indonesia Eximbank news and announcements.

25 Jan 2019

Four Main Commodities to Increase Indonesian Export

According to economic observers from the Institute for Development of Economics and Finance (INDEF), the Indonesian maritime sector is becoming increasingly unreliable in terms of becoming a short-term potential export source, due to nationwide development being mostly focused on infrastructure. Additionally, Indonesia has began importing more goods from overseas, lowering the value of exports from this sector. 

In order to combat this, observers propose the following export commodities to replace exports from the maritime sector.

  • Palm oil

Palm oil is a raw material often used as ingredients for cosmetics, hygiene products, food, and biodiesel fuel. Indonesia is listed as one of the world’s largest producers and exporters of palm oil. Along with a growing population, the demand for palm oil will also continue to grow. This signals a positive development for the Indonesian economy, because an increase in demand for palm oil would enable the country to export more oil and thus receive larger profit. Unfortunately, the palm oil industry remains far from being environmentally friendly; a long-time obstacle hindering businesses from producing more palm oil. 

  • Pulp and paper

According to the Indonesian Bureau of Statistics (Badan Pusat Statistik), export of pulp and paper experienced a small decline in May 2018, with profit valued at USD 122.5 million compared to the previous month’s USD 158.5 million. Nevertheless, the decline was considered reasonable as it was influenced by the season, meaning conditions would go back to normal with the changing of seasons. Apart from that issue, more pulp and paper-producing factories are emerging this year -- certainly a plus for the Indonesian export scene.

  • Coal

Coal exports have been gradually decreasing in the past few years. Government regulations and production quotas are the two major factors behind this, though several efforts on the government’s part have been exerted to combat this. For example, the government has raised the 2018 production quota by 100 million metric tons (MT) of coal, possibly extended to 585 MT of coal. The increase is based on the Decree of the Minister of Energy and Mineral Resources No. 1924/2018, an amendment to the previous Decree No. 23/2018 concerning the Establishment of Minimum Percentage of Coal Sales for National Interests Year 2018. Higher production of coal is expected to bring non-tax state revenue from coal exports.

  • Tourism and the creative industry

Tourism and various creative industries in Indonesia are among the rising stars of Indonesian business sectors. Many international tourists visit the country to enjoy well-celebrated natural sceneries the archipelago has to offer. Furthermore, Indonesia has many emerging skilled artists in the jewelry industry, which has recently become very popular with tourists. This has opened countless doors of opportunities for Indonesian creatives and tourism actors alike. 

Although these four commodities would likely increase the number of national export, most businesses would not be able to reap the benefits without encountering challenges and obstacles, ranging from environmental issues, security, government regulations, marketing, and so on. The government will strive to support and help businesses in overcoming these issues.