Indonesia is a country that works with an open economy.

Therefore, it conducts international trade through routine export and import of commodities to meet the needs of the people and support the national economy.

The Central Statistical Agency (BPS) defines imports as the inflow of goods and services purchased by residents of a country from residents of other countries resulting in an outflow of foreign currency from the country. On the other hand, exports are shipments of goods and services sold by residents of one country to residents of other countries to earn foreign exchange from the buyer’s country.

Adrian Sutedi, in his book Import-export law”, declared that export and import operations are important economic activities. He wrote of the following intentional benefits of exports:

  • Increase company profits through market expansion and achieve better selling prices (profit optimization)
  • Opening new overseas markets as expanding domestic market
  • Use of excess installed capacity
  • Export transactions of goods and services bring in foreign currency to the country. Foreign exchange itself is a financial asset and liability that can be used in international transactions in the form of currencies, gold, securities, foreign notes, etc.
  • Increase national industrial growth
  • Growing National Industries

As for imports, according to various sources, countries tend to:

  • Meeting domestic needs in the form of raw materials, capital goods and consumer goods
  • Acquire modern technology
  • Prevent price spikes triggered by commodity shortages
  • Reduce currencies
  • An increase in imports of raw or auxiliary materials and capital goods indicates that there is demand from domestic industry; in consumer demand and has a positive impact on labor absorption

Read also What expats need to know about importing goods to Indonesia

Imports

Imports of raw materials and capital goods indicate that the country’s economy is on the move. Indonesia’s import value was recorded at $18.61 billion in May 2022, down 5.81% month-on-month from April 2022, when imports were valued at 19 .75 billion dollars.

The decline in the value of monthly imports was driven by a 12.07% decline in oil and gas imports to $3.35 billion. Non-oil and gas imports also fell 4.31% to $15.25 billion.

oil and gas

Crude oil, petroleum products and gas are imported into Indonesia. World crude oil prices in May 2022 were recorded at US$109.6 per barrel. Monthly it is up 6.92% and annually up 67.35%, year over year.

Statistical and Distribution Services Deputy Setianto said on June 15, 2022 that Indonesia’s decline in import performance throughout May was due to both reduced non-oil imports and gas as well as the reduction of oil and gas imports. This period reached $3.35 billion, as reported Bisnis.com.

Excluding oil and gas
  1. Machinery and mechanical equipment

Non-oil and gas imports are dominated by machinery and mechanical equipment – ​​for example, precision machinery and automobiles – used to support domestic industry. Setianto added that the value of non-oil and gas imports in May 2022 was $15.26 billion, while in January machinery and mechanical equipment was recorded as the largest portion of imported goods worth of $5.55 billion, contributing 30.46% of total national imports. The Central Statistical Agency noted that Indonesia imports from China, Japan, South Korea, Thailand, Taiwan, Malaysia, Singapore, the United States, Germany, Italy,… Australia, etc.

2. Electrical equipment

Indonesia also imports electrical equipment and its parts. In May 2022, the low value of imported electrical goods contributed to the drop in non-oil and gas imports, which stood at 11.16%.

3. Food

Food imports include garlic, shallots, sugar, beef, buffalo meat, soybeans, salt, milk, etc. Indonesia’s imports based on the use of goods have decreased each month, Setianto said. Consumer goods fell 10.77%, driven by fruits and vegetables. However, the largest increase in commodity imports was sugar and confectionery (HS 17), which increased by US$106.8 or an increase of 18.22 percent, as more goods came from Thailand. , Brazil and Egypt.

4. Plastics and plastic products

Other products imported by Indonesia are plastic and plastic products used for packaging in the food and beverage industry as well as raw materials used for the automotive industry.

5. Cereals

Cereals or grains are a group of plants grown for their seeds or grains to be harvested as a source of carbohydrates and starch. Grain products that are still imported include wheat, maize, sorghum, etc. Indonesia imports these grain products from Australia, Canada, Argentina, the United States, Brazil, and Ukraine, to name a few. Wheat imports are used as a raw material for bread and instant noodles, which are popular among Indonesians, while corn is used for animal feed and consumption.

6. Organic chemicals

According to the Ministry of Industry, imports of organic chemicals include those from petroleum, from agricultural products, organic chemicals for dyeing raw materials, organic chemicals that produce chemicals, etc.

seven. Pharmaceutical products

At least 90% of the raw materials for Indonesian medicines still come from imports. Indonesia remains dependent on supplies from China, India and others, although the government has started efforts to reduce imports of pharmaceutical raw materials and encourage domestic production amid the COVID pandemic. -19.

“Commodities that saw a decline in May 2022 were grain products (HS 10) minus US$62.5 million, machinery and mechanical equipment and parts thereof (HS 84) which decreased by US$65.2 million US, Pulp & Food Industry Waste (HS 23) US$103.5m, and Iron & Steel (HS 72) down $254.4m,” explained Muzhar.

Exports

Records from the Central Statistical Agency (BPS) indicate that Indonesia’s export value in April 2022 hit an all-time high of $27.33 billion. “The previous record was set in March 2022, which was $26.5 billion,” said Margo Yuwono, head of the Central Statistics Agency, as quoted by Antara on Tuesday, May 17.

Yuwono explained that the value of Indonesian exports in April 2022 increased by 3.11%. The largest increase in non-oil and gas exports occurred in mineral fuels, which amounted to US$642.8 million (13.88 percent), while the largest decline occurred in goods in metals and jewels or precious stones, which amounted to US$525 million (47.84 per cent). percent).

The value of exports in May 2022, however, reached US$21.5 billion. This figure is higher than Indonesia’s imports during the period, so Indonesia recorded a trade balance surplus of US$2.89 billion – down from the April 2022 surplus of US$7.56 billion.

Each month, this value decreased by 21.29% from the April 2022 export value of $27.32 billion, due to non-oil and gas exports decreasing by 22.71% month on month. to another, or $20 billion. Meanwhile, oil and gas exports rose 4.38 percent month-on-month to $1.49 billion.

Based on Ministry of Industry data, up to the end of May 2022, as reported by Koumparan, exports of the pharmaceutical industry, chemical pharmaceuticals and traditional medicines reached US$62.32 million. The pharmaceutical, chemical and traditional medicine industries are considered to have great potential for development, given Indonesia’s large domestic market, as well as increasing exports of pharmaceutical products. The pharmaceutical industry is one of the priority industries defined in the National Industrial Development Master Plan (RIPIN) 2015-2035.

The value of exports and imports increases in 2022

The value of Indonesia’s exports and imports had decreased month-on-month, but had nevertheless increased year-on-year. Compared between May 2021 and 2022, this year’s export value increased by 27% year-on-year. Cumulatively, Indonesia’s exports during the January-May 2022 period reached $114.97 billion, or 36.34% year-on-year, in 2021 at $84.32 billion.

The value of non-oil and gas imports in May 2022 also increased 25.33% year on year. The January-May 2022 period reached $95.17 billion, up 28.93% year-on-year from the same period last year of $73.82 billion. Half of 2022 remains – where will monthly and annual export-import value lead?