Analyst: Niche markets are the key to Indonesia's rice exports to the Middle East
An economist at the Centre for Reform on Economics (CORE) Indonesia, Yusuf Rendy Manilet, says Indonesia should target niche markets to strengthen its opportunities to export rice to the Middle East amid competition from other exporting countries.
Yusuf said the government’s move to open the rice market to Saudi Arabia is a positive initiative, but the effort to make Indonesia a consistent rice exporter still faces a number of structural challenges.
‘Rice penetration in the Middle East’s retail market would be more realistic if focused on niche markets, such as the needs of the Indonesian diaspora, migrant workers, or segments of rice that are specialised and premium with added value,’ Yusuf told ANTARA in Jakarta on Wednesday.
He explained that Indonesia’s chances of competing directly in the medium-rice market are relatively challenging due to the dominance of major exporting countries such as Thailand and Vietnam, which have production cost efficiency, economies of scale, and a global supply chain that he regards as larger.
Therefore, according to him, Indonesia’s rice export strategy should be directed at specific market segments that do not rely entirely on price competition, so Indonesian rice products still have room to compete in international markets.
Besides competition factors, Yusuf also warned of external risks that could affect export continuity, especially the escalation of conflicts in the Middle East region that could disrupt global shipping routes.
‘Disruptions to strategic shipping lanes could trigger higher sea transport costs and vessel insurance premiums, potentially making Indonesian rice prices in destination markets less competitive,’ he said.
Yusuf explained that such conditions could raise logistics costs, so the price of Indonesian rice when it reaches the Middle East could be higher than products from other exporting countries.
Amid the export opportunities, he noted that the government needs to ensure domestic rice supply stability as a foundation for strengthening strategies to expand exports to international markets.
He emphasised that the accuracy of data on the national rice balance, i.e., the comparison between production and consumption, must be ensured so that exports genuinely originate from real production surpluses.
‘The government also needs to maintain the Government Rice Reserve (CBP) at safe levels to avoid domestic price pressures,’ he added.
Earlier, the government through Perum Bulog began opening the Indonesian rice market to Saudi Arabia via an initial rice export for the needs of Indonesian haj pilgrims.
Bulog scheduled exports of 2,280 tonnes of rice in two waves on 28 February and 4 March 2026 as the initial step in penetrating the Middle East.
Bulog’s President Director Ahmad Rizal Ramdhani said the exports are expected to be a gateway to expanding Indonesia’s rice markets in Saudi Arabia, including modern retail markets as a subsequent step.
Several retail networks in Saudi Arabia, such as Bin Dawood and Lulu, are said to have shown interest in sourcing Indonesian rice for the local retail market.
Additionally, Bulog plans to build logistics warehouses spanning about 2-3 hectares in the Kampung Haji area in Saudi Arabia, as a distribution hub for Indonesian rice for haj pilgrims and commercial markets in the country.
The move is expected to strengthen Indonesia’s presence in the Middle East market while opening up more sustainable opportunities for national food exports.