Indef: Indonesia's Export Structure Must Shift to Value-Added Products

The head of the Macroeconomics and Finance Centre at the Institute for Development of Economics and Finance (Indef), M Rizal Taufikurahman, has stated that Indonesia’s export structure must shift from being based on raw commodities to industrial value-added products. The statement was made in response to Indonesia’s trade balance recording a deficit of 1.61 billion US dollars in May 2026, ending a 72-month consecutive surplus streak that began in May 2020.

“The key is not just increasing export volume, but changing the export structure from being based on raw commodities to industrial value-added. Otherwise, every time commodity prices fall or energy imports surge, Indonesia’s trade balance will be fragile again,” Rizal said in Jakarta on Sunday (5/7/2026).

Rizal argued that the trade deficit signals that Indonesian exports remain vulnerable to weakening commodity prices and rising imports. He noted that potential commodities going forward must still rely on the non-oil and gas sector, as its contribution reached 110.19 billion US dollars or 95.5 percent of total exports from January to May 2026.

However, Rizal stressed that the export focus needs to shift away from coal and crude palm oil (CPO). Exports should be driven by value-added products such as downstream nickel, iron and steel, palm oil derivatives, agriculture-based basic chemicals, semi-finished aluminium, fisheries, coffee, cocoa, spices, furniture, technical textiles, footwear, automotive, and electronic components.

“BPS also recorded that the increase in non-oil and gas exports from January to May 2026 was mainly driven by the processing industry, including processed nickel, palm oil, agriculture-based organic chemicals, inorganic chemicals, and semi-finished aluminium,” he added.