Irony: Indonesia, a Dollar Generator, Yet Suffering Because of the Dollar

Jakarta, CNBC Indonesia - Indonesia has for almost six years recorded an uninterrupted trade surplus. Exports have continued to exceed imports, but the proceeds of exports have not fully manifested in foreign exchange reserves or the rupiah’s value.

Since May 2020, Indonesia’s trade balance has not recorded a deficit. As of March 2026, the trade surplus has lasted 71 consecutive months.

The surplus indicates that the value of Indonesia’s exports has consistently exceeded its imports. In other words, goods sold by Indonesia abroad are greater than goods bought from abroad.

This performance is supported by sustained high exports. Total exports from May 2020 to March 2026 amount to US$1,507.7 billion. This figure is enormous. In the same period, total trade surplus was around US$224.23 billion.

The trade surplus should be a source of foreign exchange for the economy. When exports exceed imports, there should be additional foreign exchange entering the country. However, reality shows otherwise. The magnitude of exports and the trade surplus has not fully translated into higher foreign exchange reserves.

Foreign exchange reserves have risen since the start of the surplus, but the increase is far smaller than the value of exports or the trade surplus recorded during the period. In May 2020, reserves stood at US$130.5 billion. By April 2026, reserves were at US$146.2 billion. In other words, over six years, foreign exchange reserves rose by around US$15.7 billion, a stark contrast with total exports and the cumulative surplus.

In percentage terms, the increase is about 12.03%. This raises a major question. If Indonesia’s exports are so large and the trade balance is consistently in surplus, where exactly do the export earnings flow?

Not all export proceeds automatically enter and stay as foreign exchange reserves. Some foreign currency is used for imports, payments on external debt, payments for services, dividends, repatriation of profits, and other transactions outside the goods trade balance. Yet the gap between the size of exports, the trade surplus, and the rise in foreign exchange reserves remains wide. This opens the possibility that a portion of Indonesia’s export earnings is parked abroad rather than entering the domestic financial system. If this happens on a large scale and for a long time, the impact could be felt directly on the dollar supply within the country.

This is the issue also touched on by President Prabowo Subianto in his speech to the DPR on Wednesday (20 May 2026). Prabowo said Indonesia has never actually suffered a loss on the goods account. Exports have always been larger than imports. “What we find after several decades of outflow of national wealth: Our country has never suffered a year of loss. Our exports are larger than our imports. What we sell is more than what we buy. The country should not be experiencing an economic crisis,” he said.

He also highlighted the large outflow of national wealth from Indonesia: “What happens is our gains over 22 years amount to US$436 billion, while outflow is US$343 billion,” he said. This aligns with the data above, where export earnings fail to lift foreign exchange reserves.

A bigger problem is how to ensure those foreign exchange earnings return, enter the domestic financial system, and help strengthen foreign exchange reserves and the rupiah’s exchange rate.

The sizeable value of Indonesia’s exports is also evident in the commodities that support non-oil and gas exports. Data from the Ministry of Trade’s Satu Data, classified under HS6, show that Indonesia’s largest non-oil export categories in 2025 were dominated by natural resource-based and downstream products. The largest commodity is palm oil or crude palm oil (CPO) and its derivatives, with exports worth US$21.33 billion in 2025, up from US$17.33 billion in 2024.

Next is coal, particularly varieties other than anthracite and bituminous, with exports valued at US$18.46 billion. Although still large, the value of coal exports declined from US$22.52 billion in 2024. Ferro-nickel ranked third with exports worth US$16.39 billion in 2025.

Indonesia’s exports remain heavily supported by three commodities — palm oil, coal, and nickel. They are a major source of national exports. However, the high export value of these commodities has not fully reflected in foreign exchange reserves, hinting at an outflow of export earnings for these commodities.

The government has begun addressing this with the latest rules on Devisa Hasil Ekspor Sumber Daya Alam (DHE SDA). The government states that the revised DHE SDA rules will take effect from 1 June 2026. Under the new rules, DHE SDA must be deposited in state-owned banks (Himbara). In addition, conversion of DHE to rupiah is limited to a maximum of 50%, from the previous limit of up to 100%.

Rupiah Weakens When Exports Are High

The failure of large export receipts to feed into the foreign exchange reserves is also seen in the rupiah’s exchange rate movements. Since May 2020, Indonesia’s trade balance has been in surplus. Exports have remained high, particularly after global commodity prices surged in 2021-2022. Yet the rupiah has weakened against the US dollar. According to Refinitiv data, the rupiah was at Rp14,825 per US$ in May 2020. By close of trade on Wednesday (20 May 2026), the rupiah was at Rp17,690 per US$.

This means that during the period of a consecutive trade surplus, the rupiah’s exchange rate has weakened.