Every year the population in Indonesia continues to increase with an average population growth rate of 1.17% per year. This causes changes in product consumption that move positively with this growth. Based on data from the Statistics Indonesia (BPS), the gross domestic product (GDP) of household consumption expenditure reached IDR 5.39 quadrillion in Q2/2022. This value reached 50.38% of the national gross domestic product (GDP) in Q2/2022 which reached IDR 4.51 quadrillion. Meanwhile, private consumption grew by 5.39% (y-o-y) in Q3/2021.

Increased product needs mean that market potential also increases. This is considered good, but on the other hand it can cause business challenges such as tighter market competition, increased demands for product quality, and raises limits on raw materials that can be supplied from local suppliers (scarcity). In addition, not a few producers in Indonesia are also targeting the global market, causing the demand for raw materials to increase even higher.

Therefore, bilateral cooperation is an important factor for the welfare of the national economy. Bilateral cooperation allows Indonesia to obtain raw materials or products that do not exist or whose production is limited. This will increase the economy of local producers and contribute to the national economy.

Indonesian Export Activities

Indonesia's Export Value January - Sept 2022 (Million USD)

Based on Statistics Indonesia (BPS) data, the value of Indonesia’s oil and gas exports reached USD 12,144.7 million. Meanwhile, non-oil and gas products reached USD 207,184.1 million.

From 2022 to September 2022, it was noted that Indonesia had exported non-oil and gas products as much as 94% of its total exports to various countries with a total export value of USD 207,184.1 million. The largest exports are directed to several countries in Asia, namely 73% of the total export value. Based on the destination country, the largest exports were sent to China, which accounted for 30% of the total value of Asian exports. Then followed by Japan at 12%, Malaysia at 7% and the Philippines at 6%, Singapore at 5%, and Thailand at 4%.

Portion of Indonesia's Export Activities Based on Region January - September 2022

Export Activities from Indonesia to Malaysia

One of the collaborations currently being carried out by Indonesia is economic cooperation with Malaysia, particularly in the export-import sector. Indonesia and Malaysia are increasing their cooperation in the trade sector amid the Covid-19 pandemic which has not been fully resolved. The Malaysian government recognizes that Indonesia is a country that has the largest market in ASEAN and uses this as a basis for enhancing its working relations.

Based on Statistics Indonesia (BPS) data, there has been a growth in the export value of non-oil and gas products in 2021 reaching 36.3% (y-o-y) and the import value reaching 20.9%.

Export Growth of Non-oil and Gas Product with Malaysia 2019 - 2021 (%)

Indonesia’s non-oil and gas imports to Malaysia in January – September 2021 period reached USD 7.53 billion, growing by 61.7% (y-o-y) and reaching USD 10.64 billion by the end of 2021. This import value was also the highest in the last ten years. This increase shows that the demand for goods from Indonesia is getting better after the lockdown carried out by Malaysia since the emergence of the Covid-19 pandemic. There were several non-oil and gas products that experienced significant perinatal including copper reaching 265.11%, fats and animal or vegetable oils reaching 164.9%, chemical products reaching 112.20%, iron and steel reaching 65.89%, and coal reaching 50.29%.

Export Value To Malaysia 2018 - 2022 (Million USD)

In addition, based on its average growth until September 2022, the value of exports to Malaysia is predicted to increase by 33.5% or USD 14,204 million (Y-o-Y).

Indonesian Import Activities

Indonesia’s total import value from January to September 2022 reached USD 179,486.6 million, an increase of USD 40,270.5 million (28.93%) compared to the previous month. This increase was influenced by an increase in the value of oil and gas imports of USD 13,819.0 million (80.21%) and non-oil and gas of USD 26,451.5 million (21.68%). Judging from the proportions, the value of non-oil and gas imports during the January – September period from 2018 to 2022 dominates Indonesia’s imports with an average of 86.33% per period. Judging from the role of total imports during the September 2021-September 2022 period, the value of oil and gas and non-oil and gas imports contributed an average of 16.15% and 83.85% per month.

Mounthly Average of Indonesia's Import Contribution January - September 2022 (Y-o-Y) (%)

Of Indonesia’s total imports during January-September 2022, 71.68% of Indonesia’s import needs come from ten main countries of origin. China occupies the first position, reaching 28.23% of Indonesia’s total imports. The next countries of origin are Singapore (8.34%), followed by Japan (7.10%), Malaysia (5.34%), South Korea (4.90%), United States (4.89%), Thailand (4.81%), Australia (4.09%), Vietnam (2.03%), and Taiwan (1.95%).

Portion of Indonesia's Import Activities Based on Region January - September 2022

Import Activities from Malaysia to Indonesia

In general, the domestic economy continues to improve after the previous two years experienced a pandemic, marked by the increasing need for imported commodities during 2022. Based on its track record, the development of import values during the 2007-2021 period increased by an average of 11.02% per year, i.e. from USD 74,473.4 million in 2007 to USD 196,190.0 million in 2021. Oil and gas imports increased by an average of 7.98% and non-oil and gas imports 12.61% per year.

Import Value From Malaysia 2018 - 2022 (Million USD)

During the last 12 months (Sept 2021 – 2022), the highest non-oil and gas import value was recorded in March 2022 of USD 18,470.2 million and the lowest in February 2022 of USD 13,736.2 million. In its contribution, Malaysia is the fourth country as the country of origin for the highest imports in 2022 (Jan-Sept), namely 5.34% or USD 9,579 million. This value has exceeded the total import value in 2021 which only reached USD 9,451 million.

Import from Malaysia Based on Products January - September 2022

Meanwhile, based on the type of product, most of the products imported from Malaysia are chemical products as raw materials for industry. The most imported products are Petroleum Products, which account for 49% of the total imports from Malaysia. Then followed by Hydrocarbons and Their Halogenated, Nitrated Derivatives (4%), Polymers Of Ethylene In Primary Forms (2%), Alcohols, phenols, phenol-alcohols And Their Halogenated (2%), Other Plastics In Primary Forms (2%), and others.

Import activities from Malaysia are increasingly needed, especially for industrial development in Indonesia. This indirectly shows that the domestic industry for these imported products is not yet capable of meeting domestic needs and keeping abreast of developments. On the positive side, there is still a lot of room for the domestic industry to develop business from these products.

*Data Source:  Statistics Indonesia (BPS), 2022