Indonesian commodities contributed about one-fourth of Indonesia’s Gross Domestic Product (GDP) and government revenue in 2007. This has led Indonesia to become one of the largest global commodity exporters. Check out some interesting facts about Indonesian commodities:
Indonesia is the largest palm oil producer in the world. CPO exports reached US$19 billion in 2013 and account for 3.8 milion full-time jobs. CPO production in Indonesia continues to increase annually, with an average growth of 12.3 %. In 2013 the production of CPO in Indonesia reached 27.0 million metric tons of crude palm oil. Currently, Indonesia is the world leader in CPO production. In fact, Indonesia and Malaysia together generate more than 85 percent of the world supply.
World rubber production in the period 1995-2011 increased by 1.7 %. Indonesia is the second largest rubber producer after Thailand. In 2002, Indonesia was capable of producing approximately 1.6 million tons, in 2007 increased to 2.8 million tons, then had dropped back in 2009 to 2.5 million tons. In addition, Indonesia currently has an area of 2.93 million hectares devoted to rubber plantation. According to the Indonesian Rubber Research Institute in 2015 and 2020 Indonesia is projected to produce 3.5 million tons of s / d 3.8 million tons of rubber.
Indonesia is the third largest producer of cocoa in the world after the Ivory Coast and Ghana. The highest production reached 621 873 tons in 2006. Since 2011 there has been a cocoa revolution in Indonesia, transforming the country in a leading producer. Exports increased from approximately 100,000 tons in 2009 to over 300,000 ton in 2012. It is possible that Indonesia could become the world’s largest cocoa exporter.
Indonesian cocoa has important value as the mainstay of exports: It is the third largest foreign exchange earner after oil and rubber for the agricultural sector, and it supports more than 1.3 million head of family farmers nationwide.
Indonesia is one of the world’s largest potential mining countries, home to the third-largest global coal and nickel reserves. Based on research from the Directorate General of Mineral and Coal, Ministry of Energy and Mineral Resources, Indonesia’s coal production increases annually. In 2003, Indonesia produced about 121 million tons and in 2008 production doubled to 240 million tons. Interestingly, in 2012, Indonesian coal production was three times more than 2003, which is about 386 million tons. Indonesia is now considered the fifth largest coal producing country in the world, with production of 376 million tons in 2011.
These commodities have the potential to leading Indonesia to become dominant globally, at least in production Indonesia, but in fact commodity prices are determined by other countries as well because they are also consumers.
In the global commodity trade, consumer countries will always strive to suppress the price of Indonesia’s main commodities, because it benefits them, of course. The main cause of weak commodity pricing negotiations in Indonesian production is its inability to establish domestic prices, leading to price competition among commodity producers.
For example, in the production of Indonesian commodities such as cocoa, coffee and coal, from December 2011 to February 2013, the price was likely to continue declining. Cocoa prices dropped from US$2,150 to US$2,130, down 1 %. Coffee prices fell from US$220 into US$150, down 30 %, and the price of coal decreased to US$95 from US$115, down 17 %.
The Ministry of Trade encourages the creation of a reference price from the commodity exchange. The regulations regarding the export of tin (Regulation of the Minister of Trade of Indonesia No. 32/M-Dag/Per/6/2013 on Amendment to Regulation of the Minister of Trade No. 78/M-Dag / Per/12/2012 about export) require that the export should go through trading in commodity exchanges. It is expected that the Indonesian government continues to support and create transparency in commodity prices in order to give farmers an opportunity to contribute to the development of Indonesia.
The role of exchange rates is expected to be a reference point in the management of commodity prices and is expected to trigger the presence of other actions, such as:
These factors will determine Indonesia’s commodity trade power in the global market.
To become powerful in the global market, Indonesia has a tremendous opportunity: