Indonesian imports set new record in 2021

According to the Indonesian statistics office BPS, Indonesia imported goods worth US$196.2 billion in 2021. That is an increase of 38.6% compared to the previous year and at the same time a new record. The previous high of $191.7 billion dates back to 2012. A new peak was also recorded on the export side at $231.5 billion (up 41.8%). The positive foreign trade balance of $35.3 billion marks the country’s largest surplus since 2007. 

Import demand was largely driven by chemical products, with a year-on-year increase of 52%. This was mainly due to the tripling of drug imports of $4.8 billion. By far the most important product was the COVID-19 vaccine, which was procured from abroad for around $3.2 billion. Available data from the BPS suggests that the majority of these shipments originate from China. According to Destatis, Germany delivered vaccines worth $232 million to Indonesia in 2021. 

Demand for machines falters 

For machines, demand in 2021 has not yet returned to the pre-crisis level. The corresponding imports increased by 12.8% compared to the previous year, but remained below those of 2018 and 2019.  

There was a new record import for food. Wheat deliveries increased by almost $1 billion compared to 2020. Wheat is not grown in the country but is the main ingredient for some widely-consumed, locally-produced instant noodle products. The archipelago relies on imports for almost all staple foods. In view of an annual population growth of more than 3 million people and increasing purchasing power for both agricultural commodities and processed food, Indonesia can be expected to continue to grow in import demand in the coming years. 

Motor vehicle imports are increasing 

Imports of motor vehicles rose by two thirds in 2021 compared to 2020, but at $7 billion remained well below the highs of previous years. In 2012, motor vehicle imports nearly hit $10 billion. High taxes on imported vehicles have steered foreign purchases of cars towards assembly kits for local production. German vehicle deliveries in 2021 were almost $80 million. 

After the record year 2021, there was a decline of 11 percent in medical technology. One reason for this is likely to be the procurement ban on state hospitals for imported products that are also manufactured in the country.  

China crowds out other suppliers 

In 2021, China continued to expand its share of imports in Indonesia. Almost 29% of all deliveries come from the People's Republic. If the oil and gas sector is deducted, the figure is 33%. The market takeover is taking place at breakneck speed: as recently as 2010, the Chinese share of imports was 15 percent. 

China is the most important supplier in almost all areas of technology. The exception is the motor vehicle sector, in which the People's Republic is catching up quickly - at least in terms of deliveries.  

Indonesian Foreign trade in comparison to ASEAN 

Measured both in terms of population and economic strength, the archipelago imports significantly fewer goods than all countries in the neighboring Southeast Asian community of states, ASEAN. The reasons for this are the low involvement in global supply chains and a protectionist trade policy. The record increase may be seen as an effect of some significant improvements in the country’s investment conditions. Many previously closed industries have been opened to foreign companies in 2021. Distribution law has been liberalized. In addition, foreign investors often no longer need Indonesian equity investments. International law firms in the country are reporting greater interest in the archipelago. 

Original article: https://www.gtai.de/de/trade/indonesien/wirtschaftsumfeld/indonesische-einfuhren-2021-mit-neuem-rekord-804558