New Strategies for Accelerating Export Growth in Indonesia

Vietnam’s economy is experiencing significant growth, highlighting the power of effective export strategies. As one of the largest economies in Southeast Asia, export in Indonesia has also become a vital component of the country’s economic plan. 

If Vietnam can effectively leverage its exports to drive economic growth, why can’t Indonesia achieve similar success? By harnessing its potential, Indonesia can position itself as a strong player in the global export and import market.

Overview of Vietnam’s Growth

Vietnam’s economy grew by an impressive 7.4% in the third quarter of 2024 despite the severe economic damage caused by Typhoon Yagi, which hit the agriculture, forestry, and fishery sectors hardest. 

However, exports still increased significantly by 15.8% compared to last year, highlighting the effectiveness of the Vietnam export strategy.

Vietnam’s GDP growth for 2024 is projected at 6.8-7%, exceeding the forecasts of international organizations. Key factors driving this growth include strong momentum in the agro-forestry-fishery and service sectors and a robust recovery in industrial production, which has been a critical engine of economic expansion.

Additionally, the country has seen positive growth in trade value, retail sales, services revenue, and overall production, business, and investment activities. This reflects foreign investors’ confidence in Vietnam as a safe and attractive destination.

Indonesia’s Export Data Landscape – A Comparison

Indonesia holds one of the largest economies in Southeast Asia and plays a key role in the global economy as part of the G20. With a GDP of around USD 1.2 trillion in 2023, Indonesia’s economic strength lies in its diversity across manufacturing, agriculture, mining, and services.

The country’s vast natural resources—such as oil, natural gas, coal, and palm oil—form the backbone of its export earnings. Moreover, Indonesia’s strategic location along critical sea routes enhances its global trade potential, making it an important international trading hub.

Indonesia’s Trade Balance

Indonesia’s trade balance has fluctuated in recent years, yet the country currently enjoys a substantial trade surplus, reflecting effective Indonesia trade policies. In 2023, exports in Indonesia reached approximately USD 230 billion, surpassing imports valued at around USD 200 billion, resulting in a USD 30 billion surplus.

High-demand exports in Indonesia, like palm oil, coal, and rubber, largely drive this trade surplus. The surplus benefits the economy by increasing foreign exchange reserves, strengthening the national currency, and promoting economic stability. 

It also provides the government with more resources for infrastructure and social development.

Export in Indonesia: Surabaya’s Role in Indonesia Trade

Surabaya, the capital of East Java Province, is Indonesia’s second-largest city, with a population of 2.85 million. Due to its strategic location and well-developed infrastructure, Surabaya is a key export hub in Indonesia.

It is home to one of Indonesia’s major commercial ports, handling over 3.2 million containers in 2015, making it a crucial player in enhancing trade across Southeast Asia trade competition. Jakarta handled 6.4 million containers, while Hamburg, one of Europe’s largest ports, processed 8.8 million.

This economic progress has spurred demand for real estate, commercial, and hotel projects, with property prices consistently growing. Local developers dominate the market, focusing on middle—to upper-class residential projects with prices ranging from USD 920 to USD 3,100 per square meter. 

Due to its expanding economy and size, Surabaya is increasingly drawing interest from domestic and international investors.

What Indonesia Can Learn from Vietnam

Vietnam offers valuable lessons in pandemic management, economic policy, and business development. Indonesia could consider these insights to enhance its strategies.

From effective public health measures to strong economic growth initiatives, here are key takeaways from Vietnam’s success:

Effective COVID-19 Control

Despite a slow vaccination rollout, Vietnam quickly controlled the COVID-19 outbreak by enforcing strict public health measures. This approach helped keep infection rates low, allowing the country to resume economic activities earlier than many other Asian nations.

Government Economic Policy

Vietnam’s pandemic response focused on bolstering its manufacturing sector, especially electronics and medical products. The government also fostered foreign investment through favorable conditions like low labor costs, affordable electricity, and tax incentives. 

Numerous free trade agreements have further attracted multinational companies to establish operations in Vietnam.

Business Development in Services, Technology, Education, and Logistics

Vietnam has made significant strides in diversifying its economy, particularly in services, technology, and logistics. 

The government supports startups and prioritizes education to create a skilled workforce, while improvements in infrastructure, including railways, have enhanced logistical efficiency and lowered transportation costs.

Growing Domestic Market and Purchasing Power

Vietnam’s young, fast-growing population is driving the expansion of its domestic market. The rise of the middle class with increasing purchasing power is boosting demand for essential and luxury goods, positioning Vietnam for sustained growth in consumer markets over the next several years.

Unlocking Indonesia’s Export Potential in Surabaya

Surabaya, the capital of East Java, is a major metropolis with over 3 million residents, and Greater Surabaya has more than 10 million. 

Strategically positioned as the gateway to East Indonesia, Surabaya benefits from extensive sea and air connections, facilitating trade between the Indian Ocean, Java Sea, Malacca Straits, and Maluku Islands.

In 2023, Surabaya’s economy reached IDR 715.29 trillion, with a 5.70% growth rate. The Electricity and Gas Supply sector grew by 30.84%, while Wholesale and Retail Trade and Car and Motorcycle Repair contributed 28.16% of the GRDP. 

Household consumption comprised 60.39% of the economy, supported by improved infrastructure and expanding import-export facilities.

Why Surabaya Become a Strategic Hub for Export in Indonesia

As of 2024, several key infrastructure projects in Indonesia, particularly in Surabaya, are making substantial progress:

Road Infrastructure

Upgrades are planned for 519 roads, including 71 secondary arterial roads, 53 secondary collector roads, and 395 local roads. Improvements include flexible and rigid pavement work, bridge enhancements, and drainage upgrades across 121 sites.

Trans-Java Toll Road

Fully operational between Jakarta and Surabaya, with ongoing expansions to improve connections across Java, boosting transportation and logistics.

Port of Tanjung Perak

Expansions at Tanjung Perak port, including the Teluk Lamong Terminal, aim to increase capacity and efficiency through automation and eco-friendly technologies.

Export in Indonesia: Key Industries in Surabaya

In 2024, Surabaya continues to play a crucial role as a key export hub for Indonesia within East Java. The leading global exporters for Surabaya are the United States, with 7,626 shipments, followed by Indonesia, with 1,642 shipments, and Singapore, with 870 shipments.

Total Export Value

As of March 2024, East Java’s exports totaled USD 2.51 billion, a significant increase of 39.10% compared to February 2024 and a rise of 34.57% compared to March 2023.

Non-oil and Gas Exports

The non-oil and gas sector exports reached USD 2.45 billion, demonstrating a remarkable growth of 42.89% from February 2024 and a 38.16% increase from March 2023.

Oil and Gas Exports

While the value of oil and gas exports was lower, they still contributed USD 58.78 million, despite a decline from previous months.

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