Foreign exchange is a measurement of net exports, namely the value of exports minus the value of imports. If an industry exports commodities of great value, but also imports commodities of great value, then it would generate limited foreign exchange, or even create a foreign exchange deficit.
In the Indonesian economy, the non-oil sector (including the palm oil industry) is the mainstay for generating foreign exchange. From 2008 to 2016 (Table) the value of net exports of non-oil and gas sector fluctuated, but it maintained a surplus.
Table: Export value of palm oil and net export value of non-oil and gas in Indonesia (USD billion)
|Year||Net export value of palm oil||Net export value of non-oil and gas aside from palm oil||Net export value of non-oil and gas|
If the export value of non-oil and gas is divided into the export of palm oil and non palm oil, it will be seen that the net value of palm oil exports is consistently in surplus with an increasing trend. In contrast, the net value of exports aside from palm oil tends to decrease from surplus to deficit. In total, the net non-oil and gas exports are still in a surplus as caused by palm oil exports.
The data clearly show that palm oil exports are an important component and the savior of Indonesia’s non-oil and gas trade. Without the export of palm oil, Indonesia’s trade balance would be in deficit (that is, there would be a negative foreign exchange).