Indonesia is breaking free from Singapore’s grip on trade, pushing for direct exports and industrialization. But can it overcome global pressures and economic challenges?

For decades, Indonesia has been the world’s warehouse—rich in resources but locked in a cycle of exporting raw materials while other nations profit from its wealth. The most glaring example? Singapore, a city-state smaller than an Indonesian regency, has built its prosperity by acting as a middleman for Indonesia’s exports. But change is coming.

This discussion, sparked by a YouTube video “Indonesia Bangkit! Singapura Panik! PRABOWO Stop Jadi Feeder Singapura.” by SANG PENYERU, has ignited widespread debate among Indonesians about the country’s role in global trade. The video highlights how Indonesia’s critical commodities—palm oil, coal, seafood, and nickel—often pass through Singapore before reaching global markets, allowing Singapore to profit significantly while Indonesia receives minimal returns. It’s a system that has benefited Singapore for decades, and now, as Indonesia moves towards direct exports and industrialization, the small but mighty neighbor is feeling the heat.

How Did Singapore Get Rich Off Indonesia?

Singapore’s trade dominance isn’t just about geography—it’s about strategy. Its port, one of the largest in the world, has capitalized on Indonesia’s lack of infrastructure. Without sufficient direct shipping routes, Indonesia has relied on Singapore as a transit hub. This means additional costs, markups, and logistics fees—all adding to Singapore’s GDP while draining Indonesia’s potential revenue.

Speaking about this long-standing issue, President-elect Prabowo Subianto acknowledged the mismanagement of Indonesia’s wealth and its inefficiency in economic planning:

“Brothers and sisters, I say, and we all know that Indonesia is very rich, but this wealth is often not managed well and is often wasted,” said Prabowo.

“That is why I am determined to lead an efficient government. I understand a lot. I understand that every organization, especially one that has been accustomed to inefficiency and wasteful practices for years, will try to trick us. Brothers and sisters, I understand all those tricks,” he added.

Prabowo’s remarks highlight the core problem—Indonesia’s failure to manage its own economic resources, leading to foreign nations profiting at its expense.

Take Crude Palm Oil (CPO), for example. In 2023 alone, Indonesia exported over $2.6 billion worth of CPO, but much of it was routed through Singapore. With shipping fees between $15-45 million per container, Singapore effortlessly pockets hundreds of millions from Indonesia’s exports.

The Push for Economic Independence: Hilirisasi

The game is changing. President Joko Widodo’s administration has aggressively pushed for hilirisasi—the industrialization of raw materials to ensure Indonesia exports higher-value goods instead of just raw materials. The first major move? The nickel ban.

By prohibiting raw nickel exports and instead refining it locally, Indonesia has drawn ire from global markets but positioned itself as a key player in the EV battery supply chain. European nations have already taken Indonesia to the WTO over the policy, but Indonesia isn’t backing down.

Now, the strategy is expanding:

• Direct exports to China via Kuala Tanjung Port, bypassing Singapore entirely.
• Increased domestic processing of palm oil into higher-value products.
• Investment in maritime infrastructure to reduce dependence on Singaporean ports.

This shift is causing panic in Singapore. Media outlets there have ramped up narratives about the inefficiencies of Indonesia’s policies, claiming that direct exports will be costly and unsustainable. But let’s be clear—Singapore’s concerns are not about Indonesia’s efficiency; they’re about losing their role as the middleman.

The Singaporean Panic: Economic and Political Ramifications

Singapore thrives on control. Its dominance over trade routes gives it leverage over regional economies. Indonesia’s new export policies threaten this position, and Singapore is scrambling to maintain influence.

Online discussions among Indonesians reflect this awareness. One commenter, @wawanagading6943, pointed out:
“Dulu pejabat kita yang penting perut lebar, sekarang kita bisa kelola sendiri. Indonesia harus maju tanpa jadi perbudak ekonomi negara lain.”

Another, @JalanTerus85, wrote:
“Teruslah buat konten seperti ini… agar wawasan rakyat Indonesia semakin luas tentang ekonomi dan memperkuat nasionalisme.”

These sentiments echo a larger nationalistic movement pushing Indonesia to assert control over its resources.

The Reality Check: Challenges Indonesia Must Overcome

Breaking free from a trade dependency that has lasted for decades isn’t easy. While hilirisasi is a strong step forward, Indonesia must address several challenges:

1. Infrastructure Development

• Ports like Kuala Tanjung must scale up their capacity to handle direct exports effectively.
• The government needs to continue investing in maritime and logistics capabilities.

2. Global Trade Pressures

• The EU’s legal actions against Indonesia’s nickel policies highlight the resistance from established economies.
• Western nations and Singapore will use diplomatic channels to pressure Indonesia into reversing its export bans.

3. Internal Economic Stability

• While processing raw materials domestically is beneficial, it requires a skilled workforce, reliable energy, and capital investment.
• Policies must support local entrepreneurs and industries to ensure hilirisasi benefits all Indonesians, not just large corporations.

What Comes Next?

Indonesia is standing at a crossroads. For years, it has played the role of a raw material supplier, while others have reaped the profits. Now, as the country takes decisive steps toward industrialization and direct exports, it faces resistance from external forces. But this is not just an economic battle—it’s a fight for sovereignty.

Indonesia has the resources, the manpower, and now, the political will to break free from its dependency on Singapore’s trade routes. But success will depend on whether the nation can maintain its course despite international pressure.

As Indonesia moves forward, it must continue to build infrastructure, refine its industrial strategies, and stay firm against external pressures. The shift away from Singapore’s trade dominance isn’t just about money—it’s about national pride, economic sovereignty, and Indonesia’s rightful place as a global powerhouse.

Indonesia is done being a feeder hub. The real question is—how long before Singapore accepts this new reality?

Sources:
[1] Indonesia Bangkit! Singapura panik! PRABOWO Stop Jadi Feeder Singapura.
[2] Presiden Prabowo Optimis Indonesia Bangkit karena Saling Membantu
[3] Prabowo: Indonesia Mampu Bangkit dengan Disiplin dan Efisien
[4] Presiden Jokowi: Hilirisasi dan Digitalisasi Kunci Dorong Pertumbuhan Ekonomi Indonesia