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Kratom Effects on Indonesian Economy

Mitragyna Speciosa, or kratom tree, is found all over Southeast Asia. But if there is one country that can be called the home of kratom, it would be Indonesia. Indonesia is a large country with thousands of big and small exotic islands. Most of these islands have the kratom trees flourishing on them. Partly because of the rich minerals in the soil, but mostly due to the suitable climatic conditions that prevail all year round. The warm temperatures and heavy moisture content in the air perfectly suit the kratom trees and they thrive! Let’s take for example the island of Borneo. Sweltering forests of this large island – shared by three different countries including Indonesia – are famous for kratom production of gigantic amounts. At the grass-root level, the local farmers and exporters, both benefit by selling kratom abroad. But what are the Kratom effects on Indonesian economy? In this article we’ll have an objective look on just that.

There are no historical evidences that can tell for sure when kratom was discovered for its properties and became a famous commodity. However, what we do know now for sure, is that the kratom effects on Indonesian economy are not less than a miracle because of the popularity in the West. The kratom products, later sold as kratom powders and kratom capsules, help Indonesia earn a lot of revenue annually. So let us start with a quick overview of the Indonesian economy.

The Economy of Indonesia – An Overview

With a population of about 270 million people, Indonesian Gross Domestic Product (GDP) surpasses that of $1.1 trillion mark (nominal) and $ 3.7 trillion adjusted for Purchasing Power Parity (PPP). With this size, the GDP of Indonesia ranks as 16th in the world according to nominal figures and 7th according to PPP.

The total exports are $180 billion and the imports are $188 billion. With the negative difference between the exports and imports, the budget balance is -2.7 % of the GDP. This figure is not alarming, yet perturbing. Every dollar of export versus the imports matters. Among palm oil, paper, and rubber – kratom effects on Indonesian economy through its export are also important to some extent.

Dependence of Indonesian Farmers on Kratom

To understand the kratom effects on Indonesian economy, we need to realize the dependence of numerous kratom farmers on the export of their kratom. Many of the farmers in regions such as Kalimantan, Hulu Kapuas, and Borneo have shifted away from growing rubber plants and palm trees. Seeing the profits, they have made Kratom their chief crop. The survival of not only these kratom farmers, but also their families rather whole communities, depends on the export of their kratom crop. One of our suppliers, exporting 5 tonnes of kratom monthly, says that all his life earnings are invested in his kratom farm. He, and many such farmers, depend on kratom for staying afloat. One can imagine the positive kratom effects on Indonesian economy just from this one example. There are thousands more of such stories.

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The Indonesian government has banned the local consumption of Kratom but allows the exports in its raw form. The positive kratom effects on Indonesian economy are evident from the benefits that the small scare rural farmers have been able to reap from the export. The encouraging social and financial impacts of kratom exports cannot be understated. During the last decade or so, there has been a sharp upward spike in the demand for kratom from the West, especially from the US. The villages, once struggling for basic life facilities, are now bustling with activities as money has started to pour in through the exports. The transformation in few years is surreal!

Kratom Effects on Indonesian Economy Through Trade with the US

The United States is the biggest importer of Kratom from Indonesia. According to American Kratom Association, about five million Americans use kratom regularly (2016 figures). This number is expected to have increased considerably since then. Kratom effects on Indonesian economy can be gauged from the fact that the US alone imports kratom worth about $130 million per anum (unofficial estimates). Most of this massive influx of money goes directly to the small and medium-scale farmers, transforming theirs and their families’ lives.

In the US, any change in the legal status of kratom would have dire consequences for kratom effects on Indonesian economy. Such a change will give rise to an adverse situation for the kratom farmers in Indonesia who depend solely on Kratom as a source of their livelihood.

Besides being the largest exporter of kratom to the US, Indonesia also supplies many unique kratom strains that are not available in other countries. Imagine that the legal status of kratom is changed in the US, not only it will have negative kratom effects on Indonesian economy, but many kratom enthusiasts in the US will be deprived of their basic right guaranteed to them in their constitution as well.

What is the Indonesian Government Doing About This?

The Indonesian government, to keep the money coming in for now, is keeping the export of kratom legal. Over the past few years, the government has held many seminars and lectures specifically to discuss the kratom effects on Indonesian economy. Opinions differ from scholar to scholar regarding the subject. But all of them agree, that through the influx of money, whole communities in the rural areas are benefiting hugely. The government also cannot afford to cause unemployment on such a massive scale. Therefore, for now, it is the “status quo” for the Indonesian government.

To inquire further, we interviewed one of the kratom farmers in Sumatra, who said that they are not responsible for end-users. They are just interested in exporting the kratom powder so that they can continue with this profitable business. He also hopes that the Indonesian government will support their demands and help them create positive Kratom effects on Indonesian economy.

Indirect Effects on Economy Associated with Export of Kratom

Besides the direct economy, many indirect jobs are generated through kratom effects in Indonesian economy. Few of them are listed in the ensuing paragraphs.

Pontianak (Postal service in Indonesia) has reported that as much as 90% of their total postal orders abroad consisted of Kratom exports to the US. The postal service attributed a big portion of the annual revenues to the export of kratom to the US.

Many daily-wagers work for the kratom farmers who perform petty tasks such as harvesting, drying, and separating the kratom leaves based on their grades. These temporary workers are part of the informal undocumented economy, but a crucial part in the overall kratom industry.

The transport businesses in Indonesia also benefit much from the kratom. Moving kratom from the farms to the towns, from where it can be exported, they play an important role in the overall complex logistics chain.

Conclusion

Analyzing the facts we can safely conclude that there are positive kratom effects on Indonesian economy. Any change can alter that status for worse. In the last decade or so, there has been a big positive change in the lives of kratom farmers in the rural areas of Indonesia. The farmers depend a lot on the export of kratom and they want the Indonesian government to keep supporting them. They also argue that if the kratom export is disallowed in the future, their precious commodity will go to waste completely. In the US and Indonesia, we hope that common sense will prevail and governments will not take steps that are detrimental for people of both the countries.

If you are interested in reading more articles like this, we suggest you have a look at our kratom blog section. You’ll find a ton of interesting kratom topics to read from.


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