BRIN economist confident that Indonesia-US cooperation will boost industrial exports by 15 percent
The increase in trade will definitely occur, and Indonesia must maximize these trade opportunities through various efforts and alternative products.
Senior Researcher at the Center for Macroeconomic and Financial Research of the National Research and Innovation Agency (BRIN), Ragimun, assessed that the trade agreement between Indonesia and the United States will encourage an increase in national industrial product exports by up to 15 percent.
Ragimun said that the agreement provides easier market access for Indonesian exports to the US, thus opening up opportunities for increased bilateral trade that needs to be optimally utilized by domestic industrial players.
“The increase in trade will definitely occur, and Indonesia must maximize these trade opportunities through various efforts and alternative products,” he said when contacted in Jakarta, Wednesday.
According to him, the sectors that have the potential to record an increase in exports are still dominated by the textile and textile product (TPT) industry, footwear, household appliances, crude palm oil (CPO), electronics and telecommunications goods, and rubber products.
He estimates that the increase in exports for these products can reach around 15 percent along with the opening of market access and increased trade activity between the two countries.
However, Ragimun reminded that the agreement also has consequences for the national energy sector. In addition to opening up export access, the agreement requires a commitment to import products, especially from the US energy sector.
According to him, this condition reflects a strategic shift that prioritizes the resilience of oil and gas supplies, while still trying to maintain a clean energy partnership.
He added that there are concerns about Indonesia’s clean energy transition targets if there is an option to switch to importing fossil fuels from the US, as well as the potential for increased dependence on energy imports from the country.
However, he emphasized that the opportunity to increase industrial exports remains a positive side that must be maximized by the government and business actors through product diversification and strengthening competitiveness in the global market.
President Prabowo Subianto and US President Donald Trump discussed mutually beneficial cooperation and trade for both countries.
In a meeting that lasted for 30 minutes in Washington DC, United States, Thursday (19/2), President Prabowo said that the discussion focused on trade issues, especially the negotiation of reciprocal tariffs that have been going on for quite some time.
“We discussed trade issues between the two countries,” said Prabowo when giving a press statement in Washington DC, United States, Saturday (21/2) morning local time.
Indonesia will get a 0 percent reciprocal tariff for superior export products such as palm oil, coffee, cocoa, and others.
Tariff exemptions apply to 1,819 Indonesian products (consisting of 1,695 industrial products and 124 agricultural products subject to MFN).
For Indonesian textile products, the US has prepared a tariff reduction of up to 0 percent through the Tariff-Rate Quota (TRQ) mechanism.
Then, increased investment through ease of doing business. Ease of investment entry, especially in the field of high technology for the ICT sector, medical devices and pharmaceuticals through adjustments to TKDN policies, domestic specification provisions and deregulation of domestic policies.
The Indonesian commitment in implementing Strategic Trade Management provides a signal to the business world that Indonesia is very serious in creating a safe business ecosystem, and ensures that high-tech and high-value goods will not be misused.
With the provision of easier import licensing and standardization requirements for agricultural products from the US, it is hoped that businesses can obtain raw materials more efficiently and maintain the smoothness of the production process, thus supporting the national food security program.
The Indonesian commitment to open up opportunities and encourage investment flows with looser foreign ownership restrictions for US companies in certain sectors, including mining divestments and several restrictions in the financial sector.