Economist: Indonesia-US ART Agreement to Take Effect Soon, RI Should Confirm Promptly
Jakarta (ANTARA) - IPB University Professor of Economics Sahara is urging the government to promptly provide written confirmation regarding the Agreement on Reciprocal Trade (ART) between Indonesia and the United States, given the increasingly limited time remaining before the agreement officially takes effect.
Sahara stated that the ART agreement, signed on 19 February 2026, will become effective 90 days after both countries complete all domestic legal procedures. Thus, the timeframe for Indonesia to respond officially is narrowing.
“The time we have to provide written confirmation is increasingly limited, considering that the ART also covers economic aspects, national security, and Indonesia’s commitments to purchase several US commodities,” Sahara said during a public discussion by CORE Indonesia in Jakarta on Wednesday.
She explained that official confirmation is necessary because the ART has a broader scope than conventional trade agreements such as free trade agreements (FTA) or Comprehensive Economic Partnership Agreements (CEPA), encompassing aspects from economics to national security, as well as commitments to purchase certain commodities from the US.
Sahara outlined the results of Global Trade Analysis Project (GTAP) modelling regarding the implementation of ART on Indonesia through two simulation scenarios.
In the first scenario, with Indonesia subject to a 19% reciprocal tariff excluding 10 products, economic growth is projected to contract by around 0.4%. The weakening of exports to the US due to a 19% relative price increase, along with rising imports, are the main factors.
From a trade perspective, Indonesia’s exports to the world are projected to fall by up to 1.86%, while imports rise by about 1.5%, potentially shrinking the trade balance by 5.66 billion US dollars.
In the second scenario with lower tariffs around 15%, the impacts are relatively moderate. Economic growth contracts by about 0.2%, with imports increasing by 0.4%.
Sahara also highlighted the potential risks of retaliation or retaliatory actions from other trading partner countries due to the purchase commitments in the ART.
One example is the obligation to import around 50,000 metric tons of beef from the United States annually, which could shift imports from Australia as the main supplier.
“If there is a shift in purchases, partner countries like Australia may respond with retaliatory actions,” she said.
Additionally, she revealed that prices of certain commodities from the United States tend to be higher compared to other major suppliers such as China, Australia, and Brazil, potentially adding to Indonesia’s import burden.
Amid these dynamics, Sahara views accelerating confirmation of the ART as an important initial step, followed by further strategies to minimise negative impacts on the economy.
She recommends that the government strengthen export market diversification to non-traditional markets, promote increased value addition in products, and reduce reliance on imported raw materials through domestic industry strengthening.
Furthermore, logistics and energy efficiency, as well as rupiah exchange rate stability, are deemed important for maintaining competitiveness amid global pressures.