Indonesia Will Not Be Subject to US Boycott
Jakarta - Deputy Minister of Investment and Downstreaming/Deputy Head of BKPM, Todotua Pasaribu, affirmed that Indonesia will not be the target of a United States (US) boycott in trade and investment cooperation. He ensured that there are no agreements that could potentially involve Indonesia in a trade boycott scheme, as experienced by several other countries. “There is no such agreement (regarding a boycott). We still adhere to the principle of cooperation, free and active trade, with the US and other institutions,” he said in Jakarta, this week.
Todotua emphasized that the direction of the government’s policy under President Prabowo Subianto is very clear, especially in maintaining national independence without closing the door to global cooperation. “Our President is clear, President Prabowo is clear,” he said.
He believes that communication in the field of trade and investment is an important instrument to maintain Indonesia’s economic stability and competitiveness. “Our independence is our business, there is no interference. But that we must open communication in order to promote trade and investment, yes, that is a must,” he said.
Previously, the Indonesian Minister of Trade, Budi Santoso, ensured that the import tariff policy in the reciprocal trade agreement with the United States of 19% would not affect Indonesia’s export performance or the national trade balance.
He explained that so far, Indonesia’s exports still record a surplus, including with the US, which is one of the main trading partners. “Right now, we have a surplus. Our largest surplus is with America, the second largest is with India. So, there is no problem,” he said. “Oh, no, no (impact from the 19% tariff),” Budi told reporters on Tuesday (February 24).
Furthermore, Budi said that in the trade agreement that has been agreed upon, Indonesia actually gets many benefits in the form of 0% tariffs for various export commodities. With these facilities, he believes that Indonesia’s export performance has the potential to grow higher.
“Our largest surplus is with America, the second largest is with India. So there is no problem. Secondly, in this agreement, we get a lot of 0 percent tariffs. So it should actually increase. In fact, we want to increase exports,” he said.
Responding to the view that Indonesia’s trade balance could be depressed due to US tariff policies, Budi denied it again. According to him, imports from the US are not a major problem because most of the goods that enter are commodities that are indeed needed in the country.
Previously, Indonesia officially agreed on a reciprocal trade agreement with a 19 percent tariff with the United States (US). There are 1,819 tariff items regulated in the trade agreement between the two countries.
The signing of the Agreement on Reciprocal Trade (ART) was carried out by President Prabowo Subianto and US President Donald Trump. The agreement was signed after the inaugural agenda of the Gaza Peace Council or Board of Peace (BoP) meeting.
“Indonesia and the United States agreed to strengthen economic cooperation,” said Coordinating Minister for Economic Affairs, Airlangga Hartarto, in a virtual press conference, last week.
He recounted the negotiation process which began in April 2025 when Donald Trump announced that Indonesia would be subject to a reciprocal tariff of 32 percent. Negotiations resulted in a reduction in tariffs to 19 percent with various other additional provisions. “90 percent of the documentation sent by Indonesia was fulfilled by the United States. So Indonesia’s proposal was fulfilled by the United States as outlined in the Agreement on Reciprocal Tariff,” he said.
Local Content (TKDN) Issue
Todotua Pasaribu emphasized that the relaxation of the Domestic Content Level (TKDN) with the United States (US) is part of the trade agreement. This step is an effort to remove non-tariff barriers for the US.
He ensured that there would be no negative impact from the TKDN relaxation on the investment climate in Indonesia. This is because the values and figures in the trade with the US are clear.
Todo’s belief is strengthened because not all requirements are subject to the relaxation. For him, this is part of a strategy. “If it’s just part of a strategy, some of the requirements are relaxed,” he said.
He ensured that the relaxation of TKDN for US products does not mean that Indonesia will be completely drained. This is because in the trade practices between the two countries, there are clear figures. “But there are also calculations of our trade that we take from them, it doesn’t have too much influence on that,” he said.
Previously, the Indonesian Government through the Coordinating Ministry for Economic Affairs stated that the policy on the domestic content level (TKDN) remains in effect and is applied. This answers the question about the application of the TKDN policy in the reciprocal trade agreement or agreement on reciprocal trade (ART) with the United States.
The Spokesperson for the Coordinating Ministry for Economic Affairs, Haryo Limanseto, said that the TKDN policy remains in effect and is applied in the context of government procurement. This means that the TKDN provisions relate to projects or government spending, not all goods circulating in the market. “This is carried out as an effort to promote the use of Indonesian-made products,” he said, last week.
According to Haryo, goods sold commercially in the national market or directly to consumers are generally not required to have TKDN. “Thus, these provisions do not change the mechanism of competition for goods in the retail market or industry in general and do not immediately create unfair conditions for domestic business actors,” he said.
In one of the points of the trade agreement between Indonesia and the United States regarding the elimination of non-tariff barriers, Indonesia will address various non-tariff barriers, such as exempting US companies and goods of origin from local content requirements.
Previously, Director of Digital Economy at the Center of Economic and Law Studies (Celios), Nailul Huda, said that there are