JAKARTA: Days ahead of the expected signing of a bilateral tariff agreement with the United States, analysts have called on the government to tread with caution regarding concessions made, specifically opening the domestic market to US goods.
Paramadina University economist Wijayanto Samirin said Jakarta had to pay careful attention to the pricing of US commodities. “It shouldn’t be the case that we are forced to buy products at uncompetitive prices.”
Speaking to The Jakarta Post, Wijayanto said incoming shipments of wheat and soybean, in particular, would need to be properly coordinated with Indonesia’s private sector to prevent excessive market disruption.
“Regarding the commitment to buy aeroplanes and energy commodities, the government has to be careful, given that our financial situation is not strong,” said Wijayanto, before urging the government not to be afraid to back off from a deal that might disadvantage the archipelago.
The government issued a loosely worded statement following a weekend meeting at President Prabowo Subianto’s Hambalang estate in Bogor, West Java.
Cabinet Secretary Teddy Indra Wijaya said in a statement afterward that Prabowo wanted any deal to “increase domestic industrial productivity to the fullest extent possible, ensuring that the position taken by Indonesia in economic negotiations with any party – particularly in the near term with the United States – is the best and most advantageous for Indonesia.”
“President Prabowo wants every policy to have concrete benefits for Indonesia as soon as possible and as much as possible,” he added, without going into details about the current US-Indonesian talks.
Last week, Airlangga said Jakarta and Washington were scheduled to sign the Agreement on Reciprocal Trade (ART) on Feb 19, following the Board of Peace’s inaugural meeting in Washington, DC.
Syafruddin Karimi, an economics professor at Andalas University cautioned against compromising too much to clinch a deal and warned of a potential import flood.
“If the agreement with the United States ultimately proves disadvantageous for Indonesia, the worst impact would not only be on the trade balance or specific industrial sectors but also on the country’s credibility in managing geopolitical risk,” Syafruddin said.
He added that the government would need to push for renegotiation “should the data show that the agreement’s design is imbalanced” but without falling into “indiscriminate protectionism”.
“Indonesia’s concessions must be matched by measurable deliverables from the United States,” the economist insisted.
A general 19% tariff would put Indonesian exporters on par with South-East Asian peers based on ARTs signed by Malaysia and Cambodia with the United States, but it would leave them at a slight disadvantage to competitors in India, as New Delhi signed a bilateral deal subjecting its exports to a marginally lower rate of 18%.
The 19% import duty would apply to most Indonesian goods exported to the United States, while tariffs are to be eliminated on 99% of US products entering Indonesia, as well as several other concessions, such as procuring aircraft from Boeing as well as importing more energy commodities, wheat and soybeans from the United States. — The Jakarta Post/ANN
