By: Karmila Fitri )*
In the midst of an increasingly dynamic geopolitical situation and uncertain global economic policies, the Indonesian Government has demonstrated its readiness to maintain national economic stability through a number of strategic policies. These steps are specifically designed to respond to the United States’ reciprocal tariff policy, without getting caught up in an escalation of trade conflicts.
Instead of retaliating, the Indonesian Government has chosen economic diplomacy as its main approach. Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated that Indonesia will prioritize mutually beneficial solutions through negotiation. To mature the joint strategy, a high-level meeting between ASEAN countries will be held, where Indonesia will take an active role in aligning its stance with Malaysia, Singapore, and Cambodia. This step will also strengthen the position of the Southeast Asian region in facing increasing external pressure.
The policy package currently being prepared includes revitalizing the Trade and Investment Framework Agreement (TIFA). The government considers that the agreement signed in 1996 requires updating because many of its provisions are no longer relevant to today’s trade dynamics. This revitalization is seen as crucial so that trade and investment cooperation between Indonesia and the United States is more adaptive to the challenges of the times, and in line with international standards that continue to develop.
Furthermore, the government will submit a proposal to relax a number of Non-Tariff Measures (NTMs). One focus is the relaxation of the Domestic Component Level (TKDN) rules in the information and communication technology sector. The government will also evaluate various policies prohibiting and restricting export and import goods, including those involving the United States. This is done to avoid unnecessary friction, while opening up space for increasing the volume of mutually beneficial trade.
As part of anticipatory measures, the government is also preparing a strategy to encourage imports from the United States, especially in the energy sector such as oil and natural gas. This step not only maintains the balance of trade, but also strengthens bilateral cooperation based on the strategic needs of both countries. With a more balanced trade pattern, it is hoped that pressure from tariff policies can be minimized through an economic symbiosis approach.
In order to strengthen export competitiveness, the government will launch fiscal and non-fiscal incentives, including the possibility of reducing import duties, import Income Tax (PPh), and import Value Added Tax (PPN). This policy is designed to maintain the stability of Indonesian exports amidst the possibility of tariff increases from major partner countries, without sacrificing state revenues in the long term.
Data from the Ministry of Trade shows that in 2024, Indonesia recorded a trade surplus of USD 14.34 billion against the United States. The largest surplus came from commodities such as machinery and electrical equipment, clothing, and footwear. On the other hand, the United States recorded a deficit of USD 17.9 billion against Indonesia. This makes it important for trade relations between the two countries to continue to be maintained through a constructive negotiation approach and away from a protectionist approach.
In order to strengthen Indonesia’s bargaining position, the Minister of Trade, Budi Santoso, has held a dialogue with the United States Ambassador to Indonesia, Kamala Shirin Lakhdhir. In the meeting, both parties agreed on the importance of maintaining positive trade relations so as not to be affected by negative issues that could damage the stability of bilateral cooperation. The government also emphasized the importance of not implementing policies that could harm Indonesian export products in the US market, considering that many domestic industrial sectors depend on open and fair access to foreign markets.
The government realizes that maintaining a trade surplus is not just a matter of high-level diplomacy, but also requires support from the national financial and banking sectors. In this context, PT Bank Negara Indonesia (Persero) Tbk. or BNI has taken mitigating steps by tightening the distribution of foreign currency-denominated credit. BNI Corporate Secretary, Okki Rushartomo, emphasized that this step was taken to maintain asset quality and financial resilience amid fluctuations in the rupiah exchange rate due to pressure from US foreign policy.
BNI also applies stress tests on various global macroeconomic scenarios to ensure that bank operations remain stable. Foreign currency lending is now focused on debtors who have sources of income in foreign currency or have natural hedge capabilities. On the other hand, the positionUS dollar liquidity in the national banking system remains well maintained, with the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) above the internal risk threshold.
The government’s efforts to maintain national economic stability through diplomacy and fiscal policy are clear evidence that the country is not sitting idly by in facing global challenges. Each policy is prepared with careful calculation and by involving various strategic stakeholders.
By prioritizing dialogue, regional cooperation, and synergy between the government and the business sector, Indonesia demonstrates its capacity to respond to global dynamics wisely and strategically. The policy package being prepared is not only an instrument of economic defense, but also a symbol that Indonesia is ready to be an important part of a fair, open, and inclusive global trading system.
)* Observer of the World Economy
