By: Rikcy Rinaldi
The dynamics of the global economy are being tested again after the President of the United States, Donald Trump, who is now back in office, decided to raise import tariffs on various trading partner countries, including Indonesia. This unilateral policy immediately triggered concerns in the world market, including pressure on the rupiah exchange rate. Although Trump postponed the implementation of the tariff for 90 days, the Indonesian government continues to make various negotiation efforts to prevent a wider impact on the national economy.
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However, the Indonesian government responded with a cool head. Rather than being reactive, the strategy taken was a measured, coordinated approach, and focused on long-term stability.
President of the Republic of Indonesia, Prabowo Subianto, emphasized that Indonesia adheres to the principle of fair and mutually beneficial international trade. He emphasized that the government will not be reckless in facing US protectionist policies, but will take an active and dignified diplomatic path. Prabowo also stated that Indonesia is not closed to the possibility of opening new bilateral cooperation as long as it maintains national interests as the main priority.
Finance Minister Sri Mulyani Indrawati, who remains in Prabowo’s Cabinet after previously serving in President Joko Widodo’s era, is a central figure in maintaining the direction of fiscal policy. At the ASEAN Finance Ministers forum in Kuala Lumpur in early April 2025, Sri Mulyani explained that Indonesia still has sufficient fiscal space and strong foreign exchange reserves to maintain national economic stability. She also stated that the government is ready to use fiscal incentives selectively to reduce the impact of external pressures.
Concrete steps will be taken immediately, starting from providing tax incentives for exporters affected by tariff policies, to accelerating VAT restitution and easing import duties on imported raw materials for labor-intensive industries. The government considers that the resilience of the industrial sector is key to facing global uncertainty, because the impact is directly felt at the employment and productivity levels.
In addition to short-term strategies, the government is also designing medium-term policies oriented towards export market transformation. Minister of Finance, Sri Mulyani Indrawati, said that countries in the East African, Middle Eastern, and South Asian regions are new targets for Indonesian market penetration. She emphasized the importance of market diversification so that Indonesia is no longer too dependent on one or two large trading partners.
The President of the Republic of Indonesia, Prabowo Subianto, also fully supports this policy direction. He instructed the relevant ministries to prepare a national export roadmap that is more agile in responding to global trends. According to him, the world is currently changing too quickly to rely on old strategies. Therefore, industrial downstreaming and the creation of added value domestically are also major priorities in national economic development.
The monetary sector also received serious attention. Although Bank Indonesia Governor Perry Warjiyo did not appear much in the media spotlight this month, the government ensured that coordination remained close with the monetary authorities. Bank Indonesia continued to maintain exchange rate stability through market intervention and foreign exchange reserve management, but the pressure was not placed solely on the nominal exchange rate. The main focus remained on strengthening the fundamentals of the national economy so that the rupiah would be naturally stable.
At the domestic level, Minister of Finance Sri Mulyani Indrawati actively engages in dialogue with business actors, both through formal forums and direct meetings with industry associations. She said that the government does not only want to extinguish the fire for a moment, but also build an economic system that is resilient to global turmoil. According to her, the voice of business actors is important in determining the direction of incentives and relaxations that really have an impact.
The government’s steps have received support from various parties. Former Vice President of the Republic of Indonesia, Boediono, who is also known as a senior economist, said that the government needs to continue to maintain a balance between fiscal and monetary policies so that external risks do not have a broad impact on domestic business actors. He emphasized the importance of managing risk exposure carefully so that long-term stability is maintained.
On the other hand, the public response to the government’s economic policies is very positive. Although there has been an increase in gold purchases as a form of hedging, people’s consumption and spending activities continue to show a stable trend. Based on a national survey released in early April 2025, 67 percent of respondents stated that they were satisfied with the government’s steps in maintaining the economy amidst global turmoil. This figure reflects a very high level of public trust.
Economic diplomacy is also being strengthened. The government, through the Ministry of Trade and the Ministry of Foreign Affairs, has sent a delegation to Washington DC to discuss the possibility of tariff adjustments and open up opportunities for new bilateral trade agreements. The government is also strengthening its bargaining position through regional cooperation, including accelerating the ratification of the Comprehensive Economic Partnership Agreements (CEPA) with European and Asian countries.
With these steps, the Indonesian government shows that external pressure does not make the direction of national policy lose focus. On the contrary, global tensions are a momentum to accelerate the transformation of the national economy to be more independent, sustainable, and highly competitive.
*)Strategic Issues Observer
