By: Farhan Farisan )*
Global economic challenges are increasingly complex due to geopolitical turmoil, protectionist policies, and uncertainty in international financial markets. Tensions between major countries such as the United States and the People’s Republic of China have an impact on the global supply chain and commodity price fluctuations, which ultimately affect economic stability in Indonesia.
The government has shown a quick and strategic response to anticipate this external impact. One of them is through trade negotiation efforts with strategic partners such as the United States. In a press conference of the Financial System Stability Committee (KSSK), Finance Minister Sri Mulyani said that discussions with the US were still ongoing outside the official schedule, showing the government’s seriousness in maintaining the balance of bilateral trade relations.
Sri Mulyani also emphasized that the situation in the US is still very fluid, with their policies also influenced by global trade tensions, including with China. Therefore, Indonesia responded by proposing five main strategies in order to strengthen the national economic position while creating a mutually beneficial relationship with the US.
The first step is to offer to adjust import tariffs on certain products from the US. This approach is intended as a constructive step that creates a new balance in bilateral trade relations, not as a repressive action. The government wants to show that Indonesia remains open, but firm in protecting national interests.
Furthermore, the government also stated its commitment to increase imports of products from the US, especially commodities such as oil and gas, high-tech equipment, and agricultural products that are not produced domestically. This is expected to strengthen economic cooperation between the two countries, while increasing Indonesia’s energy and technology resilience.
Fiscal and customs reforms are also a major focus. The government is committed to improving the tax and customs system to increase efficiency and transparency, creating a more competitive and attractive business climate for foreign and domestic investors.
In terms of non-tariff barriers, the government is making policy adjustments such as the Domestic Component Level (TKDN) and import quota management. In addition, deregulation of various technical requirements in a number of ministries and institutions is being accelerated to provide easy market access for foreign products, without sacrificing the protection of local industries.
Indonesia also prepared a responsive policy to face the surge in imports through the trade remedies mechanism. This is important to maintain the competitiveness of the domestic industry so that it is not eroded by foreign products with unreasonable prices or dumping practices.
The government views this reform as an important step in encouraging inclusive economic growth, maintaining macroeconomic stability, and ensuring the sustainability of the State Budget (APBN). The hope is that Indonesia’s export competitiveness will increase, while strengthening strategic relations with the US.
Meanwhile, FEB UGM Economist, Muhammad Edhie Purnawan, said that the main challenge of the Indonesian economy today comes from global uncertainty triggered by geopolitics, trade protectionism, and financial market volatility. This condition weakens the rupiah exchange rate, suppresses exports, and erodes people’s purchasing power.
According to Edhie, national banks need to innovate in strengthening liquidity and risk management in order to adapt to the challenges of the digital era. With fintech increasingly aggressively targeting the millennial segment, conventional banks must make major investments in technologies such as open banking and artificial intelligence, while strengthening defenses against cyber threats.
Concrete steps that need to be taken by the government and Bank Indonesia (BI) are strengthening monetary and fiscal coordination, maintaining food security, encouraging the digitalization of MSMEs, and utilizing economic diplomacy. This strategy is important to strengthen economic sovereignty amidst changing global tensions.
Edhie also emphasized the importance of maintaining the BI-Rate and maintaining a healthy credit ratio. Open market operations remain the main instrument in maintaining the stability of the rupiah amid pressure from capital outflows due to high global interest rates and geopolitical conflicts.
In addition, BI needs to maintain exchange rate stability through adaptive interest rate policies and measured interventions in the foreign exchange market. The government must also reallocate state spending to sectors most affected by global trade tensions.
Mirae Asset Sekuritas economist Karinska Salsabila Priyatno said that maintaining economic growth in the range of 4.75% requires a balance between fiscal support and structural reform. Spending efficiency, increasing revenue from the tax sector, and wise debt management are non-negotiable steps.
Tariff negotiations with the US are still dynamic, with several sectors such as energy and agriculture currently under evaluation. The government emphasized that all offers remain based on national interests, especially in maintaining energy security and technology transfer.
Karinska also highlighted the importance of protecting digital infrastructure such as QRIS and GPN. The sustainability of the national payment system must be maintained so that Indonesia does not get caught in a digital dependency that endangers economic sovereignty in the future.
This week, market attention will be on the release of April CPI data and first-quarter 2025 GDP growth. These two indicators are important benchmarks in seeing the resilience of domestic consumption amid high interest rates and global pressures.
With various strategies and cross-sector collaboration, Indonesia is expected to be able to overcome global challenges with its head held high. The main keys are policy synergy, macro stability, bias towards productive sectors, and adaptation to rapid and dynamic global changes.
)* The author is a Bandung student living in Jakarta
