Kadin and Aprisindo Ask Government to Fly to Washington DC for Negotiations

JAKARTA, KOMPAS – The Indonesian Chamber of Commerce and Industry will utilize its connections with the US Chamber of Commerce to follow up on negotiations between the two countries. Meanwhile, several industry players are still assessing the impact of the 32 percent import tariff.

The Chairman of the Indonesian Chamber of Commerce and Industry (Kadin), Anindya Novyan Bakrie, stated that the United States is a strategic business partner for Indonesia. The relationship between Indonesia and the United States is one of mutual dependence. President Trump's statement serves as an opening speech, indicating that the door for negotiations remains open.

"At the beginning of May, it is planned that, in coordination with the government, the Indonesian Chamber of Commerce will visit the United States to follow up on cooperation with the US Chamber of Commerce and attend several business and economic conferences to address the latest developments," said Anindya in a press release on Friday (4/4/2025).

According to Anindya, Indonesia still has the opportunity to maintain good relations with the US as a trading partner. The US needs a market for defense equipment, aircraft, and liquefied natural gas.

The US could also subsidize imports of processed nickel and other minerals from Indonesia as long as the minerals are processed according to environmental and labor standards. This is made possible by the critical minerals agreements with the US.

"We can negotiate this with Indonesia's leading export products," said Anindya.

As the largest bilateral trading partner, the US is the largest foreign exchange supplier, contributing a trade surplus of 16.8 billion USD to Indonesia in 2024. Nearly all of Indonesia's main commodity exports to the US increased in 2024.

The majority of Indonesia's exports to the US consist of manufactured goods, namely electrical equipment, footwear, clothing, and not raw commodities. So far, Indonesian products have been subject to an import tariff of approximately 10 percent in the US.

However, some consumer goods are completely duty-free. This is because Indonesia enjoys the Generalized System of Preferences (GSP) facility provided by the US government to developing countries.

If the United States proceeds with the plan to impose a 32 percent import tariff on Indonesian products, Anindya continued, significant impacts will affect the balance of payments, particularly the trade balance and investment flows. Trump's policy also impacts the movement of investment funds, both portfolio investments and direct investments.

"Therefore, it is very important for Indonesia to attract investment, including through the creation of a special economic zone specifically for the US and its alliance. The Special Economic Zone (KEK) is very important to attract industrial relocation from China," he said.

If President Trump declared the day of tariff announcements as the United States' Liberation Day, then Indonesia needs to roll out a comprehensive economic policy package to free business actors from the anxiety of investing in Indonesia.

President Prabowo has instructed the Red and White Cabinet to take strategic steps by making structural improvements and rolling out a deregulation package, namely simplifying regulations and eliminating regulations that hinder, especially regulations related to non-tariff barriers.

"Trump's tariffs need to be used as momentum for the government, Bank Indonesia, the Financial Services Authority, and Indonesian business actors to work together to maintain market confidence, rupiah stability, and continue to try to reduce the high-cost economy as reflected in the Incremental Capital Output Ratio (ICOR) which is still above 6 percent, far from the normal limit of 4 percent," he said.

Chairman of the Indonesian Footwear Association (Aprisindo), Eddy Widjanarko, said that his party sees the opportunity for negotiation is still open to the US Government. The Indonesian Government must immediately send a competent and credible high-level delegation to Washington DC to negotiate directly with the US Government.

The comprehensive global strategic partnership between the Indonesian and US governments aims to ensure that the growth of trade relations between the two countries remains a pillar of shared prosperity and drives transformative change for the benefit of both countries.

"The relationship between the two countries is mutually beneficial in trade including footwear, maintaining mutual interests including strengthening supply chain integration and future investment," said Eddy.

Beyond the negotiation efforts, according to Eddy, there needs to be other solutions. For example, the government quickly finalizes the Indonesia European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) which has been stalled for nine years.

The completion of the deal will provide alternative market access and reduce import duties on Indonesian footwear products to the markets of 27 countries in Europe.

Currently, Eddy added, Aprisindo is conducting a comprehensive review of the impact on its members from the implementation of reciprocal tariffs. Aprisindo is actively working with the government to take strategic steps to mitigate the impact.

"Of course this will have quite a heavy impact on the footwear industry players. The ability of Aprisindo members, with the implementation of this new tariff, needs time to adjust to the situation and circumstances of this policy," he said.