Jayanty Nada Shofa, Jakarta – Indonesia is trying to get the US into letting Jakarta use Chinese ships in its Washington-bound exports to avoid higher costs, according to the presidential economic advisor Luhut Binsar Pandjaitan, as the months-long tariff talks continue.
While Indonesia and the US reached a preliminary deal in July, both countries are currently working to finalize the agreement that is expected to finish soon. Luhut, who had just returned from a Washington trip, revealed he had another round of tariff talks with US Secretary of Commerce Howard Lutnick.
The use of Chinese vessels had emerged as a sticking point in the negotiations. As Washington dissuades Jakarta from using Chinese ships, Luhut said that the government should be able to stand its ground to save its businesses.
"I think talks have been going well, but we don't want to give in to all their demands. The US has forbidden us from using Chinese-flagged or made-in-China vessels. I told Lutnick that [the ban] would only raise costs," Luhut told reporters in Jakarta.
The former investment tsar explained that such restrictions would lead to Indonesia breaking its very own regulations. Jakarta also has to respect the "existing pacts with other countries". He went on to say that Indonesia "must show that it is not a country that others can mess with".
"We have to make sure [that export costs] are cheap, why would we look for something expensive? Why should we obey their [Washington's] demands just because they are fighting with China? We have to look for a way out," Luhut stated.
According to Luhut, President Prabowo Subianto's recent UN debut and US-led Gaza Summit attendance are already enough to prove Indonesia's global influence. He added: "We are in an equal standing [as the US]. We have to prove that we are a sovereign country, one with dignity."
A port tariff war is brewing between the world's two largest economies. US President Donald Trump has begun collecting additional levies from China-linked vessels entering its ports. China has retaliated by imposing extra port fees on US ships docking in its country.
Indonesia's chief negotiator Airlangga Hartarto had set a goal to secure the tariff deal with the US by the end of the month.
A 19 percent tariff is in effect for Indonesian goods exported to the US. Washington, on the other hand, gets to trade with Jakarta at zero tariff. The Southeast Asian country has been nudging the Trump government into exempting certain commodities, including palm oil, from the tariff campaign. Trump's tariff blitz stems from Washington's concerns over trade imbalances with Jakarta.
The Central Statistics Agency (BPS) reported that Indonesia's exports to the US saw a 12.39 percent month-on-month drop in August as the tariffs began to bite. However, the US remained Indonesia's biggest driver to its overall trade surplus, contributing $12.2 billion between January and August.