Jayanty Nada Shofa, Jakarta – Indonesia has agreed to exempt US companies from local content requirements – the same policy that had prevented tech giant Apple from selling its iPhone 16 – as part of the freshly struck tariff deal.
US President Donald Trump recently decided to bring down his reciprocal tariffs on Indonesian goods to 19 percent, down by 13 percentage points compared to initial figures, following a phone call with President Prabowo Subianto. The White House finally released the much-anticipated joint statement on the tariff deal on Tuesday local time, which revealed that Indonesia had to make some major concessions.
In particular, Indonesia agreed to no longer require American companies to source parts of their components and services locally. Indonesia has been banking on this local content policy to boost its economy and create jobs.
"The US and Indonesia will work together to address Indonesia's non-tariff barriers that affect bilateral trade and investment in priority areas, including exempting US companies and originating goods from local content requirements," the joint statement reads.
The document did not specify whether the local content policy removal would apply to all sectors.
However, this is not the only non-tariff barrier that Southeast Asia's largest economy will remove for the sake of the lower-than-promised 19 percent duty. According to the White House, the US will no longer be subject to what Washington called "burdensome" certification and labeling requirements for its exports of cosmetics, medical devices, and other manufactured goods.
Indonesia has been hinting at relaxing the local content policy as Prabowo had told his government to make the rules "more realistic and flexible," not long after Trump launched his tariff salvo in April.
Trump's trade team had launched a report that slammed the policy as it required 4G-LTE-enabled devices to contain 35 percent locally made parts before they could enter the Indonesian market.
Indonesia initially barred Apple from selling its iPhone 16 in the country after the company failed to comply with the domestic content rule. Apple later offered to invest in an AirTag factory via its vendor Luxshare-ICT. Riyatno, a deputy at the Investment Ministry, recently told the press that Apple and its vendor would remain committed to the AirTag factory plan despite the tariff agreement with the US.
The two countries will now negotiate and finalize an agreement on reciprocal trade, including having the document ready for signature. As part of the deal, Jakarta will eliminate tariff barriers on a preferential basis on over 99 percent of American products entering its market. Trump is happy with the outcome, saying that the pact is a "huge win" for American automakers and tech companies.
"The United States of America will now sell American-made products to Indonesia at a tariff rate of zero, while Indonesia will pay 19 percent on all of their products coming into the USA – the best market in the world," Trump wrote on Truth Social, also on Tuesday local time.
Source: https://jakartaglobe.id/business/indonesia-to-exempt-us-companies-from-local-content-requiremen