Deni Ghifari, Jakarta – Days ahead of the expected signing of a bilateral tariff agreement with the United States, analysts have called on the government to tread with caution regarding concessions made, specifically opening the domestic market to US goods.
Paramadina University economist Wijayanto Samirin said Jakarta had to pay careful attention to the pricing of US commodities. "It shouldn't be the case that we are forced to buy products at uncompetitive prices".
Speaking to The Jakarta Post on Monday, Wijayanto said incoming shipments of wheat and soybean, in particular, would need to be properly coordinated with Indonesia's private sector to prevent excessive market disruption.
"Regarding the commitment to buy airplanes and energy commodities, the government has to be careful, given that our financial situation is not strong," said Wijayanto, before urging the government not to be afraid to back off from a deal that might disadvantage the archipelago.
The government issued a loosely-worded statement on Monday, following a weekend meeting at President Prabowo Subianto's Hambalang estate in Bogor, West Java.
The meeting on Sunday was attended by State Secretary Prasetyo Hadi, Coordinating Economic Minister Airlangga Hartarto, Finance Minister Purbaya Yudhi Sadewa and Investment and Downstream Minister Rosan Roeslani, who is also the CEO of state asset fund Danantara.
Cabinet Secretary Teddy Indra Wijaya said in a statement afterward that Prabowo wanted any deal to "increase domestic industrial productivity to the fullest extent possible, [...] ensuring that the position taken by Indonesia in economic negotiations with any party – particularly in the near term with the United States – is the best and most advantageous for Indonesia,".
"President Prabowo wants every policy to have concrete benefits for Indonesia as soon as possible and as much as possible," he added, without going into details about the current US-Indonesian talks.
Last week, Airlangga said Jakarta and Washington were scheduled to sign the Agreement on Reciprocal Trade (ART) on Feb. 19, following the Board of Peace's inaugural meeting in Washington, DC.
A separate statement from the Palace's Press Bureau notes that Prabowo took off for the US capital from Halim Perdanakusuma Air Force Base in East Jakarta on Monday, accompanied by Teddy as well as Energy and Mineral Resources Minister Bahlil Lahadalia.
The statement says Prabowo is scheduled to have a bilateral meeting with US President Donald Trump but does not explicitly mention the ART.
Airlangga, Jakarta's lead negotiator in the bilateral trade talks, confirmed on Friday that the general US import duty imposed on Indonesian goods would remain at the 19 percent rate agreed in July, down from the initial threat of 32 percent.
Syafruddin Karimi, an economics professor at Andalas University, told the Post on Monday that Teddy's noncommittal statements could be interpreted as either a positive or a negative signal.
Except for some vague hints at potential tariff exemptions for certain Indonesian commodities to the overarching agreement reached since the handshake deal, the negotiation process has been a watertight secret since both sides signed a nondisclosure agreement.
Syafruddin said Teddy's statement might be Jakarta's intention to calm the market or else a "preemptive defense" before the costs and trade-off are announced.
Like Wijayanto, he cautioned against compromising too much to clinch a deal and warned of a potential import flood.
"If the agreement with the United States ultimately proves disadvantageous for Indonesia, the worst impact would not only be on the trade balance or specific industrial sectors, but the country's credibility in managing geopolitical risk," Syafruddin said, adding that the government would need to push for renegotiation "should the data show that the agreement's design is imbalanced," but without falling into "indiscriminate protectionism".
"Indonesia's concessions must be matched by measurable deliverables from the US," the economist insisted.
A general 19 percent tariff would put Indonesian exporters on par with Southeast Asian peers based on ARTs signed by Malaysia and Cambodia with the US, but it would leave them at a slight disadvantage to competitors in India, as New Delhi signed a bilateral deal subjecting its exports to a marginally lower rate of 18 percent.
The 19 percent import duty would apply to most Indonesian goods exported to the US, while tariffs are to be eliminated on 99 percent of US products entering Indonesia, as well as several other concessions, such as procuring aircraft from Boeing as well as importing more energy commodities, wheat and soybean from the US.
Earlier this month, Airlangga said the negotiations had been wrapped up and the legal drafting process had reached 90 percent.
While Jakarta and Washington outlined the framework of the agreement in July, the final conclusion has been pushed back multiple times.
The two governments had initially announced plans to get the deal signed by the end of October, until Washington went through its longest-ever government shutdown, which pushed bilateral meetings back to November and saw the signing rescheduled for December.
On Dec. 10, media reported that unnamed US officials had grown increasingly frustrated with Indonesia due to Jakarta reneging on some of the terms outlined in the joint statement, putting the deal at risk of collapse.
The government still appeared keen on signing the ART by the end of December, as Airlangga flew to Washington just days ahead of Christmas. That deadline too passed, and signing was pushed back to January.
Airlangga visited the US capital again in January for further talks with the US Trade Representative, after which he said all issues had been settled and the ART would be signed by the end of the month, which, again, did not happen.
Source: https://asianews.network/indonesian-government-urged-not-to-compromise-too-much-for-us-trade-deal