Prabowo Vows to ‘Dismantle’ Business Regulations
 

President Prabowo Subianto has ordered the government to extensively cut back business regulations, including local content requirements and import restrictions, a day before the United States is set to slap steep import tariffs on Indonesian goods.  

Speaking at a public economic forum on Tuesday, the President said he had made it his “mission” to deregulate the economy and eliminate “convoluted” business bureaucracy.  

“Throw away all the regulations that don’t make sense. Make it easy! Make business processes easy!” Prabowo said in front of government officials, businesspeople, economists and journalists.  

Specifically, he vowed to make the regulation on local content requirements (TKDN) “more flexible” because it “ends up making us less competitive”.  

Another concrete instruction by the President was to eliminate quotas issued by the government for specific parties to import certain amounts of commodities, such as staple foodstuffs.  

“[So that] anyone who wants to import beef, they can do so. Whatever anyone wants to import, [let them] go ahead, open it [the market]. Our people are smart,” said Prabowo.  

The government is looking to import more American-made products to reduce Indonesia’s bilateral trade surplus with the world’s largest economy, which amounted to USD 18 billion last year.  

US President Donald Trump has pointed to large US trade deficits with other countries as grounds for imposing double-digit import tariffs on goods from around the world, which is 32% in the case of Indonesia.  

If the deficit was a problem [for the US], then Indonesia would buy USD 18 billion worth of US products, Prabowo said: “We’re not a poor country, we can buy” that much.  

He mentioned wheat, soybean and cotton as products Indonesia could import more of from the US, alongside liquefied petroleum gas, oil and oil drilling machines, given that the government was looking to revive 10,000 oil and gas wells.  

Narrowing America’s trade deficit with Indonesia by importing more US products is one bargaining chip Jakarta wants to put on the table when dispatching a high-ranking delegation to the White House next week.  

Speaking at the same forum, Coordinating Economic Minister Airlangga Hartarto said Jakarta had mailed letters to the US Trade Representative and the US Secretary of Commerce, who had received them.  

He said in his presentation that Indonesia “could certainly open other markets besides America”.  

Attending the same event, Finance Minister Sri Mulyani Indrawati noted that China and the US, the two principal parties exchanging fire in the escalating trade war, accounted for a combined 25% of global trade.  

“So, the other 75% can actually conduct trade [among themselves] without those two big countries, but the spillover [effect] from the two countries cannot be underestimated,” said Sri Mulyani.  

She added, however, that the US tariffs also afforded Indonesia an opportunity to “take over” a greater share of global markets, given that Washington imposed higher rates on Vietnam, Bangladesh, Thailand and China.  

National Economic Council head Luhut Pandjaitan, speaking at the same forum, said Indonesia would come “under pressure” from the trade war but “should not be overly anxious” about the US tariffs.  

Local stocks tumble  

Market jitters over the escalating US tariffs saw the Indonesia Stock Exchange (IDX) Composite index plunge 9.2% to 5,912 points shortly after the opening at 9 a.m. on Tuesday, triggering an automatic 30-minute trading halt.  

By the closing bell in the afternoon, the index had rebounded only slightly to 5,996 points, which still marked a daily drop of 7.9%.  

All major Asian markets plummeted on Monday as traders responded to the tariff announcement by US President Donald Trump, but some indexes recovered partially on Tuesday.  

The IDX had been technically shielded from the initial market rout due to an 11-day closure for the Nyepi and Idul Fitri holidays, but analysts had warned in advance that the local bourse would not remain unscathed following the major sell-off in markets around the world.  

Just before trading resumed after the break, the IDX revised its circuit breaker rules, first introduced during the COVID-19 crisis, to better accommodate current volatility.  

The threshold for the first 30-minute trading halt was widened from a 5% drop to 8%. A second 30-minute pause will now be triggered at a 15% loss, up from the previous 10%. A 20% plunge could lead to a full-day trading suspension.  

IDX had been one of the worst-performing indexes in Asia before Trump’s tariff announcement. It closed at 6,510.62 points before the break, marking an 8.04% year-to-date drop. During the same period, foreign investors pulled out a net amount of USD 1.8 billion.  

Fikri C. Permana, an economist at local brokerage KB Valbury Sekuritas, said the firm may revise down its year-end projection for the IDX Composite, previously set at 7,800 points, citing weaker economic growth and feeble consumer spending power as factors that could hurt corporate earnings, as well the elevated US import tariffs.  

He noted that, while the latest government promises of deregulation were aimed at boosting investor confidence, flippant remarks made by President Prabowo about equity investment in the past had done little to reassure investors.  

“Investors need more than just a promise. They need real things rather than mere goodwill,” Fikri told The Jakarta Post on Tuesday.  

Ezaridho Ibnutama, head of research at NH Korindo Sekuritas Indonesia, echoed that view, saying Prabowo’s dismissive tone regarding market volatility was unsettling for many investors.  

“People had high hopes for a more pro-business, free-market stance from Prabowo’s administration,” Ezaridho told the Post on Monday. “It turns out he doesn't convey as much optimism as former president Joko “Jokowi” Widodo in some areas.” 
 
 

Source: The Jakarta Post 

US Tariffs May Cut Indonesia Growth by Up to 0.5 Percentage Points, Minister Says

Planned U.S. tariffs could reduce Indonesia's potential growth by 0.3 to 0.5 percentage points, but a 90-day pause in implementing the levies allows time to discuss solutions, Indonesia's finance minister told Reuters on Thursday. 

Minister Sri Mulyani Indrawati said Indonesia welcomes the 90-day pause as it provides an opportunity to mitigate or avoid the downside risks from tariffs to economic growth. 

"The estimated current situation, before the pause, could reduce our potential growth by between 0.3% of GDP up to 0.5%," she said in an interview on the sidelines of the ASEAN finance ministers and central bank governors meeting in Malaysia. 

Higher U.S. imports, tax cuts, easier import processes and a relaxation of local content requirements are being planned by Jakarta as an offer to escape U.S. tariffs. Sri Mulyani said the deregulation measures were also part of an ongoing effort to reform Southeast Asia's largest economy. 

Indonesia has set a 5.2% GDP growth target this year versus 5.03% achieved last year. President Prabowo Subianto, however, wants to jack up the growth to 8% by 2029. 

Indonesia's authorities have said the U.S. tariffs would have a limited impact on the economy, which relies more on the domestic market. 

The U.S. was Indonesia's third-biggest export destination as of last year, receiving shipments worth USD 26.3 billion, according to Indonesian government data. 

Sri Mulyani said Indonesia would use the 90-day pause to come up with a framework of cooperation that was "mutually respected" by other countries, as well as working with other ASEAN countries to increase the region's resiliency. 

"We have to continue to be very prudent... Expenditure should be made more efficient, well-targeted and effective in supporting growth on the monetary side," she said. 

She said the recent pressure on the rupiah currency, which is at all-time lows, was temporary, adding the government remained focused on indicators such as corporate debt and government debt-to-GDP. 

The rupiah strengthened as much as 0.83% to IDR 16,720 a dollar on Thursday as of 0512 GMT, according to LSEG data, after hitting an all-time low for two days straight since the market reopened on Tuesday. 

The stock market (.JKSE), rebounded to above 6,000 on Thursday, up as much as 5.6%, after the global turmoil caused by the threat of U.S. tariffs caused the main index to tank on Tuesday when Indonesian markets reopened after an extended holiday break. 

Source: Reuters 

UAE’s Al-Ain Farms to Invest in Indonesia’s Dairy Production

Emirati dairy giant Al-Ain Farms is set to invest in Indonesia as the Southeast Asian country seeks to meet its milk demand without relying on imports. 

The Agriculture Ministry announced that it had just secured a memorandum of understanding with the company that claims to have one of the most advanced farms in the Middle East. The deal was among the key outcomes of President Prabowo Subianto’s bilateral talks with Mohamed bin Zayed Al Nahyan (MBZ) in Abu Dhabi on Wednesday local time. The government did not disclose the investment value of this project. 

Agriculture Ministry’s senior official Agung Suganda said Thursday that the investment would focus on ramping up the production and quality of milk produced in the country. Indonesia had promised to give Al-Ain Farms an array of incentives, including exempting the latter from import duties for livestock and industrial equipment. The company can also enjoy low-interest financing schemes and livestock insurance programs. 

“We gladly welcome Al-Ain Farms’ intent to be part of our efforts to accelerate milk sufficiency. We hope that this investment can open up job opportunities and improve the welfare of local farmers through partnership schemes,” Agung said. 

The Emirati investor would develop dairy cattle farms in locations listed in Indonesia’s so-called national strategic projects for 2025-2029, Agung said. Prabowo not long ago announced a list of 77 projects, including the ambitious school-feeding program, that his government would focus on over the coming years. Agung did not specify in which province Al-Ain Farms would build the dairy farms, although the nutritious meal program’s reach encompasses the entire country. 

The nationwide project sees Indonesia feeding students nutritious meals every school day – a program that was at the center of Prabowo’s election campaign. Each lunch menu typically includes milk to boost the kids’ calcium intake. At present, Indonesia imports approximately 80 percent of its milk with a deficit of 4.9 million tons. The free meal program has caused the national fresh milk appetite to soar by 3.6 million tons. Amid the soaring demand, Indonesia wants to become fully self-sufficient in milk by 2029.  

Al-Ain Farms was founded by MBZ’s father and the country’s first president.  

Aside from Al-Ain Farms, Vietnamese dairy company TH Group is close to investing in a similar project in Indonesia. Agriculture Minister Andi Amran Sulaiman met with TH Group’s chairwoman Thai Huong in February. Andi Amran promised similar incentives to TH Group while saying that the government had prepared some areas in Central Kalimantan, as well as South and Central Sulawesi that would be suitable for large-scale dairy production. 

Indonesia intends to bring in 200,000 better-quality, foreign dairy cows for breeding throughout 2024. By having foreign investments, Indonesia can improve the quality and production volume of its fresh milk without adding a burden to the state spending. Data showed that Indonesia recorded USD 32.7 million in foreign direct investment inflows from the United Arab Emirates (UAE) throughout 2024. 

Source: Jakarta Globe