Indonesia Seeks to Negotiate with US over Trump’s New Tariffs

The Indonesian government plans to negotiate with the US after its president, Donald Trump, launched a 32 percent reciprocal tariff on imports from the Southeast Asian nation. 

Trump’s latest reciprocal tariffs have been making headlines worldwide as they are expected to take a huge toll on many industries. On what Trump called the “Liberation Day”, the businessman-turned-politician revealed Wednesday local time that the tariffs that affected Indonesia aimed to level the playing field as Jakarta had been imposing 64 percent rates on US-made goods. 

His team’s calculations factored in trade barriers, including Indonesia’s policy that requires American manufacturers to source parts of its goods domestically. Trump even said that the US was trying to be nice by only charging half of the rates that Indonesia -- and other countries -- had been slapping on American imports. 

Indonesian ministries finally issued the much-awaited joint press statement on Thursday evening following internal discussions within the government. Indonesia revealed that the country was aware that it would be a target of Trump’s tariffs sooner or later, saying that talks had already been long underway with the White House in hopes the latter would reconsider the policy. 

“Since the beginning of the year, the Indonesian government has prepared various strategies and steps in response to the US’ reciprocal tariffs. We have been negotiating with the US government,” a statement published on the Foreign Affairs Ministry’s website reads. 

The government has also “intensively coordinated” with the Indonesian businesspeople to brace for the impact. A baseline 10 percent tariff will come into effect on April 5 before the reciprocal rates enter into force four days later. This should give more time for Indonesia to make a pitch for some revisions. According to the statement, Indonesia intends to continue talking with the US government “across various levels”. 

“We will send a high-level delegation to Washington DC to directly negotiate with the US government,” the statement reads. 

The government did not say who would be among the high-level representatives. As part of the negotiations, Indonesia said it had prepared some undisclosed steps to respond to the trade issues raised by the US. A report published by the US Trade Representative a few days before Trump’s freshly signed executive order highlighted American businesses’ concerns over Indonesia's import licensing system, and halal or Islamic law-compliant import requirements, among others. 

President Prabowo Subianto has instructed his cabinet to simplify or get rid of regulations that could become non-tariff barriers, according to the press release. Indonesia also promised that it would “improve the investment climate”. Jakarta has also reached out to fellow ASEAN nation Malaysia to prepare for some “joint steps” as all ten of the bloc’s members would be subject to Trump’s tariffs. Charts published by the Trump administration revealed that tariffs within ASEAN range from 10 percent to 49 percent with Cambodia facing the highest rates. 

Experts have urged Indonesia to have last-minute negotiations with the US following Trump’s latest trade move. Analyst Bhima Yudhistira called for such talks, although he admitted that the likelihood of Trump having a change of heart was “slim”. Senior economist Eisha Maghfiruha Rachbini said the government needed to immediately negotiate with the US to minimize the tariff’s impact. 

“[Indonesia’s] diplomatic negotiating power would be very crucial in mitigating the effect of the trade war with the US,” Eisha said. 

Source: Jakarta Globe 

Manufacturing PMI Drops Amid Slowing New Orders, Output 

According to the latest S&P Global report released on Monday, Indonesia’s manufacturing Purchasing Managers’ Index (PMI) dipped to a reading of 52.4 in March from 53.6 in February. 

Factory activity slowed last month after hitting its highest level in nearly a year in February, according a report published by S&P Global this week. While output and new orders continued to grow, the pace softened slightly compared to the previous month.  

Indonesia’s manufacturing purchasing managers’ index (PMI), released by S&P Global on Monday, dipped to a reading of 52.4 in March from 53.6 in February.   

This marks the fourth consecutive month the index has read above the critical 50-point threshold separating expansion from contraction.   

Based on a survey of purchasing managers from around 400 manufacturers nationwide, the PMI report offers a snapshot of business conditions in the sector.  

Indonesia’s manufacturing sector maintained strong momentum in March, with production growth recording its second-highest pace in five months, fueled by rising new orders. Some manufacturers attributed the demand boost to new client requests and improved marketing strategies. Meanwhile, foreign demand for locally manufactured goods returned to expansion territory for the third time in four months, the report said.  

In response, companies expanded their workforce at the end of the first quarter, though job creation slowed to a three-month low and remained modest. 

Usamah Bhatti, an economist at S&P Global, said he expected that demand would stay strong in the short and medium term.  

“Confidence regarding the coming year remained strong amid reports that economic improvements and new product developments would continue to sustain the current uplifts in demand and output,” he said.  

To meet production needs, Indonesian manufacturers continued stockpiling raw materials, pushing pre-production inventories higher for the fifth consecutive month.  

However, cost pressures remained a challenge. Input prices have been rising since December 2019, driven by higher raw material costs and exchange rate fluctuations that made imports more expensive. In response, firms passed on these costs to customers by raising factory gate prices, but with a marginal rate of inflation, the report said. 

Despite tens of thousands of layoffs in labor-intensive business fields like textiles and footwear, Industry Minister Agus Gumiwang Kartasasmita said on March 4 that overall employment in manufacturing continued to rise.  

Citing data from the Manpower Ministry and the Workers Social Security Agency (BPJS Ketenagakerjaan), Agus noted that some 48,300 people lost their jobs across various sectors last year. However, Industry Ministry figures show that around 14,800 new companies began operations in the same period, collectively hiring 1.08 million workers, just in the manufacturing sector alone. 

By the end of last year, the total manufacturing workforce had expanded from 17.43 million people in 2020 to 19.96 million. 

Source: The Jakarta Post  

As Egg Production Hits Surplus, RI Sets Sights on US Market

The Agriculture Ministry has expressed its readiness to assist the export of 1.6 million chicken eggs per month to the United States. 
 
This follows surplus national production of up to 288.7 thousand tons, equivalent to 5 billion eggs per month. 
 
With the excess production, Indonesia has great potential to supply eggs to countries that are experiencing production disruptions due to the HPAI outbreak, including the US, according to the ministry's director general of animal husbandry and animal health, Agung Suganda. 
 
The US is reported to be experiencing a high production deficit that has driven up egg prices to USD 4.11, he noted. 
 
"We continue to encourage increased exports by ensuring that quality standards, food safety, and requirements of the destination country are met," Suganda said on Saturday. 
 
"As an initial stage, exports to the US of 1.6 million eggs per month are believed to be possible. Currently, the process of exploring and fulfilling export protocols is being carried out," he added. 
 
After gaining experience exporting eggs to Singapore and the United Arab Emirates, Indonesia will export to the US while observing follow strict requirements of the food safety authorities there, he informed. 
 
"Eggs to be exported must be of high quality, free of Salmonella, and free of antibiotic residues in order to comply with food safety standards set by the US Food and Drug Administration (FDA)," he said. 
 
Suganda also assured that the exports would not disrupt domestic needs, which remain a priority of the government. 
 
"Exports are carried out without disrupting supply and price stability in the domestic market," he said. 
 
This year, national egg production is estimated to reach 6.5 million tons, against the need of 6.2 million tons. That leaves a potential surplus of 288.7 thousand tons. 
 
This figure could still potentially be increased as the government is supporting the businesses in meeting export standards, starting from quality and safety to product traceability. 
 
"We are ready to work with various parties so this egg export runs smoothly and provides benefits for farmers, business actors, and the national economy," he affirmed. 
 
Earlier, general chairperson of the Indonesian Poultry Breeding Association (GPPU), Ahmad Dawami, expressed his full support for the plan to export eggs to the US. 
 
The national production capacity allows for exports of up to 160 million eggs per month, without disrupting domestic needs, he said. 
 
Concurring with Suganda, he noted that exporting eggs to countries hit by 'eggflation' like the US would not be easy because a number of requirements would need to be met for sending domestic eggs to the foreign market. 
 
"Indeed, if you look at the opportunities, there are definitely opportunities for export. But exporting is not that easy considering the strict requirements," he added. 

Source: Antara