US-China Trade War Will Affect Indonesia Regional Economies
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Regional economies in Indonesia will be affected if the United States suspends its special tariffs for some of the country’s exports, a minister said on Tuesday (10/07).
The US is currently reviewing Indonesian products on its Generalized System of Preferences (GSP) list — a trade incentive that gives duty-free entry to 129 poor and developing countries and territories.
Last year, Indonesia ran a $9.7 billion trade surplus out of its total $17 billion exports to the US.
It is the fourth biggest GSP beneficiary, after India, Thailand and Brazil.
“If the exports of [the listed] products or commodities are disrupted, we are worried that our regional economies, where the goods come from, will also be affected,” National Development Planning Minister Bambang Brodjonegoro said on Tuesday.
Indonesia’s exports, not only to the US, come mostly from the manufacturing sector, especially in Java.
Last year, they made up 76 percent of the country’s total exports and were worth $125 billion, nearly $15 billion more than in the previous year.
West Java and East Java together were the main contributors ($44 billion) to the country’s total experts, followed by East Kalimantan, Riau, Riau Islands and North Sumatra.
“We can divert our exports to other countries and this should not be a problem. But we need to prepare ourselves,” Bambang said.
Indonesia has been trying to enter markets in Africa and South America to lessen dependence on its traditional importers such as China, the US and Japan.
However, exports to Africa (mainly South Africa and Egypt) amounted to only $264.7 million last year, Ministry of Trade data show.
A team consisting of Ministry of Trade, Ministry of Foreign Affairs and Ministry of Agriculture officials is set to visit the US at the end of July, with a lobby mission to keep the special tariffs for Indonesia unchanged.
Questions & Answers
Q.Which Indonesian regions are most likely to be affected if the GSP status is removed?
Which Indonesian regions are most likely to be affected if the GSP status is removed?
The article highlights West Java and East Java as the main contributors to the country's total exports. East Kalimantan, Riau, Riau Islands, and North Sumatra also contribute significantly, suggesting these regions would face the most impact.
Q.What is the primary sector of Indonesia's exports that could be affected?
What is the primary sector of Indonesia's exports that could be affected?
Indonesia's exports, including those potentially impacted by the US review, come mostly from the manufacturing sector. This sector made up 76 percent of the country's total exports last year, with a value of $125 billion.
Q.Has Indonesia managed to diversify its export markets away from traditional partners?
Has Indonesia managed to diversify its export markets away from traditional partners?
Indonesia has been trying to enter new markets in Africa and South America. However, last year's exports to Africa, mainly South Africa and Egypt, amounted to only $264.7 million, showing limited diversification success so far.
Q.What steps are Indonesian officials taking to maintain their GSP status with the US?
What steps are Indonesian officials taking to maintain their GSP status with the US?
A team comprising officials from the Ministry of Trade, Ministry of Foreign Affairs, and Ministry of Agriculture is scheduled to visit the US at the end of July. Their mission is to lobby to keep the special tariffs for Indonesia unchanged.