Positive Side Of US Residual Tariffs, It's Time For Indonesia To Finish Investors

JAKARTA Various potential threats haunt Indonesia following the implementation of the reciprocal tariff by the United States (US). But behind that, there are opportunities that Indonesia should be able to take advantage of, by looking at what Vietnam is doing.

US President Donald Trump announced a reciprocal policy of tariffs or reciprocal rates against trading partners. In his speech, Trump said the move was part of Liberation Day, a major strategy to free America's economy from dependence on imports.

Donald Trump set reciprocal tariffs or import duty rates to more than 180 countries and territories based on a wide new trade policy. Indonesia is among those affected by the reciprocal rate policy. The figure is 32 percent and starting April 9, 2025. Prior to this, the tariff was only 10 percent.

This resipprocal tariff policy raises concerns, especially seeing the recent sluggish Indonesian economic situation.

Executive Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira said there was a threat of termination of employment (PHK) due to the increase in US import duty rates.

But on the other hand, if Indonesia is clever in taking advantage of this situation, then the reciprocal tariff policy could actually be profitable. Bhima said the Indonesian government must compete to attract foreign investors to build their factories in the country.

The Indonesian government has finally taken a stand on the reciprocal tariff policy implemented by US President Donald Trump. Instead of retaliation or retaliation, President Prabowo Subianto will take the negotiation route.

This was conveyed by the Coordinating Minister for Economic Affairs Airlangga Hartarto in economic facilities at the Mandiri Tower, Jakarta, Tuesday (8/4/2025). "The direction of the President, Indonesia chose the negotiation route, because the US is a strategic partner," said Airlangga through the official channel of the Presidential Secretariat on Youtube.

Previously, the governments of Vietnam and Cambodia also chose a negotiation route with the US regarding the latest import tariff policy. Vietnam asked the US to postpone one to three months for a reciprocal rate of 46 percent to provide time for negotiations.

Likewise with Cambodia, which asked the US government to postpone the 49 percent tariff on its products.

"Kamboja proposes to negotiate with your honorable government as soon as possible," Cambodian Prime Minister Hun Manet said in a letter to Trump.

However, Indonesia is considered to be one step behind when compared to Vietnam and Cambodia if they want to take steps to negotiate. This is because since 2023, Indonesia does not have a Ambassador to the US.

According to an observer of the development economy from Andalas University in West Sumatra, the absence of Indonesian representatives in the US, Syafruddin Karimi, actually weakens Indonesia's bargaining position in bilateral negotiations amid increasing trade tension due to Trump's tariff policy.

"Without an active ambassador in Washington, Indonesia's efforts to maintain access to the export market and reduce the impact of American protectionism will always be one step behind competing countries such as Vietnam and Thailand," he said.

Since Rosan Roeslani left two years ago, the position of Ambassador to the United States has been vacant until now. Rosan himself now serves as Head of the Danantara.

So far, the Vietnamese government's efforts to ask for a cool delay in tariffs by the White House have responded. President Trump's main adviser, Peter Navarro, emphasized that this was not a negotiation even though he later said that his party was "always willing to listen".

"The rejection of Vietnam shows that the United States, under Trump's leadership, puts forward a protectionism strategy that is not easily negotiated, even with key trading partners," he said.

This is not the first time Trump has set a reciprocal rate, or reciprocal rate. He imposed a similar policy in 2019, which created a trade war between China and the US. But behind the war, there was one country that managed to take advantage of Vietnam.

They cleverly replace Chinese products in the US and make it easier for foreign investment to enter their country. Vietnam has a fairly high similarity of export products to China so that they are able to replace the empty space left by China in the US.

"Vietnam also has facilities for Generalized System of Preferences (GSP) and Bilateral Trade and Investment Framework Agreement (TIFA) with the US since 1994. There is also the potential for re-labeling Chinese products in Vietnam," said Executive Director of the Institute for Development of Economics and Finance (INDEF) Esther Sri Astuti.

In addition, Esther revealed how Vietnam is also good at capturing investment opportunities. Geographical closeness to China was utilized optimally by Vietnam so that a number of manufacturing companies in China moved the production base to the ASEAN member country.

"About 23 US companies are relocating investment from China to Vietnam. The key factor is the ease of investment, investors only need two months to get an investment permit," he explained.

Bhima Yudhistira from Celios also encouraged the Indonesian government to compete to lure foreign investors to want to build factories in the country. This is because investors have the potential to move their factories from countries affected by US major reciprocal rates.

"The key is that in consistent regulations, licensing efficiency, there are no bills that make noise, such as the National Police Bill and the Criminal Procedure Code, postponed infrastructure readiness to support industrial estates, adequate renewable energy sources to supply electricity to industry, and readiness of human resources," said Bhima to VOI.

Some of the things mentioned earlier, according to Bhima, are much more important because Indonesia can no longer induce excessive fiscal incentives with the existence of Global Minimum Tax.

"If previously attracted investors with tax holidays and traditional allowances, now is the time to improve fundamental competitiveness," he explained.

In addition to improving domestic conditions, Bhima encouraged the government to look for alternative export countries. Among them is a Middle Eastern country whose growth is relatively stable.