DEN: RI Potentially Withdraws Industrial Relocation From 10 Percent Tariff To China

Member of the National Economic Council Chatib Basri (central) accompanied by Septian Hario Seto (right) and Firman Hidayat/ANTARA/Andi Firdaus

JAKARTA - Member of the National Economic Council (DEN) Chatib Basri assessed that the application of a 10 percent tariff by the United States (US) to imported goods from China opened up opportunities for industrial relocation that could benefit the Indonesian economy.

"With the application of a 10 percent tariff to China and there is also a trade war between America and China, it is not impossible that the production base will move from China to countries that are not subject to tariff imports. One of them is Indonesia," said Chatib at the Presidential Palace complex, Jakarta, Thursday, February 6.

In order to take advantage of these opportunities, the DEN recommends that Indonesia make improvements to the investment climate, increase business certainty, and maintain policy consistency.

"Because if this happens, then Indonesia's position can actually benefit. Because there is a relocation from the production base from China to Vietnam and maybe if Vietnam is too full, it will run to Indonesia," he said.

The sectors that have the potential to be affected by the relocation include manufacturing and various industries previously based in China. The company will seek locations with more competitive production costs to avoid high tariffs imposed by the US.

Chatib emphasized the importance of bureaucratic reform through digitization or GovTech in order to accelerate the administrative process and increase Indonesia's investment appeal.

He assessed that accelerating digitalization in government systems can help improve the investment climate and ensure that Indonesia really benefits from this shift in global supply chains.