Indonesia's Trade Balance Is At Risk Of A Deficit, After Graduating To Become A Developed Country

Secretary of the Coordinating Ministry for Economic Affairs Susiwijono (Mery Handayani / VOI)

JAKARTA - The United States through the US Trade Representative (USTR) has revised Indonesia from the list of developing countries. Based on the level of international trade, Indonesia has upgraded to become a developed country that can compete, such as China, Brazil and India.

Unfortunately, removing Indonesia's status from the list of developing countries could be a risky step for the country's trade balance deficit. Indonesia is also threatened with losing the Generalized System of Preference (GSP) which is commonly given to developing countries, such as cutting import duties on export products for economic assistance.

"Yesterday I told you that the US decision to issue it was related to trade facilitation. Later trading friends will explain. Because the consequences will be the GSP and other problems," said Secretary of the Coordinating Ministry for Economic Affairs Susiwijono, when met at the Economic Forum at the Hotel. Luwansa, Kuningan, South Jakarta, Monday, February 24.

Susiwijono is worried that if Indonesia's status is revoked, it will widen the trade balance deficit. Moreover, according to data from the Central Statistics Agency or BPS in January 2020, it was noted that Indonesia's trade balance with America was still a surplus of 1.01 billion US dollars.

"Oh yes, it is clear (at risk of) a deficit," he explained.

Meanwhile, Rahmat Soebagiyo, Director of Objections for Appeals and Regulations at the Directorate General of Customs and Excise, said that business actors in developing countries still need low entry facilities for exports to US destinations. Therefore, Indonesia must start racking its brains to streamline the costs incurred.

"If (the status) is raised, we must be able to minimize the costs incurred here. We are now making a name for it, the National Logistic Ecosystem, reducing the logistical costs so that we can compete there," he said.

Soebagiyo said that the promotion of Indonesia's status from a developing country to a developed country was sudden. He hopes that Indonesia can immediately prepare intensive steps in order to increase trade competitiveness.

"We'll just execute it because we are at customs. We only execute. That is in trade," he said.

As is well known, US President Donald Trump criticized the increasing economic income of countries such as China, Indonesia and India but were still categorized as developing countries. Seeing this particular preference, Trump feels unfair considering these countries still have status as developing countries and still receive assistance in export and import activities.