Indonesia Must Fix Longstanding Trade Barriers Amid Trump Tariff Threat

JAKARTA, investortrust.id – Indonesia’s top business chamber has warned that the country must urgently address longstanding trade issues as renewed tariff threats from the United States place pressure on emerging economies.

The Indonesian Chamber of Commerce and Industry, known as Kadin, said that persistent non-tariff barriers and weak investment communication have hindered trade growth and discouraged investors—issues that must be resolved to keep Indonesia competitive globally.

In a statement on Monday, April 7, 2025, Vice Chairman for International Relations Bernardino M Vega said the rise of protectionist policies, such as reciprocal tariffs under US President Donald Trump, highlighted Indonesia’s failure to remove structural obstacles to trade.

“This has been on our agenda long before the US started raising tariff walls,” said Vega, commonly known as Dino. “As President Prabowo has also pointed out, several non-tariff measures must be removed. These have long been unresolved homework.”

Dino emphasized that most trade between Indonesia and the US involves complementary products. The US exports items such as wheat and dairy—goods Indonesia does not produce—while Indonesia exports palm oil and footwear.

“Removing these non-tariff measures could be a breakthrough move to enhance trade,” he said.

Focus on Domestic Reform and Credit Gap

Beyond tariffs, Kadin also highlighted the importance of closing Indonesia’s business financing gap. Dino called for broader support for non-bank financial institutions including multifinance companies, cooperatives, and digital platforms to strengthen domestic liquidity.

“Bridging the credit gap is key to maintaining business momentum, especially in these uncertain times,” he said.

He added that Indonesia already offers numerous investment incentives but lacks clarity and consistency in its messaging to potential investors.

“Our messaging needs to be clearer. The way we frame our investment offering must be consistent if we want to build investor confidence,” Dino stated.

Value-Added Industry Over Industrial Relocation

When asked about potential opportunities from industries relocating out of countries hit by US tariffs, Kadin cautioned against focusing solely on relocation. Instead, Dino said Indonesia should prioritize downstream development of its natural resources.

“What matters more than relocation is how we develop our value-added industries,” he asserted.

Selective Imports and Strategic Partnerships

Kadin also urged the government to take a selective approach in handling foreign goods entering Indonesia. Products not manufactured domestically should be given easier access, while those competing directly with local industries must be protected.

In addition, Dino underscored the importance of maintaining stable trade relations with key partners like China and Australia to mitigate risks from escalating global trade tensions.

“We must ensure our relationship with China remains stable, and the same goes for Australia. We cannot afford for this trade war to expand,” he warned.

Dino further suggested that deeper engagement with emerging economic blocs such as BRICS, ASEAN, and the Organisation of Islamic Cooperation (OIC) could serve as a counterbalance in the current global environment.

He concluded by stating that fixing Indonesia’s trade and investment issues is no longer optional, but essential to preserving the country’s global competitiveness.