Facing rising tensions from global trade wars, Indonesia's government is ambitiously seeking to expand its export markets beyond the United States. With trade policies spearheaded by President Prabowo Subianto and coordinated by Minister of Economic Affairs Airlangga Hartarto, the move is strategically important to mitigate potential economic risks imposed by U.S. tariffs.
Minister Hartarto has emphasized the need for diversification, stating, "83 percent of trade is outside the U.S., so we have to build partnerships with 83 percent of the world" (SINDOnews). This remark highlights Indonesia's dedication to entering new markets amid fluctuated trade relationships, especially with the implementation of tariffs by former U.S. President Donald Trump.
The current strategy incorporates the negotiations around the Indonesia-European Union Comprehensive Economic Partnership Agreement (I-EU CEPA). According to Hartarto, the government’s focus also includes completing legal frameworks to engage with various trading partners globally. Initiatives are underway to boost Indonesia's economic ties with countries such as Brazil, Argentina, and members of the Gulf Cooperation Council, including Saudi Arabia and the United Arab Emirates.
Another pivotal effort is the upcoming Trade Expo Indonesia (TEI) 2025, which Minister of Trade Budi Santoso described as integral for achieving the national export growth target of 7.1% for the year. He conveyed at the launch of the expo: "TEI 2025 is aimed at driving the 7.1% target. There will be many buyers coming" (Bisnis.com). The expo seeks to catalyze transactions worth approximately $25 billion, significantly contributing to the overall export goal.
The government remains optimistic about achieving this growth, even as various economic analysts express concerns. Economist Wijayanto Samirin noted the substantial challenges facing this export growth target, citing global market dynamics and their potential to depress commodity prices. "The export growth target of 7.1% is challenging, especially due to global dynamics" (Bisnis.com), he warned.
Nevertheless, Hartarto reassured stakeholders about the resilience of Indonesian trade. Amid persistent trade tensions with China and the U.S., he stated, "Trade continues to flow smoothly amid U.S.-China trade tensions" (Liputan6.com). This indicates confidence not only within diplomatic circles but also among business leaders who see opportunities for Indonesian products internationally.
Indonesia’s targeted expansions will also include strategic partnerships within various trading blocs. These initiatives, including its recent admission to the BRICS coalition and efforts to engage more actively with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), mark significant steps for Indonesia on the global stage.
Export growth becomes even more significant when considering Indonesia's economic factors influenced by past tariff policies and the global supply chain's transformation. Director of the Indonesia Mining Association, Hendra Sinadia mentioned the government’s plan to ease copper concentrate exports following operational setbacks related to the Freeport smelter fire: "Relaxation of copper concentrate exports should have been done earlier due to the Freeport smelter fire" (CNBC Indonesia). This not only demonstrates the government's reevaluation of its export strategy but indicates broader economic impacts on labor and national revenue.
The cumulative strategy is built with optimism set against the backdrop of consistent trade surpluses, with Hartarto indicating, "Our trade balance has been surplus for 57 consecutive months" (Liputan6.com). These successes drive the momentum for trade diversification and secures Indonesia's place as it navigates through complex global trade landscapes.
Even amid uncertainties projected from economic models and internal market fluctuations, the Indonesian government remains committed to advancing its trade initiatives, seeking to build sustainable economic growth through these ambitious export strategies.