TEMPO.CO, Jakarta - Chairperson of the National Economic Council (DEN) Luhut Binsar Pandjaitan spoke up about the reciprocal tariffs imposed by United States President Donald Trump on Indonesia, which he does not entirely view as negative.
"DEN does not see this reciprocal tariff from the U.S. as entirely negative. The repositioning of global trade could become an opportunity for Indonesia to attract foreign investment and make Indonesia their production base," he said in an Economic Discussion with President Prabowo in Jakarta on Tuesday, April 8, 2025, as quoted from Antara.
Luhut believes that Indonesia's strategic location has the potential to replace various positions of other countries in the global supply chain. He then cited the example of the European Union, which has questioned Indonesia's critical minerals and received President Prabowo's approval for cooperation.
Furthermore, Luhut believes that Indonesia's reciprocal tariffs are relatively low compared to other Southeast Asian countries. Indonesia is ranked eighth on the list of countries affected by the U.S. tariff hike, with a rate of 32 percent. Around 60 countries will be subject to half of the reciprocal tariff rate they impose on the U.S.
He also points out that Indonesia is not the only country in Southeast Asia affected by U.S. trade. Countries such as Malaysia, Cambodia, Vietnam, and Thailand also face tariff increases of 24 percent, 49 percent, 46 percent, and 36 percent, respectively.
Therefore, according to Luhut, deregulation policies to cut high-cost economics are crucial.
"Coordination with related ministries and institutions continues. Learning from the experience as Coordinating Minister for Maritime Affairs and Investment, the top-down approach decided by the President is considered the most effective to avoid lengthy bureaucracy. This decision must be fully respected," he said.
President Prabowo Subianto ordered a policy of deregulation a month and a half ago in anticipation of possible U.S. tariffs to reduce the high cost of doing business. This will make Indonesian products more competitive in international markets.
Prabowo's decision was supported by the government's countercyclical policies to minimize the trade war's negative impact on the domestic economy. With deregulation, the completion of the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU CEPA) is expected to be expedited.
As the agreement will expand Indonesia's market to Europe. This policy also facilitates the distribution of Indonesian products to the United States, China, and countries included in BRICS (Brazil, Russia, India, China, South Africa).
In Luhut's opinion, with many inefficiencies in the past, this is an opportunity for the Indonesian nation to reflect and reform the economy. "Become an efficient economy that can compete with anyone."
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