US-China Trade “Peace” Full of Thorns, Indonesia in Tariff “Trap”

By: Eko B. Supriyanto, Chairman of Infobank Institute

PEACE. It was expected. The United States (US) with Donald Trump’s “bluff” style does not scare China. The more advanced, and one side of China has morally won. Meanwhile, Indonesia, which looks “grusa-grusu”, has declared a good child to negotiate. Did Indonesia enter the tariff trap spread by Donald Trump?

The two world economic giants finally stopped elbowing each other. The US and China, after years of hitting each other with tariffs of up to 145 percent and 125 percent, have now reconciled with figures of 30 percent and 10 percent. A reconciliation that tastes sweet, but for Indonesia it leaves a bitter taste on the tongue.

In the midst of this peace party, we are instead playing with fire: raising tariffs to the US from 32 percent to 47 percent while pretending to be friendly with American energy imports. A contradictory move that makes us ask: is this a clever strategy or a diplomatic blunder that will be embarrassing?

Listen! Indonesia once had a chance. And, apparently, the opportunity evaporated before it could be enjoyed. Because, when China stumbled over high tariffs, our electronics exports to the US had shot up 23.5 percent. Now, when the red dragon returns with a 30 percent tariff, the beautiful dream evaporates like morning dew. Our textile and footwear products that had enjoyed the American market, now have to bite the bullet to see Chinese products dominate again.

On the other hand, in Indonesia, thuggery, bureaucracy, and suffocating logistics are big rocks in the face of competitiveness. Logistics costs are more expensive than China and Vietnam – like a marathon runner carrying sandbags. No wonder that of the 33 companies that fled China, only 7 chose Indonesia, while 19 preferred Vietnam.

There are other facts about dependency that are worrying. In fact, 70 percent of the raw materials for our electronics industry still depend on China. If the tariff war heats up again, the yuan fluctuation could make our banks’ balance sheets fall apart. Although, at present, the easing of the China Vs US war is enough to make banks less “dag-dig dug”, because liquidity will be looser.

While Indonesia’s “grusa-grusu” with negotiations – which resulted in tariffs being raised to 47 percent from the previous tariff of 32 percent. Trump seems to be using his bluff and Indonesia is not a pawn but not yet a queen. In fact, some say that our tariff increase to the US has put Indonesia on the “Dirty 15” list – countries targeted for US retaliation.

In fact, exports worth USD16.8 billion are in danger of being victimized. It’s like going from the mouth of the lion to the mouth of the tiger. Shifting energy imports to the US may reduce dependency on China, but without renewable energy development, Indonesia is just moving from one dependency to another. It’s just a change of players because of a change of regime.

Nevertheless, Indonesia, which continues to be dear to God – whoever the president is, economic growth of 4-5 percent is already in hand. That is because of commodities and consumption. Even when consumption is “strangled” by the budget, the IMF still projects Indonesia’s growth to be 4.8-5.0 percent. But, that number could be a mirage if we remain dependent on raw material exports. This is because the downstreaming of nickel and CPO is still in place, while added value flows to other countries.

There is not much time, the way out normatively needs to cut bureaucracy, eliminate thuggery under the guise of official or fake. It’s time to stop being coolies in our own country by accelerating downstreaming and industrialization. Because, downstreaming without our industry will not absorb more workers.

The peace between China and the US is the “grusa-grusu” of trade diplomacy that cannot read the signs of the times. In fact, Trump is honestly just bluffing, and we are afraid to run away even though Indonesia’s exports are only 2 percent of our Gross Domestic Product (GDP).

We do not have to surrender to all US demands. We must be more fair in protecting Indonesian products and Indonesian businesses. And, not always being the good boy. An important lesson is not to be reactive and policies need to be carefully thought out, or is it because the President’s assistants – his ministers are still in the “internship” class?

It’s time to choose a path. The US-China tariff truce is the “school bell” ringing. Indonesia must choose: to remain a bobbing spectator, or to become a player who sets its own direction.

“On the global economic stage, we have been extras for too long. It’s time to write our own scenario, not just follow someone else’s script.”

Unfortunately, we are more preoccupied with the affairs of the seats of power with the proliferation of words for the sake of the people – which honestly has become inflationary. Words for the sake of the people that no longer easily inspire market confidence – because it is only limited to we will, we will and has not been accompanied by concrete steps. In fact, we have “buried” the trust of the market and the public by making promises.

It’s time to change the pace to become a major player in the world. We can! Because we have everything, such as natural resources and a productive population. Only one thing needs to be done, lowering leakages or (ICOR), especially thuggery and bureaucratic drawers that are increasingly difficult and unfriendly to the market. (*)

US-China Trade “Peace” Full of Thorns, Indonesia in Tariff “Trap”

By: Eko B. Supriyanto, Chairman of Infobank Institute

PEACE. It was expected. The United States (US) with Donald Trump’s “bluff” style does not scare China. The more advanced, and one side of China has morally won. Meanwhile, Indonesia, which looks “grusa-grusu”, has declared a good child to negotiate. Did Indonesia enter the tariff trap spread by Donald Trump?

The two world economic giants finally stopped elbowing each other. The US and China, after years of hitting each other with tariffs of up to 145 percent and 125 percent, have now reconciled with figures of 30 percent and 10 percent. A reconciliation that tastes sweet, but for Indonesia it leaves a bitter taste on the tongue.

In the midst of this peace party, we are instead playing with fire: raising tariffs to the US from 32 percent to 47 percent while pretending to be friendly with American energy imports. A contradictory move that makes us ask: is this a clever strategy or a diplomatic blunder that will be embarrassing?

Listen! Indonesia once had a chance. And, apparently, the opportunity evaporated before it could be enjoyed. Because, when China stumbled over high tariffs, our electronics exports to the US had shot up 23.5 percent. Now, when the red dragon returns with a 30 percent tariff, the beautiful dream evaporates like morning dew. Our textile and footwear products that had enjoyed the American market, now have to bite the bullet to see Chinese products dominate again.

On the other hand, in Indonesia, thuggery, bureaucracy, and suffocating logistics are big rocks in the face of competitiveness. Logistics costs are more expensive than China and Vietnam – like a marathon runner carrying sandbags. No wonder that of the 33 companies that fled China, only 7 chose Indonesia, while 19 preferred Vietnam.

There are other facts about dependency that are worrying. In fact, 70 percent of the raw materials for our electronics industry still depend on China. If the tariff war heats up again, the yuan fluctuation could make our banks’ balance sheets fall apart. Although, at present, the easing of the China Vs US war is enough to make banks less “dag-dig dug”, because liquidity will be looser.

While Indonesia’s “grusa-grusu” with negotiations – which resulted in tariffs being raised to 47 percent from the previous tariff of 32 percent. Trump seems to be using his bluff and Indonesia is not a pawn but not yet a queen. In fact, some say that our tariff increase to the US has put Indonesia on the “Dirty 15” list – countries targeted for US retaliation.

In fact, exports worth USD16.8 billion are in danger of being victimized. It’s like going from the mouth of the lion to the mouth of the tiger. Shifting energy imports to the US may reduce dependency on China, but without renewable energy development, Indonesia is just moving from one dependency to another. It’s just a change of players because of a change of regime.

Nevertheless, Indonesia, which continues to be dear to God – whoever the president is, economic growth of 4-5 percent is already in hand. That is because of commodities and consumption. Even when consumption is “strangled” by the budget, the IMF still projects Indonesia’s growth to be 4.8-5.0 percent. But, that number could be a mirage if we remain dependent on raw material exports. This is because the downstreaming of nickel and CPO is still in place, while added value flows to other countries.

There is not much time, the way out normatively needs to cut bureaucracy, eliminate thuggery under the guise of official or fake. It’s time to stop being coolies in our own country by accelerating downstreaming and industrialization. Because, downstreaming without our industry will not absorb more workers.

The peace between China and the US is the “grusa-grusu” of trade diplomacy that cannot read the signs of the times. In fact, Trump is honestly just bluffing, and we are afraid to run away even though Indonesia’s exports are only 2 percent of our Gross Domestic Product (GDP).

We do not have to surrender to all US demands. We must be more fair in protecting Indonesian products and Indonesian businesses. And, not always being the good boy. An important lesson is not to be reactive and policies need to be carefully thought out, or is it because the President’s assistants – his ministers are still in the “internship” class?

It’s time to choose a path. The US-China tariff truce is the “school bell” ringing. Indonesia must choose: to remain a bobbing spectator, or to become a player who sets its own direction.

“On the global economic stage, we have been extras for too long. It’s time to write our own scenario, not just follow someone else’s script.”

Unfortunately, we are more preoccupied with the affairs of the seats of power with the proliferation of words for the sake of the people – which honestly has become inflationary. Words for the sake of the people that no longer easily inspire market confidence – because it is only limited to we will, we will and has not been accompanied by concrete steps. In fact, we have “buried” the trust of the market and the public by making promises.

It’s time to change the pace to become a major player in the world. We can! Because we have everything, such as natural resources and a productive population. Only one thing needs to be done, lowering leakages or (ICOR), especially thuggery and bureaucratic drawers that are increasingly difficult and unfriendly to the market. (*)