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Prabowo Vows To ‘dismantle’ Business Regulations

President Prabowo Subianto has ordered the government to extensively cut back business regulations, including local content requirements and import restrictions, a day before the United States is set to slap steep import tariffs on Indonesian goods. Speaking at a public economic forum on Tuesday, the President said he had made it his “mission” to deregulate the economy and eliminate “convoluted” business bureaucracy. “Throw away all the regulations that don’t make sense. Make it easy! Make business processes easy!” Prabowo said in front of government officials, businesspeople, economists and journalists. Specifically, he vowed to make the regulation on local content requirements (TKDN) “more flexible” because it “ends up making us less competitive”.

Another concrete instruction by the President was to eliminate quotas issued by the government for specific parties to import certain amounts of commodities, such as staple foodstuffs. “[So that] anyone who wants to import beef, they can do so. Whatever anyone wants to import, [let them] go ahead, open it [the market]. Our people are smart,” said Prabowo. The government is looking to import more American-made products to reduce Indonesia’s bilateral trade surplus with the world’s largest economy, which amounted to US$18 billion last year. US President Donald Trump has pointed to large US trade deficits with other countries as grounds for imposing double-digit import tariffs on goods from around the world, which is 32 percent in the case of Indonesia. If the deficit was a problem [for the US], then Indonesia would buy US$18 billion worth of US products, Prabowo said: “We’re not a poor country, we can buy” that much. He mentioned wheat, soybean and cotton as products Indonesia could import more of from the US, alongside liquefied petroleum gas, oil and oil drilling machines, given that the government was looking to revive 10,000 oil and gas wells. Narrowing America’s trade deficit with Indonesia by importing more US products is one bargaining chip Jakarta wants to put on the table when dispatching a high-ranking delegation to the White House next week. Speaking at the same forum, Coordinating Economic Minister Airlangga Hartarto said Jakarta had mailed letters to the US Trade Representative and the US Secretary of Commerce, who had received them.

He said in his presentation that Indonesia “could certainly open other markets besides America”. Attending the same event, Finance Minister Sri Mulyani Indrawati noted that China and the US, the two principal parties exchanging fire in the escalating trade war, accounted for a combined 25 percent of global trade. “So, the other 75 percent can actually conduct trade [among themselves] without those two big countries, but the spillover [effect] from the two countries cannot be underestimated,” said Sri Mulyani. She added, however, that the US tariffs also afforded Indonesia an opportunity to “take over” a greater share of global markets, given that Washington imposed higher rates on Vietnam, Bangladesh, Thailand and China. National Economic Council head Luhut Pandjaitan, speaking at the same forum, said Indonesia would come “under pressure” from the trade war but “should not be overly anxious” about the US tariffs.

Local stocks tumble Market jitters over the escalating US tariffs saw the Indonesia Stock Exchange (IDX) Composite index plunge 9.2 percent to 5,912 points shortly after the opening at 9 a.m. on Tuesday, triggering an automatic 30-minute trading halt. By the closing bell in the afternoon, the index had rebounded only slightly to 5,996 points, which still marked a daily drop of 7.9 percent. All major Asian markets plummeted on Monday as traders responded to the tariff announcement by US President Donald Trump, but some indexes recovered partially on Tuesday. The IDX had been technically shielded from the initial market rout due to an 11-day closure for the Nyepi and Idul Fitri holidays, but analysts had warned in advance that the local bourse would not remain unscathed following the major sell-off in markets around the world. Just before trading resumed after the break, the IDX revised its circuit breaker rules, first introduced during the COVID-19 crisis, to better accommodate current volatility. The threshold for the first 30-minute trading halt was widened from a 5-percent drop to 8 percent. A second 30-minute pause will now be triggered at a 15-percent loss, up from the previous 10 percent. A 20-percent plunge could lead to a full-day trading suspension. IDX had been one of the worst-performing indexes in Asia before Trump’s

Tag: Prabowo Subianto Sri Mulyani Indrawati TKDN