Indonesia will relax import restrictions and rules on a selection of goods in a bid to make it easier to do business in the country, in an apparent concession in its ongoing tariff negotiations with the United States.
Speaking at a press conference yesterday, Airlangga Hartarto, the coordinating minister for economic affairs, said that the government would ease import regulations on 10 groups of commodities, including fertilizers, footwear, and bicycles. The change will also exclude some industrial raw materials, including plastic and chemical products, from the import restriction list. Airlangga said that the changes “would come into effect in two months.”
Satya Bhakti Parikesit, an official in the Indonesian Ministry of State Secretariat, said that President Prabowo Subianto had “instructed all ministerial bodies to ensure the process of business licensing is not hindered by a long bureaucratic process.”
According to Bloomberg, Airlangga said that the measures would both aid ongoing tariff negotiations with the United States and support Jakarta’s broader economic goals, including its aims of finalizing a trade deal with the European Union and joining the Organisation for Economic Co-operation and Development.
The loosening of import regulations on these goods will be matched by a further tightening on ready-made garments and accessories, in a bid to prevent domestic manufacturers from being swamped by cheap imports, particularly from China. As per Bloomberg, “restrictions remain unchanged for strategic goods, including rice, salt, fisheries products, goods related to security and health, and goods produced by labor-intensive industries such as some textiles, iron and steel.”
The problem of red tape was among the numerous non-tariff barriers identified by the U.S. Trade Representative (USTR) in a report published in late March. The report claimed that Indonesia’s overly complicated bureaucracy has long been a concern for many companies operating in Indonesia, including American ones, “due to numerous, overlapping import licensing requirements that impede market access.” The USTR argues that this has contributed to its $17.9 billion goods trade deficit with the country.
The deficit formed the mathematical basis for U.S. President Donald Trump’s decision to impose a 32 percent “reciprocal” tariff on Indonesian goods during his “liberation day” tariff announcement on April 2. The tariff is due to come into effect on July 9, and Indonesian officials continue to negotiate with their U.S. counterparts over a fair resolution.
With next week’s U.S. tariff negotiation deadline fast approaching, Airlangga told reporters on Friday that the Indonesian government had approved several U.S. government proposals for tariffs and trade barriers and had submitted what he described as “Indonesia’s second-best offer.” “We have fulfilled several U.S. requests regarding tariffs, non-tariff barriers, and commercial matters,” he said, adding that U.S. Treasury Secretary Scott Bessent had expressed a willingness to accommodate a number of Indonesian concessions.
Indonesia has previously proposed relaxing some of its local content requirements – another significant non-tariff barrier identified in the USTR’s report – as a carrot to the Trump administration. In particular, Prabowo has proposed reducing the requirement on government procurements that will permit any state ministry and institution to buy products with 25 percent locally produced content, down from the current minimum of 40 percent.
Also yesterday, Airlangga said that Indonesia has invited U.S. firms to invest in its critical minerals sector, in collaboration with the country’s new sovereign investment fund, Danantara.