Jakarta, June 28 (Antara) - In the face of possible trade war between giant economies of the United States and China, Indonesia has to improve the structure of its exports and help strengthen regional economic integration.
Indonesia is now reviewing the impact of the trade war threat following the possible tariff wars of the two countries.
The United States has issued a threat on Monday June 18 to slap a 10 percent import duty on US$200 billion worth of Chinese goods after Beijing decided to raise the import duty on US$50 billion worth of US commodities in response to similar measure taken by Washington on Chinese goods.
"Indeed, this trade war will come into force next month, and from now on, the minister of economy has the opportunity to evaluate what the pros and cons are. We will examine its impact to avoid negative ones," Vice President Jusuf Kalla noted at the Vice President's Palace on Tuesday (June 26).
The vice president remarked that the trade war between the United States and China will have an impact on Indonesia. Hence, it is necessary to examine the extent of the impact on the economy and the opportunities that can be utilized in the situation.
It was earlier reported that the United States will impose a 25 percent import tariff on 818 products effective from July 6, 2018, and will levy a charge on 1,300 products from China valued at US$50 billion.
The imposition of high trade tariffs has triggered retaliatory action, which will also result in a trade war between the two sides. As a result, it will also affect other countries
Earlier, senior economist Mari Elka Pangestu elaborated that the phenomenon of protectionism and the possibility of a trade war is becoming a conversation nowadays. The turmoil is considered to disrupt world trade, especially involving the markets of traditional countries.
She argued that the regional economic integration of Asian countries can help outweigh protectionism owing to the fact that the Asian region contributes 40 percent to the world economy.
Therefore, the ASEAN Economic Community, the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), need to be reinforced.
"It is not to realize an Asian bloc, because if the Asian countries grow, then it will also contribute to the growth of the world economy," Pangestu noted in a discussion held at the office of Center for Strategic and International Studies (CSIS), Jakarta, on Wednesday (June 6).
Meanwhile, Coordinating Minister for Economic Affairs, Darmin Nasution, remarked that the improvement in the national export structure is important to overcome the impact of potential trade wars by developed countries.
"We have to prepare a policy both on industry and natural resources to improve our export performance," Darmin said here on Thursday (June 21).
He said Indonesia has to look for any opportunity open in the trade war, adding the country could not afford to remain passive facing the situation threatening the country's economy.
He said the country has to improve its trade performance, and cut the current account deficit, which has been one of the causes of rupiah depreciation.
"That means first thing to be taken care of is the current account balance. No need to focus too much on trade war. We just focus on our problem, meaning we have to find a way of reversing the course of negative current account," he said.
In the meantime, a legislator of the Prosperous Justice Party (PKS) opined that the European Union (EU) can offer an opportunity and solution to the problem of the US-China trade war.
"(The European Union) offers an opportunity that could be developed, especially in the economic field, to come out of the trap of the US-China trade war," Handi Risza, the PKS secretary for economic, financial, and industrial affairs, noted in a press statement in Jakarta on Wednesday.
Europe is one of the influential investors in Indonesia, so the opportunity should be utilized by the Indonesian government. The phenomenon of the ups and downs faced by the EU in the field of economics can serve as a lesson for the Indonesian nation. "Economically, they have experienced a tremendous crisis but are now in the process of recovery, so we need to take a cue from this," he noted.
According to the PKS, international cooperation in the economic field is a necessity, and the most important aspect is that such cooperation must be mutually beneficial and be consistent with principles and justice.
So far, the impact of the trade war threat on Indonesia is still not felt. Even, Indonesia's trade with the United States and with the People's Republic of China continues to increase despite both countries being in a trade war.
"Trade continues to rise despite trade wars (between the People's Republic of China and the United States)," Head of Central Statistics Agency (BPS), Kecuk Suhariyanto, said here on Monday (June 25).
Based on data from the BPS, the value of non-oil exports to the People's Republic of China in May 2018 amounted to US$278.9 million, up 15.37 percent as compared to that in April 2018.
The value of non-oil and gas exports to the United States amounted to $143.4 billion, up 10.03 percent in May 2018 as compared to that in April 2018.
In the January-May 2018 period, China remained Indonesia's largest export destination, with a value of $10.24 billion, up 15.05 percent year-on-year (y-o-y), followed by the United States, at $6.87 billion, or an increase of 10.91 percent (y-o-y).***3***
(A014/H-YH)(T.A014/A/BESSR/A/Yosep) 28-06-2018 00:11: |
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