Gov’t to Intensify Communication with US in Response to GSP

Minister of Industry Airlangga Hartarto accompanied by Head of the Investment Coordinating Board (BKPM) Thomas Lembong delivers a press statement, at the Bogor Presidential Palace, West Java, on Monday (9/7)) (Photo: Rahmat/PR)

The Indonesian Government has announced it will intensify communication with the US Government following the instruction given by US President Donald Trump to review the duty-free program for Indonesian goods because the Generalized System of Preferences (GSP) policy is considered to create deficit for the US in the US-Indonesia trade.

“We will communicate with the Government of the United States (US). We will also conduct dissemination for products that are still within the scope of GSP,” Minister of Industry Airlangga Hartarto told reporters after a limited meeting at the Bogor Presidential Palace, West Java, Monday (9/7).

The Minister asserted that for the US, Indonesia is ranked 17 among the country’s top trade partners and in the terms of import and export, it is not a threat for Indonesia. Therefore, the Government is still trying to communicate and have talks.

However, Airlangga said that it is normal to review GSP because every country gaining GSP will be reviewed. And for this year, Indonesia is one of three countries to be reviewed by the US.

“We will conduct a study but we are still prioritizing palm oil. We will also improve harmonization, negotiation, and early harvest of textile industry. As for other sector including automotive, we will monitor the discussion with Vietnam; this is our priority. Thus, there are several priorities to be discussed,” Airlangga said.

The Government has also discussed several issues and made anticipation in the form of regulations which are expected to boost investment, he added.

“Thus, that barriers are being discussed, so we can promulgate its regulations, given some of the barriers are related with the regulation issued before President Jokowi’s administration. So, they are being reviewed,” Airlangga added.

In the meantime, Head of the Investment Coordinating Board (BKPM) Thomas Lembong acknowledged that the US Government’s plan to review duty-free which is included in the GSP policy will bring an impact to investment, mainly in terms of sentiment and trust. “Trade war will indeed cause uncertainty. Business and investment sectors are more likely prone to the uncertainty,” Thomas said.

For that reason, he added, the Government must prepare additional intensives to address and tackle the impact on investor sentiment. He also appreciated Minister of Industry for initiating mega projects in industrial sector the main focus.

Thomas also mentioned that two or three factors are directly affected by the impact of the review; first, the upstream industry; given investment project in upstream industry is quite huge, in one transaction, it can generate tens of trillions and second, there are many export-oriented projects in the upstream industry that will reduce import.

“As for the example that you may know is smelter. Minister of Industry and the Government have successfully generated tens or even hundreds of trillions from smelter, making Indonesia the top three in the world,” Thomas added.

According to Thomas, during the meeting Minister of Industry also mentioned several mega projects in petrochemicals, but still the needs for petrochemicals and plastics are still half of that those being imported.

“Thus, if we can accelerate investment realization of mega project in petrochemicals, we can get three advantages. Investment and capital will enter the country, export will increase, and import can be reduced to maintain the stability rather than maintain trade balance,” Thomas explained. (DNA/RAH/ES) (RAS/EP/Naster)