DAVOS: A trade agreement being discussed between the US and Indonesia could lead to a massive expansion in bilateral trade between the two countries, the head of Indonesia’s chamber of commerce told Reuters.
The agreement, which could be completed next month, could increase trade between the US and Southeast Asia’s largest economy fourfold from the current level of around US$40 billion per year, Anindya Bakrie, chairman of Kadin, said in an interview at the World Economic Forum in Davos, Switzerland.
“Trade would become more balanced but the total trade would expand maybe three or four times,” Bakrie said.
Bakrie, whose organisation represents all businesses in Indonesia, said the country had long run a trade surplus with the US, which was currently running at around US$2 billion per month.
“I believe the US would like to balance that. We don’t mind because balancing means they want to send more wheat, cotton, oil, and gas and dairy,” he said.
“But we can also increase our own exports because we get much more free access for our palm oil, garments, electronics, furniture,” he added.
Last year, the US threatened an additional tariff of 32% on Indonesian exports, but the new deal would lower this to 19%, when it goes into effect.
In 2024, exports from Indonesia to the US reached US$26.54 billion with major shipments of palm oil, footwear and electrical machines, according to data from Indonesia’s trade ministry.
Meanwhile the US exported US$12 billion of products to Indonesia in 2024, a level that has not changed much since 2021, with soybean, wheat, cotton and petroleum oils among the main products.
Kadin’s Bakrie said the deal could also lead to more investment into Indonesia from the US.
“Indonesia’s investment in the US will also increase. There could be more investments in both directions,” he added.
“Indonesia has yet to sign the final deal with the US but both might sign next month depending on each leader’s schedule as final discussions between respective delegates have been held,” said Susiwijono Moegiarso, a senior official at Indonesia’s economic ministry.
“Final discussions have been held and all substantive matters are now complete,” he told Reuters on Friday without giving more details.
