JAKARTA — Indonesia is going all out to strike trade pacts with about a dozen countries and blocs as the US-China trade war hurts its shipments and threatens to worsen a current-account deficit.
The country on Monday signed a free trade pact with Australia that has been in the works for years, and is close to clinching deals with Iran, Turkey and the European Union, according to officials. It’s also pushing for a China-backed 16-nation Regional Comprehensive Economic Partnership to ensure greater access for its goods and services, they said.
The urgency to seal as many trade pacts as possible stems from the need to reverse a slump in exports in the past three months, which sent the nation’s trade deficit to a record last year. While an aggressive tightening by the central bank helped the rupiah rebound from a two-decade low and a dovish rate outlook from the US Federal Reserve drew foreign investors back, risks loom from a prolonged US-China trade war.
“Indonesia’s current trade policy is very proactive in looking for market access in various parts of the world, whether the traditional markets or the non-traditional ones such as in Africa and Latin America,” said Ni Made Ayu Marthini, trade ministry’s bilateral negotiations director.
“That’s because the trade talks will give better preference to Indonesian products.”
Through the signing of the Indonesia-Australia Comprehensive Economic Partnership Agreement, exports will increase to Australia as shipments of some commodities from the Southeast Asian country will no longer attract an import duty, said Susiwijono Moegiarso, secretary at the Coordinating Ministry for Economic Affairs.
Besides simplifying export procedures and ensuring efficient logistics, the government is leaning on diplomacy to secure preferential tariffs, access to non-traditional market and cheaper export financing, Moegiarso said. — Bloomberg