Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, will lead a delegation to the United States from April 16th to 23rd, 2025, to engage in negotiations on tariff issues. The delegation includes several high-ranking officials such as the Minister of Foreign Affairs, Retno Marsudi, the Deputy Chair of the National Economic Committee, Farah Hendrawati, the Minister of Finance, Sri Mulyani Indrawati, and the Deputy Minister of Finance, Thomas Lembong, among others. At a press conference on April 14th, Airlangga revealed that the negotiation team will meet with officials from the Office of the U.S. Trade Representative, the Secretary of Commerce, the Secretary of State, and the Secretary of the Treasury, focusing on discussing tariff issues and investment cooperation between the two parties. Sri Mulyani will also attend the Spring Meetings of the International Monetary Fund-World Bank, adding weight to the negotiations.
I. Tariff Background: Policy Changes by the Trump Administration
On April 2nd, the Trump administration announced the imposition of reciprocal tariffs, with rates as high as 32% targeting Indonesia. Although Trump declared a suspension of these tariffs for 90 days on the 9th, this policy still introduces considerable uncertainty. The Indonesian delegation aims to resolve this issue through negotiations.
II. Preparations for Negotiations: Various Documents and Topics
The Indonesian delegation has prepared numerous documents covering a range of topics: proposing to revitalize trade and investment cooperation agreements; relaxing domestic component standards (TKDN) in the communications technology sector to reduce non-tariff measure regulations; planning to assess U.S. import and export bans and restrictions to further optimize trade policies between the two countries; and finally, proposing to reduce import tariffs and establish relevant fiscal incentives to promote the import of U.S. goods.
-END-
These negotiations will not only address tariff issues but also explore the expansion of investment and trade cooperation between the two countries. Airlangga stated that as the first country invited by Trump to discuss tariff issues, Indonesia hopes to achieve a mutually beneficial agreement through these negotiations.
Seize the Initiative and Invest in Indonesia – A Call to Action for Manufacturing Decision-Makers
In today’s global trade landscape, which is undergoing a significant reshaping, the most costly strategy is to merely observe! As the largest economy in ASEAN, Indonesia is offering a “zero-time-lag” production plan for the manufacturing industry with a combination of national economic special zones and ready-to-use standardized factories:
1. Tariff Breakthrough
Avoid the 125% additional tariffs imposed by the United States on China, and enjoy the benefits of the Indonesia-ASEAN Free Trade Area (AFTA) and the Regional Comprehensive Economic Partnership (RCEP), which offer duty-free exports for 90% of goods within the region.
2. Cost Lock-in
– Tax Policies: Enterprises in special zones enjoy a 15-year corporate income tax exemption (first 5 years tax-free, next 10 years at half rate), and full exemption from import tariffs on equipment.
– Labor Costs: 38% of the workforce is under 25 years old, with an average monthly salary in manufacturing that is only one-third of that in China.
– Energy Security: Electricity prices are approximately 0.5 CNY per kWh, with peak prices at 0.75 CNY.
– Employee Social Insurance: Health insurance is paid by both the enterprise and the employee at 1% of the salary each, pension insurance is paid by the enterprise at 8.4% of the salary, and work injury insurance is paid by the enterprise at 0.24% of the salary (totaling less than 10%).
3. Ready-to-Use Facilities
The Batang Economic Special Zone in Central Java Province offers 1 million square meters of high-standard factories for immediate lease and use:
– Complete infrastructure
– Proximity to highways
– Bonded area
– Energy-efficient green buildings
– One-stop service
At this moment, what is even more scarce than a “low-cost base” is a “strategic springboard” resource.
Please contact our investment promotion team immediately to obtain a customized landing plan – starting while others hesitate is the true dimensionality reduction competition!
The Economic Special Zone Management Committee in East Java Province, Indonesia, has bilingual specialists ready to respond 24/7.
