Indonesia Criticizes Trump’s Protectionist Policies

Indonesia is foregoing billions of dollars on offer from American companies eager to invest in Southeast Asia’s biggest economy, US ambassador to Indonesia, Joseph Donovan, said.

As the US tries to arrest a deteriorating trade balance with Indonesia, which last year found itself in President Donald Trump’s cross-hairs, Donovan has also rejected complaints of increasing American protectionism. Indonesia had made significant progress on macroeconomic stability, improving the business environment, education and infrastructure, yet more must be done to encourage trade as well as foreign investment, he said, Bloomberg reported.

Indonesian officials such as Finance Minister Mulyani Indrawati have consistently criticized the protectionist tone sounded by Trump, who last year accused a host of nations, including Indonesia, of potentially abusing their trade relationship with the world’s biggest economy. Since then, the US trade deficit with Indonesia has worsened to $13.3 billion from $13.2 billion in 2016, according to the US Census Bureau.

“The current protectionist language is definitely going to create concern about whether globally there will be a setback in the progress that has been made over the past three decades,” Indrawati said in an interview on Jan 30.

Oke Nurwan, director-general of foreign trade at the trade ministry, did not respond to questions about protectionism. He said Indonesia had made progress in terms of ease of doing business and was seeking to better manage imports, as well as targeting export growth of 11% in 2018.

Donovan said the US’s average tariff rate was less than 3% and half Indonesia’s average applied tariff rate. Despite the imbalance, he said trade in goods between the two nations had increased last year by about 7% to about $27 billion in bilateral terms, with US exports to Indonesia increasing about 14%.  

Ekoputro Adijayanto, the chief of the Indonesian Planning Ministry’s Center for Private Investment, said a number of US private equity firms had shown interest in Indonesia, including one that’s “seriously looking” to invest in greenfield power generation. But there also appeared to be a “Trump effect”, he said. “He’s trying to lure investors in the US to invest back in America, make America great again.”

“China is a bit different from other countries,” Adijayanto said. “Instead of us going there, they are coming here. Many Chinese companies are coming to our office.”

Figures show that in the space of three years, the US has lost significant ground to China in terms of foreign direct investment in Indonesia. Last year, direct investment from the US was worth $2 billion, according to the Indonesia Investment Coordinating Board, while Chinese foreign direct investment was $3.4 billion.