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Business Times
5 days ago
- Business
- Business Times
Indonesia bends to Trump's trade terms to avoid 32% tariff blow
[JAKARTA] In a move that underscores the bargaining power of the US under President Donald Trump's trade-first agenda, Indonesia has agreed to eliminate tariffs on American goods and commit to billions in US purchases in exchange for reduced tariffs on its own exports. The deal, which has helped South-east Asia's largest economy avoid a major trade setback, will see the US reduce tariffs on Indonesian exports from a threatened 32 per cent to 19 per cent. Earlier this month, Vietnam also reached a deal with Washington that lowered tariffs on its exports to 20 per cent; in return, it granted the US tariff-free access to its market. While the agreement secures Indonesia's continued access to the US market, analysts warn the deal is heavily skewed in favour of the US, requiring significant trade-offs. David Sumual, chief economist at Bank Central Asia, described the deal as 'a necessary compromise' to preserve Indonesia's competitiveness in the US market. The 19 per cent tariff is just below Vietnam's 20 per cent and Bangladesh's 35 per cent, two key rivals in major export sectors such as textiles, footwear and apparel. 'What matters most is preserving jobs at home,' Sumual said. 'Indonesia's labour-intensive industries rely heavily on the US market.' A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Under the deal, announced by Trump on Truth Social late Tuesday (July 15), apart from removing tariffs on US goods, Indonesia has also pledged to purchase US$15 billion worth of American energy products and US$4.5 billion in agricultural goods, and increase orders for Boeing aircraft. The US imposition of a 19 per cent tariff on Indonesian exports, though lower than the previously threatened 32 per cent, still marks an increase from the current baseline of around 10 per cent. Sector-specific tariff details have yet to be disclosed. The Indonesian government has yet to release an official statement, though a spokesperson from the Coordinating Ministry for Economic Affairs said a joint announcement is forthcoming. Brian Lee, economist at Maybank, said it's no surprise that the trade deals being struck by Trump are so-called 'unequal' given the US wields significant leverage given its large consumer market. 'Trump is likely in less urgency to strike additional deals given that higher US inflation has been slow to materialise and agreements had been struck to lower tariffs on China and Vietnam, the two key sources of consumer goods imports to the US,' he said. Throw a lifeline Indonesia is the second member of Asean, after Vietnam, to seal a trade deal following the White House's tariff notification letters to more than 20 countries. Trump claimed he spoke directly by phone with President Prabowo Subianto to finalise the agreement. The deal guarantees key Indonesian exports, including textiles, footwear, electronics and commodities, retaining access to the US – which is Indonesia's second-largest trading partner. Indonesia ran a US$17 billion trade surplus with the US last year. Meanwhile, the US may seek increased access to Indonesia's strategic natural resources such as copper. The concessions by Indonesia to secure continued access to the US market are sparking anxiety among local industry players. On pins and needles Redma Gita Wirawasta, chairman of the Indonesian Fiber and Filament Yarn Producers Association, expressed mixed feelings about the deal. 'A 19 per cent tariff is still a burden, but manageable. It helps us stay competitive, which is a relief, especially for downstream industries.' However, he warned that Indonesia's competitive edge could disappear quickly, depending on how the US finalises trade deals with other major exporters – especially China, the world's largest textile producer and exporter. 'If China secures a lower tariff than us, we'll be at a disadvantage. If their tariff is higher, we could capture some of their market share but that also brings risks, like transshipment problems or dumped Chinese goods flooding our own market.' While the trade deal provides Indonesia some relief through lower tariffs, analysts caution that the gains come with serious risks. Harry Su, managing director and research and digital production at Samuel Sekuritas, said the agreement heavily tilts in favour of the US, leaving vulnerable sectors – particularly poultry and corn – exposed to a flood of cheaper American imports. Without protective measures, he said millions of Indonesian jobs could be at stake. Indonesia is a major corn importer, with annual imports averaging around US$250 million, primarily for animal feed. These imports have placed pressure on small-scale and vulnerable local farmers, who struggle to compete with cheaper foreign corn. 'If American corn can freely enter Indonesia, our local farmers will also perish as our production costs are much higher than in the US,' he said. The Indonesian negotiation team, led by Coordinating Minister for Economic Affairs Airlangga Hartarto, has visited the US twice to meet with the US Trade Representative. Indonesia has pledged to address the trade imbalance by increasing purchases of American energy, cotton and wheat, as well as streamlining import licensing processes. The US highlighted Indonesia's non-tariff barriers, among other issues, as major sticking points during the negotiations. Lee from Maybank said easing barriers to US investments could be a positive for Indonesia if it improves the business environment and attracts more foreign direct investment to Indonesia over time, possibly in the strategic minerals space such as copper and nickel smelting. The timing of the deal also reflects Indonesia's attempt to secure certainty ahead of the Aug 1 deadline, while other countries, such as India and China, remain in negotiations. Lee said it may be too early to gauge the relative competitiveness of Indonesia's 19 per cent tariff compared to the US' other trading partners. Su from Samuel Sekuritas highlighted that Indonesia's new agreement with the US raises important questions about how China, its closest and largest trading partner, will perceive this shift. 'It's the elephant in the room', he added.
Business Times
15-05-2025
- Business
- Business Times
Indonesia revises trade data schedule amid crucial US tariff window
[JAKARTA] Indonesia's statistics agency has rescheduled the release of its monthly trade data, delaying the April report – originally set for Thursday (May 15) – to Jun 2. Inflation and trade data will now be released together at the beginning of each month, instead of mid-month. This means the May trade figures will not be published until early July. 'This adjustment aims to improve data quality,' the agency said in a statement. The announcement of the delay comes at a sensitive time. Indonesia is currently within a critical 90-day window following the US decision to impose a 32 per cent reciprocal tariff on select Indonesian products, a period during which timely trade data could prove crucial for assessing potential impacts and shaping policy responses. However, David Sumual, chief economist at Bank Central Asia, said the revised release schedule is unlikely to have an immediate or significant impact on investor sentiment, even with the longer lag in trade data. 'At the moment, external factors are playing a bigger role in driving the market,' he told The Business Times. This isn't the first time the agency has restructured its reporting cadence. In the past, trade data was released on a bi-monthly basis before shifting to monthly updates in pursuit of more precise economic tracking. Indonesia's trade surplus likely narrowed to around US$2.75 billion in April, according to a Reuters poll, as both exports and imports continued to grow despite mounting concerns over the impact of US trade policy. The softer surplus follows a stronger-than-expected US$4.33 billion surplus in March, driven by robust shipments of palm oil and nickel, which were in turn bolstered by exporters rushing to get ahead of the implementation of new US tariffs.
Indian Express
30-04-2025
- Business
- Indian Express
Top 10 richest families in Asia (2025): 6 Indian families dominate in top 20
Mukesh Ambani's children have joined Reliance Industries, which today leads as one of the most valuable and largest Indian companies. (Source: PTI) Next is Thailand's largest private conglomerate with food, retail, and telecom divisions, the Pokphand Group, headed by Dhanin Chearavanont of the Chearavanont family. They have $42.6 billion in combined family wealth. With a total wealth of $42.2 billion (Rs 3.66 lakh crore, approximately), Indonesia's richest family, the Hartono family, ranks third. Beginning with a tobacco brand, Djarum, that became the biggest cigarette manufacturer in Indonesia, their family company became more diversified and now also runs Bank Central Asia. With a total wealth of $42.2 billion (Rs 3.66 lakh crore, approximately), Indonesia's richest family, the Hartono family, ranks third. Beginning with a tobacco brand, Djarum, that became the biggest cigarette manufacturer in Indonesia, their family company became more diversified and now also runs Bank Central Asia. Rounding up the top 10, South Korea's Lee family, which has a total wealth of $22.7 billion, operates Samsung, one of the biggest tech companies in the world, which began as a trading company and grew into the technology sector with Samsung Electronics in 1938. The Top 10 Richest Families in Asia, as of 2025: Rank Family Name Company Wealth Location Generations 1 Ambani Reliance Industries $90.5B India 3 2 Chearavanont Charoen Pokphand Group $42.6B Thailand 4 3 Hartono Djarum, Bank Central Asia $42.2B Indonesia 3 4 Mistry Shapoorji Pallonji Group $37.5B India 5 5 Kwok Sun Hung Kai Properties $35.6B Hong Kong 3 6 Tsai Cathay Financial, Fubon Financial $30.9B Taiwan 3 7 Jindal OP Jindal Group $28.1B India 3 8 Yoovidhya TCP Group $25.7B Thailand 2 9 Birla Aditya Birla Group $23.0B India 7 10 Lee Samsung $22.7B South Korea 3 Source: Bloomberg Methodology: The ranking has been compiled as of January 31, 2025, excluding the first-generation families and their wealth, led by the single heir like Alibaba Group Holding Ltd.'s Jack Ma and India's Gautam Adani. For each lineage, the overall net worth combines the wealth from different family branches. Know which are India's Richest Families in 2025 The Birla family is India's oldest business family, having been passed down through seven generations, whereas the Mistry family has been led by five generations. The Aditya Birla Group led by Kumar Mangalam Birla, which has interests in metals, financial services, and retail, began as a cotton-trading company in the nineteenth century before Ghanshyam Das Birla. The Mistry family firm, on the other hand, was established in India in 1865 by Pallonji Mistry's grandfather, who started a construction business with an Englishman. Shapoorji Pallonji Group presently operates in diverse business fields, including engineering and construction. However, most of the family fortune is held by Tata Sons, the principal holding company for the $400 billion Tata Group, one of India's major conglomerates. After the death of Ratan Tata, Noel Tata now leads the Tata Trusts.
Business Recorder
28-04-2025
- Business
- Business Recorder
Asian currencies down against dollar
BENGALURU: Emerging Asian equity markets opened the week higher on Monday, led by Taiwan tracking Wall Street gains, while Indonesian shares rose on strength in banking stocks. Most stock markets in the region were upbeat as an easing of trade tensions between the United States and China helped stir an appetite for risk among investors. Shares in Malaysia, Thailand and India added 0.7%, 0.1% and 1.3% respectively. 'After a period of correction, ASEAN equities are showing upward momentum, having broken out of a technical downtrend that began from the 2017 high(the first technical breakout occurred in 2024),' said Mohit Mirpuri, an equity fund manager at Singapore-based SGMC Capital. Attractive valuations, a weaker US dollar, steady growth prospects in Asia and relatively light investor positioning create the right conditions for investors to start moving back into risk assets, Mirpuri added. Equities in Taipei surged 0.8%, reflecting a strong lead from gains in technology and artificial intelligence-related stocks in the US The Indonesian benchmark index rose 0.7% to hit its highest since February, powered by major gains in large-cap lenders - Bank Central Asia, Bank Mandiri and Bank Rakyat Indonesia. Bank Central Asia, Indonesia's largest lender, reported strong first-quarter earnings last week and set a positive tone for its rivals, who are scheduled to release their results later this week. In Thailand, the local central bank is set to meet on Wednesday for its monetary policy decision, where Poon Panichpibool, markets strategist at Krung Thai Bank, expects a cut. The Thai baht was trading 0.4% lower against a steady US dollar. If the central bank can decide to hold for now, we could see some profits taking on the Thai bonds and that could be somewhat negative on the baht,' added Panichpibool. Currencies across emerging Asia were trading tepidly against a steady US dollar as investors awaited more cues on the future trajectory of trade talks between the world's two largest economies. Despite US President Donald Trump's claims of progress on trade negotiations with China and other countries, concrete evidence remains scarce. On Sunday, Treasury Secretary Scott Bessent declined to support Trump's assertion that tariff talks with China had begun. The week is also packed with economic news including US employment, gross domestic product and core inflation.
AllAfrica
18-03-2025
- Business
- AllAfrica
Blood on the trading floor in Indonesia
JAKARTA – The Jakarta Stock Exchange forced an emergency trading stop at 11:19 local time today after the Jakarta Composite Index (IDX Composite), an index of all stocks listed on the exchange, dropped by as much as 7.1%, the market's biggest intraday slump since September 2011. While stocks rebounded somewhat, closing down -3.8% at the end of the trading day, the market fall underlines growing fear among investors about the direction of economic policy under President Prabowo Subianto. Indonesian stocks are now some of the world's worst performers in 2025. Since Prabowo's inauguration on October 20 last year, many of Indonesia's blue-chip stocks have suffered sharp declines. Bank Central Asia, IDX's biggest company by market cap, has slid 22.25% since Prabowo took power. The state-owned Bank Rakyat Indonesia, the exchange's second biggest company, is down 26.25% over the same period. State-owned Bank Mandiri, the exchange's fourth biggest company, is down 37.08%. Something appeared to snap today in what one analyst termed 'a good old-fashioned panic', with the index collapsing in a way not seen during the pandemic. The last time the exchange was forced to temporarily suspend trading because of a 5% or more drop was in late 2020. Foreign cash has also been flowing rapidly out of the country. As of March 13, the stock market had experienced a year-to-date net sell of 22.21 trillion rupiah (US$1.35 billion), according to Bank Indonesia. The central bank's weekend report showed that 10.5 trillion rupiah had left the country last week alone due to foreign dumping of stocks and government securities. The market sell-off follows months of weak economic performance. In January, Bank Indonesia downgraded its economic growth forecast for 2025 to 4.7%-5.5% from 4.8%-5.6% previously. It also unexpectedly cut benchmark interest rates from 6% to 5.75% despite the prolonged slide in the rupiah vis-a-vis the US dollar. Consumer spending, which accounts for more than half of Indonesia's economic activity, has weakened since late 2024. In February, Indonesia experienced its first bout of deflation in over two decades, with the consumer price index falling 0.09%. A decline in global commodity prices has hit the other engine of Indonesia's growth. Prices of coal, one of Indonesia's most important exports, have slumped on global markets. The same goes for nickel, which has emerged as an important new export in recent years. Meanwhile, confidence in the government's ability to handle these issues appears low. On the campaign trail last year, Prabowo touted a variety of populist policies focused on domestic processing of raw materials and spending on welfare programs. The unexpected decision of the country's totemic finance minister, Sri Mulyani Indrawati, to stay on under Prabowo briefly calmed nerves, with many investors hoping she would help keep the government's economic policy orthodox. Those hopes, however, have been mostly dashed. Prabowo's government has recently embarked on a drastic slashing of government spending – including a 75% cut to the infrastructure budget. The money is being reallocated to two pet projects – a free school lunch program and to provide capital for Daya Anagata Nusantara Investment Management Agency, aka Danantara, the government's new holding company for state-owned enterprises (SOEs). Danantara, in particular, has stoked stock market worries. SOEs play a huge role in the Indonesian economy, with assets equivalent to 55% of GDP in 2023. Danantara now controls seven of the largest SOEs – three banks, oil company Pertamina, mining company MIND ID, electricity company PLN, and telecoms company Telkom Indonesia. The fall in the stock prices of the three state-owned banks – Bank Mandiri, Bank Rakyat Indonesia, and Bank Negara Indonesia – all accelerated after the fund was launched amid concerns about governance. The fund's CEO, Roesan Roesalni, also serves as minister of investment. With the new holding company placing the companies beyond parliamentary oversight and redirecting their dividends away from the finance ministry, there are worries the fund might be treated as an enormous piggy bank for government pet projects. Other policies have also hit sentiment. Government tax collection has dropped sharply due to hiccups in the roll-out of a new system. Meanwhile, government plans to increase mining royalty rates have sparked protests from companies already facing declining global commodity prices. Rumors that Finance Minister Sri Mulyani may soon resign due to differences with the president have raised worries more economic unorthodoxy may be on the agenda. Thomas Djiwandono, the deputy finance minister and Sri Mulyani's likely successor, is Prabowo's nephew. Meanwhile, the government has floated writing off a variety of loans to MSMEs held by state-owned banks and pushing them to lend to cooperatives. 'People are increasingly thinking there's no strategy to grow the middle class,' said one trader who requested anonymity. 'Only spending on free this and free that. Maybe people will dump government bonds as well if there's no real state budget management.'
