Indonesia is going all out to strike trade pacts with about a dozen countries and blocs.
The US-China trade war has hurt its shipments and threatens to worsen a current account deficit.
The country has signed a free trade pact with Australia and is close to clinching deals with Iran, Turkey and the European Union.
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. The urgency to seal as many trade pacts as possible stems from the need to reverse a slump in exports. Notably, in the past three months, exports pushed the nation’s trade deficit, to a record last year.
Besides simplifying export procedures and ensuring efficient logistics, Indonesia is leaning on diplomacy to secure preferential tariffs, access to non-traditional markets and cheaper export financing.
Indonesia’s current account deficit swelled to the highest in four years in 2018 after the trade gap reached a record amid the US-China trade war. The aim is to narrow the deficit to around 2.5 per cent of the GDP in order to address market sentiments. Risks loom from a prolonged US-China trade war.