Losing Import Duty Facility from US Threatens Indonesia with a Trade Deficit

Table of US  leading export import commodities

Indonesia will probably lose import duty facility or the Generalized System of Preferences (GSP) scheme from United States (US) following this country’s decision to remove Indonesia from the list of developing countries.

This will threaten Indonesia with a risk of trade deficit, according to Secretary of Coordinating Minister (Sesmenko) for Economic Affairs Susiwijono.

“It is clear. Our trade will be at risk of a deficit,” Susiwijono said yesterday (Monday, February 24).

US is providing import duty facility or the Generalized System of Preferences (GSP) scheme to all developing countries, including Indonesia.

“But, the US’ decision to remove Indonesia is linked to trade facilities since the consequences will be on the GSP and so on,” Susiwijono said, adding that once Indonesia does not receive the GSP facility, it will have to pay import duties at the normal rate or Most Favored Nation (MFN).

“Our GSP is very large,” Susiwijono remarked.

He stated that currently, Indonesia’s trade with the US was still in surplus as was apparent from the Central Statistics Agency (BPS) data indicating that Indonesia’s trade surplus with the US in January 2020 had reached US$1.01 billion.

“Our trade with them (the US) is also still in surplus,” he stated.

Earlier, as reported by Antara, economic observer from the University of Indonesia Fithra Faisal Hastiadi explained that the other impact of the US decision was that Indonesia would be subject to higher tariffs since it would no longer receive facilities as a developing country.

Furthermore, the Official Development Assistance (ODA) facility, which is an alternative financing from external parties to conduct social and economic development, had been revoked.

“We are speaking of debt relations, so we can no longer do classification of ODA. This is since with that, we will be able to get cheap interest. If under US$4,000, we can get 0.25 percent,” Fithra explained as quoted by antara.co.id.

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