Jakarta, MINA – Indonesia’s Minister of Trade Budi Santoso has affirmed the country’s commitment to upholding its trade agreements with the United States while emphatically rejecting the practice of transhipment. This involves diverting goods from other countries through Indonesia for re-export to the US.
“We will adhere to the rules and agreements that have been, and will be, mutually agreed upon with the United States. They must not be violated, because if they don’t align with the agreement, tariffs could change again,” Budi told reporters in Jakarta on Thursday.
Currently, Indonesia benefits from a 19 percent import tariff for its products entering the US, the lowest in Southeast Asia. However, this favorable condition raises concerns that Indonesia could be exploited by other countries facing higher tariffs to conduct transhipment.
Transhipment is the practice of shipping goods from one country to Indonesia, then forwarding them to the final destination country after administrative processing in Indonesia. This practice is often used by countries looking to avoid high tariffs from trading partners like the US.
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“Transhipment is not allowed. Like the case in Vietnam, when they engaged in transhipment, their tariffs could rise to 40 percent,” Budi explained.
This strong stance is a crucial part of the ongoing trade negotiations between Indonesia and the US. Earlier, US President Donald Trump stated that all Indonesian products entering the US would be subject to a 19 percent tariff, a significant reduction from the previous tariff of 32 percent last April.
“Indonesia will pay a 19 percent tariff to the United States for all its imported goods into our country,” Trump said via his official Truth Social account on Wednesday.
Achieving this lower tariff signals a positive development for Indonesia-US trade relations, even as the government remains vigilant against the potential misuse of Indonesia’s export channels by other nations. [Shibgho]
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