Indonesia eases requirement to buy domestic goods from farmers

Indonesia has introduced new rules that allow the government to reduce the mandatory share of local content in government purchases to less than 25%, and allow imports of goods that are not available domestically. The decree was signed by President Prabowo Subianto on April 30 and is linked to the elimination of the potential economic impact of US tariffs on the country’s economy, Reuters reports.

Jakarta is currently negotiating a 32% tariff that the US wants to impose on Indonesian goods. As part of the talks, Indonesia has previously proposed increasing its annual imports from the US by up to $19 billion through the supply of soybeans, soybean meal, wheat, gas and crude oil.

Previously, the law on local content set the bar for domestic purchases at at least 40%. US trade officials have said that the 40% local content requirement in government purchases is one of the trade barriers they face in Southeast Asia’s largest economy.

“So this is part of the government’s major deregulation efforts that will speed up or facilitate business activities,” Industry Minister Agus Kartasasmita was quoted as saying by state news agency Antara.

The Indonesian government has said its exports to the U.S. account for about 2 percent of its gross domestic product, but the economy remains vulnerable to potential trade wars. Indonesia had a $14.3 billion trade surplus with Washington last year, according to government data.

Tags: Indonesia, soybean, USA, restrictions