Indonesia to strengthen multilateral cooperation after US tariff deal

Indonesia will need to "be present in various multilateral forums and actively fight" for the nation's interests in facing ever bigger global challenges in the coming years, said President Prabowo Subianto on Aug 15.

In unveiling his administration's new budget, Prabowo at the parliament warned the nation about greater economic challenges it will have to face in the coming years amid the 19 percent tariffs imposed by the United States on Indonesian products.

Indonesia is a member of international groups that are expected to benefit the country economically. They include WTO, IMF, AFTA, APEC, G20 and BRICS.

Prabowo told parliament members that the Indonesia-US tariff negotiations had been less tough when compared with its 10 years of trade talks with the European Union, in what is called the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA).

Under the IEU-CEPA agreement, almost all tariffs for Indonesian goods will be reduced to zero percent. The IEU-CEPA deal was made soon before Indonesia and the United States reached the 19 percent tariff agreement.

"Surely, this remains a challenge. And we continue and must make ourselves ready for future situation," the president said in his annual budget speech, explaining about this year's budget realization and the 2026 state budget plan.

Prabowo wants Indonesia to achieve 8 percent economic growth by 2029, which some views as overly ambitious judging from the current national and global situation.

In the 2026 budget plan presented to the parliament on Friday, economic growth target is set at 5.4 percent, up from this year's 5.2 percent.

The budget draft sets unemployment at 4.4 percent of the country's total workforce, poverty at 6.5-7.5 percent of its total population, and extreme poverty at 0-0.5 percent.

Prabowo said his government will continue to implement its budget efficiency policy and curb corrupt practices at government institutions and state companies. The budget allows a maximum 3 percent deficit.

In his state budget speech Prabowo stressed his government's determination of carrying on the downstreaming of minerals initiated by Widodo.

Downstreaming of minerals aims at preventing national wealth from flowing out of the country, he said. Among the minerals is nickel, which is abundant in the country.

The president had launched his flagship programs, mainly for needy people across the nation, including nutritious food for school children, people's school, and village cooperatives.

Prabowo was sworn in as president in October 2024, for a five-year term, partnering with Gibran Rakabuming Raka as vice-president. The latter is the eldest son of Prabowo's predecessor, Joko Jokowi Widodo.

The writer is a freelance journalist for China Daily.