In these times of US-China tensions, Indonesia is expected to enjoy a boost in exports; the United States has extended special tariff concessions to South-east Asia's largest economy. These concessions, called the Generalised System of Preferences (GSP), cover more than 3,500 merchandise items ranging from electronic products and children's toys to sports equipment and wigs. Last year, about 700 Indonesia export products shipped to the US used this facility.
Indonesian exports have been enjoying the GSP facility given by the US since 1980. Last year, Indonesian exports worth US$2.61 billion (S$3.5 billion), or 13 per cent of its total US$20.1 billion exports to the US, were eligible.
In 2018, the US said it reviewed the eligibility of Indonesia and several other developing countries including India for the GSP. Last Friday, the US decided to close the review for Indonesia, making it the only country in Asia that did not see any change of terms in its GSP status.
The decision to close the review - taken only days after US Secretary of State Mike Pompeo visited Jakarta last week - would place Indonesia in a better bargaining position to attract major companies wanting to shift their production base from China, or wanting to diversify their production base beyond just one or two locations, according to the Indonesian government.