President Prabowo Subianto plans to implement a policy eliminating import quotas for several commodities.
The plan was announced following U.S. President Donald Trump’s imposition of a 32 percent reciprocal tariff on Indonesia.
According to the official website of the Cabinet Secretariat of the Republic of Indonesia, this policy aims to ease business processes, create a supportive ecosystem for job creation, and boost national economic growth.
Dr. Hempri Suyatna, a lecturer in Social Development and Welfare at the UGM Faculty of Social and Political Sciences (Fisipol UGM), said the policy plan to remove import quotas should be reviewed to assess its potential positive and negative impacts on small and medium enterprises (SMEs) currently affected by a downturn in the national economy.
In the short term, the policy may help eliminate rent-seeking and monopolistic practices that often occur among importers, as import quotas are frequently granted to businesses with strong political connections.
However, in the long term, if the removal of quotas leads to large-scale import liberalization, it could clearly threaten the existence of MSMEs in Indonesia due to an influx of foreign products.
“This policy clearly threatens the economic resilience of MSMEs,” he said on Monday (Apr. 14).
According to Dr. Suyatna, the current reality is that many Indonesian MSME products still struggle to compete globally.
He cited the implementation of Minister of Trade Regulation (Permendag) No. 8 of 2024 on import policy and regulation, which has resulted in a surge of imported goods entering the country.
This, in turn, has impacted several sectors, including manufacturing, technology, and startups. Some have resorted to layoffs due to production inefficiencies.
Dr. Suyatna explained that if this policy proceeds, MSMEs will inevitably be affected and must continually innovate to boost their competitiveness.
MSME actors must cultivate qualities such as resilience, creativity, innovation, intelligence, independence, productivity, and the ability to seize local opportunities and resources.
On the other hand, the government must offer structural support such as tax relief, easier access to development funding, marketing and promotional assistance, and facilitation of intellectual property and trademark registration.
“The government’s commitment to protecting MSME products through various forms of structural support is essential,” he emphasized.
In light of the current signs of economic decline, Dr. Suyatna believes the government must show appreciation for and protect local products.
Strengthening the movement to take pride in local products is vital in helping MSMEs survive. So far, this campaign has remained largely symbolic.
It must be followed up with efforts to reshape public behavior through regulations that strengthen the domestic market.
Many people feel inferior, which leads them to prefer foreign products over local ones.
“In terms of culture, we need to make efforts to shift this sense of inferiority among the public,” he concluded.
Author: Jelita Agustine
Editor: Gusti Grehenson
Post-editor: Afifudin Baliya
Photo: Freepik