The Indonesian government faces a dilemma following a recent United States (US) announcement of a 32 percent import tariff under President Donald Trump’s administration.
In response, the Indonesian government is reportedly prepared to negotiate by offering to increase import volumes from the US. President Prabowo Subianto also signaled a willingness to lift import quotas altogether, particularly for US commodities.
Professor Subejo, an agricultural communication and food supply chain expert from the UGM Faculty of Agriculture, says this policy shift carries significant risks. Originally, the Indonesian government limited imports to achieve food self-sufficiency and improve farmers’ welfare.
“If import quotas, which were previously regulated, are suddenly lifted, it could allow foreign products to flood Indonesian markets and directly compete with local goods,” Professor Subejo said on Wednesday, Apr. 16, 2025.
He warned that local products, often priced higher than imported ones, might lose their competitive edge.
While competition can enhance the quality of local products, Professor Subejo emphasized the need for protective regulations. He pointed to Japan’s agricultural policy, where imported rice is tightly regulated to protect domestic farmers.
“We should learn from that. Opening the floodgates for imports or exports isn’t always the right choice,” the expert added.
Professor Subejo urged the government to reconsider import quotas while improving trade systems to ensure that a handful of importers do not monopolize quotas.
He stressed that import quotas primarily address local production shortages or supply goods not produced domestically. Allowing free entry of imports without proper regulation could damage Indonesia’s economy.
“Take rice, for example. If Thai rice is IDR 1,000 cheaper than local rice, consumers will choose the cheaper option, regardless of its origin. That’s partly because we haven’t instilled a strong nationalism for local products,” he explained.
Some imported commodities, like wheat, which cannot be produced locally, could actually present opportunities.
Professor Subejo noted that competition among exporting countries can drive down prices, ultimately benefiting domestic production. Thus, import policy should be commodity-specific, whether the product is needed to fill local supply gaps or is completely unavailable in Indonesia.
Beyond the import issue, Professor Subejo also emphasized the importance of protecting farmers and local commodities. He said the government should ensure the implementation of a purchase price policy, which currently remains ineffective.
He also advocated for downstream agricultural development, noting that surplus crops are prone to spoilage without processing.
“If the government facilitates investment in processing industries, like sauce or chili-drying factories, then oversupply can be turned into industrial output,” he said.
In conclusion, Professor Subejo advised that the government conduct thorough studies before deciding to lift import quotas.
“This kind of reciprocal agreement requires careful consideration, determining which products should be opened up and which must be protected. The process will be long, and the policy should be gradual. Otherwise, a good idea might destroy our national agriculture,” Professor Subejo warned.
Author: Lazuardi
Editor: Gusti Grehenson
Post-editor: Lintang Andwyna
Image: Freepik