Jakarta – The Indonesian government has shifted sources of liquefied petroleum gas (LPG) and liquefied natural gas (LNG) imports to the United States (US), as part of efforts to cushion the potential imposition of additional tariffs on Indonesian export products to the US, following trade tensions triggered by US President Donald Trump’s protectionist policies.
“This is a form of our commitment to balance trade with the United States. President (Prabowo Subianto) has given directions for us to adjust our import patterns, one of which is by reallocating the purchase of LPG and LNG from other countries to the US,” said Coordinating Minister for Economic Affairs Airlangga Hartarto at the Economic Workshop, which was broadcasted on streaming, Tuesday, 8 April.
Airlangga emphasised that this change in import direction will not increase the total volume of LPG and LNG imports. The reallocation is done by moving some purchases from other countries-such as the United Arab Emirates, Qatar, Saudi Arabia, and Algeria-to the United States.
“This is not an addition, but only a supplier switch. So it will not burden the state budget, because the volume and subsidy scheme remain,” he said.
Indonesia’s domestic LPG demand reaches around 8 million tonnes per year, while imports range from 6 to 7 million tonnes yearly. The energy subsidy burden for LPG is currently recorded at around IDR63.5 trillion in the state budget.
For LNG, imports from the United States have been ongoing since September 2021 and have recorded an upward trend from year to year. Now, the government plans to expand the volume of imports from the US as part of its bilateral trade negotiation strategy.
In addition to the energy sector, the government is opening up options to increase imports of US agricultural products such as wheat and soybeans. These products are deemed insufficiently produced domestically and come from Republican constituency states, which are currently President Trump’s power base.
“The President requested we import more from Republican constituency states, such as wheat and soybeans. This is part of careful economic diplomacy,” said Airlangga.
Not only that, the manufacturing sector will also be involved in this trade manoeuvre. “We will also increase the purchase of engineering products from America,” he added.
This import reallocation policy responded to Trump’s threat to impose additional tariffs on countries with high trade surpluses against the US. Indonesia, which is on the radar, chose the path of economic diplomacy to maintain export stability.
“We want to maintain good relations with the US without compromising the state budget. Therefore, the approach is negotiation and trade policy adjustment,” said Airlangga.
This step shows how global geopolitics and the dynamics of trade wars encourage countries like Indonesia to be more adaptive and strategic in maintaining national economic balance. (Hartatik)
Banner photo: Image generated by OpenAI’s DALL·E via ChatGPT (2024)
