In certain sectors Indonesia can bounce back and forth between protectionism and liberalization without seemingly much roadmap. Such a dynamic was at display when President Jokowi completely banned the export of nickel, despite Indonesia being one of the largest providers in the world, so that they could have ample access for their own growing electric vehicle sector. The overarching goal is almost always to nurture Indonesia’s steady re-industrialization process. These moves don’t always work out as intended - it turns out their nickel was better suited to the production of stainless steel than it was to cars batteries, and the government had to step in and place restrictions on stainless steel production.
In other situations they opt for the simple route and roll back harmful protectionist measures altogether rather than just layer ever more regulations on top. Such a decision happened recently. In 2023 Indonesia placed import restrictions on over 3000 goods, overwhelmingly “raw input” products, including everything from wheat to lubricants to simple electronics, with the goal of bolstering their domestic production.
However, unlike the nickel ban where the goal was to ensure the supply of raw materials for factories, this measure largely reduced access to these goods, significantly raising the costs on manufacturers. Many companies and trade associations chafed at these rules and lobbied heavily against them. Since the ultimate economic goal of the Jokowi Administration (and the incoming Prabowo Administration) is to boost production of more complex manufactured goods, ultimately the government has relented and lifted many of these import restrictions.
This is good news for American exporters, because these kinds of “core components” are still competitive when selling from the US to Indonesia, and the Indonesian government will effectively subsidize their purchase via the manufacturers they are trying to grow. Everything from ball bearings to air turbines to rubberworking machines - a vast new market at the top of the supply chain has opened up to ambitious exporters.
Reach out to Commerce Bridge for an exhaustive list on which goods have now had import restrictions lifted and how to best penetrate those markets.
