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Amid global trade upheaval, Jakarta sticks to China+1 strategy
The government continues to pitch Indonesia as an alternative manufacturing location while China is under pressure from US sanctions, but experts have doubt that strategy still works.
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Cargo trucks are pictured at a container terminal of Tanjung Priok Port in North Jakarta in this undated photograph. (Antara/Rivan Awal Lingga)
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ndonesia continues to pitch itself as an alternative location for export-focused factories as the United States piles pressure on China with increased tariffs, but experts say the benefits of the so-called China+1 strategy are waning as global trade undergoes a seismic shift.
US President Donald Trump slapped another 10 percent tariff on Chinese goods last week under his “America First” agenda, forcing companies to rethink supply chains and manufacturing locations.
For years, multinational companies had considered a diversification away from China into other emerging markets as the best way to mitigate the impact of US tariffs directed at Chinese imports.
“This has benefited several countries in the region in the past, especially Vietnam and also Indonesia, but this may soon start to slow,” said Jayant Menon, a senior fellow at the ISEAS Yusof Ishak Institute, a Singapore think tank.
Read also: Govt pitches RI for factories relocating from China to evade US tariffs
However, Menon told The Jakarta Post on Tuesday that the US had shifted from targeting goods “Made in China” to those “Made by China”, and if these measures expanded, it would impact Chinese foreign direct investment (FDI) aimed at bypassing US duties.
US tariffs would also ripple through supply chains, leading to decreased output and employment in the local economy, especially in sectors reliant on China, he added.
