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Jakarta Post

Indonesia could lose US$20b of potential trade without TPP: Official

Indonesia could lose US$20b of potential trade without TPP: Official New Zealand Prime Minister John Key (right), speaks to delegates at the signing of the Trans-Pacific Partnership (TPP) agreement in Auckland, New Zealand, on Feb. 4. Trade ministers from 12 Pacific Rim countries including the US have ceremonially signed the free-trade deal. (SNPA via AP/David Rowland)
Ayomi Amindoni
Jakarta   ●   Wed, September 7, 2016

Indonesia could lose US$20 billion of potential trade if it decided not to join the Trans-Pacific Partnership (TPP) — a trade pact between the US and 11 other Pacific Rim countries, including Malaysia, Singapore, Brunei, Japan and Vietnam, an official has said.

At the opposite end, Indonesia could benefit from US$26 billion of trade by participating in the pact, the Trade Ministry's head of trade policy research and development, Tjahya Widayanti, said in Jakarta on Wednesday.

A study conducted by the Australia Indonesia Partnership for Economic Governance (AIPEG) also estimated that Indonesia would lose $306 million from the trade market if it did not join the TPP, as a “trade diversion” from Indonesia to neighboring TPP member countries, such as Vietnam, Brunei and Malaysia.

"If we join the TPP, there will be additional potential trade of US$26 billion, with additional exports of US$2.9 billion. In addition, we would also become the fourth biggest contributor to the TPP," Tjahya said at a discussion on the TPP.

The top three TPP contributors are Japan, the US and Vietnam.

If Indonesia joined the TPP bloc, the country’s exports to the US and other TPP member countries would increase following the liberation of trade tariffs, the Trade Ministry predicted. Currently, the average trade tariff to the country is around 5 percent.

However, she acknowledged that by joining the TPP, Indonesia's imports would increase by 3.8 percent, based on the ministry's estimations. (bbn)