TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Indonesia's supply chain position amid tariff turmoil
The world is in need of new locations for production and distribution, and Indonesia has great potential.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
A worker uses a container lift truck on Sept. 17, 2024, at Tanjung Priok Port in North Jakarta. (Antara/Indrianto Eko Suwarso)
B
ecause of the current trade war, supply chains face disruptions, pushing businesses to rethink sourcing, logistics, warehousing and distribution. Companies can diversify their suppliers, reduce reliance on specific countries or manufacturers and explore new routes to minimize the impact of tariffs and sanctions. These shifts can lead to higher costs, reduced profitability and challenges to fulfill demand.
In Indonesia, a significant portion of manufacturing inputs originate from China, making it vulnerable to disruptions caused by trade tensions. Indonesia's manufacturers rely on imports of raw materials and semi-finished goods from China and other countries affected by United States tariffs. These tariffs increase import costs, impacting Indonesian firms' profitability.
This tariff war not only impacts the two big countries, but also has a major impact on the global supply chain and prices of basic necessities in various countries, including Indonesia.
The world economy is now highly connected. No country can be truly independent in production. Even our basic needs such as wheat and soybeans depend on imports.
Indonesia is one of the largest importers of wheat in the world, which is the main raw material for various staple foods such as instant noodles, martabak and bread. According to Aria Commodities, wheat is mostly supplied from countries with four seasons such as the US, Russia and Ukraine. Soybeans, the main raw material for tempeh, tofu and soy sauce, are also affected.
Even amid the escalating tariff war between the US and China, Indonesia is considered to have a strategic opportunity to fill the gap in the global supply chain. This could pave the way to Indonesia's rise as a producer country.
The world is in need of new locations for production and distribution. Indonesia has great potential because we not only have natural resources, but also strong human resources.
