Indonesia Says Trade Deal Postponed Due To Partner’s Deficit Fears

Indonesia is facing delays in finalizing a trade pact with an unnamed partner country due to concerns over worsening trade imbalances, Jayanty Nada Shofa reported for the Jakarta Globe.

Trade Minister Budi Santoso emphasized that trade agreements lower barriers by reducing or eliminating tariffs. I Photo: Kementerian Perdagangan Republik Indonesia

As part of its broader trade strategy, Indonesia has been pursuing agreements to boost the competitiveness of its exports in global markets. Trade Minister Budi Santoso recently revealed that one country had postponed signing a deal with Jakarta because of its trade deficit with Indonesia.

“We have already made a joint commitment to finalize the pact, but they keep delaying it. Why? Because they run a deficit with Indonesia, and they told us to put it on hold. They fear the deficit will worsen if they proceed,” Budi said.

From January to May 2025, the United States contributed $7.08 billion to Indonesia’s overall trade surplus, up from $5.37 billion a year earlier.

India followed with $5.30 billion and the Philippines with $3.69 billion. Indonesia is currently attempting to convince the U.S. to lower its upcoming 32% tariffs.

“I told them that we are not negotiating this deal to make you suffer a deficit. If that were our goal, it would be a trade war,” Budi added.

“This pact will enable both sides to gain market access.”

He emphasized that trade agreements lower barriers by reducing or eliminating tariffs. For example, Indonesia’s comprehensive economic partnership with Australia has allowed nearly all its exports to enter duty-free, improving their competitiveness in a nearby market.

“It’s not that they don’t want the agreement,” he clarified. “They’re just delaying it. But a trade deal should be mutually beneficial. We already have 19 agreements in effect and 10 more undergoing ratification.”