Jakarta. The Indonesian Employer Association (Apindo) urged the government to focus on improving its domestic market, as household consumption still largely drives Indonesia’s growth amid a three-month tariff pause between the United States and China.

The two world’s largest economies have recently decided to roll back most of their tariffs on each other’s goods for 90 days. The US has agreed to slash its combined tariff rate on Chinese imports from 145 percent to 30 percent temporarily. China’s import tax on US goods will also drop from 125 percent to 10 percent during the truce. But the latest trade de-escalation does not mean Jakarta should let its guard down, according to Apindo’s chairwoman, Shinta Kamdani. 

The seasoned businesswoman said the government should come up with ways to boost domestic consumption. At the same time, Jakarta should keep negotiating with US President Donald Trump’s team to "bring down or even eliminate" the 32 percent tariffs on US-bound Indonesian goods that would take effect early July, Shinta said.

“I’m not sure when this [trade war ceasefire] will last. ... It’s possible Trump will change his mind again, so let’s not just pin our hopes on uncertain deals,” Shinta told reporters in Jakarta on Tuesday evening.

Last month, Trump decided to slap a 10 percent baseline tariff on all US imports. He intends to further increase the tariffs for many of the US trading partners, including Indonesia -- the hikes were supposed to come into effect on April 9, but got postponed to July 9. Indonesia still has some time before the higher tariff hikes of 32 percent enter into force.

“Perhaps this is all just part of Trump's strategy. I wouldn’t even be surprised if Trump ends up imposing just the 10 percent tariffs, [and not proceed with the reciprocal tariff plan],” Shinta said.

She added: “So anything can happen, but we should pay attention to our domestic market. This remains a huge homework that we need to address. … Our economy is not mainly driven by exports, but by household consumption. … So let’s talk about how we can improve the people’s purchasing power and what sort of stimulus that [Indonesia can give to boost consumption].” 

Shinta’s comment came not long after Indonesia announced its Q1 2025 growth had slowed to 4.87 percent year-on-year (yoy), missing the 5-percent range that the country had been hovering at.

Household consumption contributed 2.61 percentage points to the Q1 growth. The spending made by Indonesian households was about threefold of what net exports contributed to the Q1 2025 growth, which reached 0.83 percentage points, official statistics showed.

Household consumption grew 4.89 percent yoy in the first quarter, marking a slower pace compared to 4.91 percent yoy compared to the same period in 2024. Despite the slower growth, Shinta said that Apindo would keep its 2025 full-year economic projections within the range of 4.8 percent and 5.1 percent.

Read More: Indonesia’s Q1 Economic Growth Slows to 4.87 Pct

Add as a preferred source on Google +