Jakarta. A senior representative of Japanese-affiliated businesses recently promised to stay loyal to their Indonesian operations even if the US tariffs on Jakarta end up being higher than other countries.

American President Donald Trump officially slapped a 19 percent tariff on US-bound Indonesian goods following months of negotiations. There is no clear timeline for when the 19 percent rate will be effective, but it will have to wait until both sides finalize and ratify the agreement.

A baseline 10 percent levy has been in place since April. Dozens of other countries, including some of Indonesia’s ASEAN neighbors, now only have two days to strike a deal with Trump. The former real estate tycoon is even eyeing imposing tariffs of 15 percent to 20 percent on most trading partners that refuse to strike separate trade deals with Washington.

Trump’s tariff salvo has kept ASEAN and the rest of the world on guard. The Southeast Asian bloc recently held high-level talks with the Federation of Japanese Chambers of Commerce and Industry in ASEAN (FJCCIA) at its Jakarta headquarters, amidst the tariff war.

During a doorstep interview, the Jakarta Globe asked FJCCIA’s chairman Wakabayashi Koichi on whether Japanese companies would leave Indonesia if Jakarta’s tariffs turned out to be higher. 

“Japan is fully committed to local communities and markets. Japanese companies are not only making an investment to bring broader employment, but we are also transferring our technologies and knowledge. … There is the development of local human capital and suppliers,” Wakabayashi said in Jakarta.

Wakabayashi said all these factors would make it “difficult for Japanese companies to move manufacturing easily”. 

Official statistics published Tuesday showed that Japan was Indonesia’s fifth-largest foreign investor between January and June. Japanese investment totaled $1.6 billion, just behind close neighbor Malaysia ($1.7 billion). 

Rosan Roeslani, the chief executive officer of the country’s sovereign fund Danantara, told a news conference that day that Indonesia’s renewable energy sector had caught the attention of a Japanese investor, alluding to Mitsubishi Corporation, whom he had just met recently. Danantara recently inked a memorandum of understanding with Japan Bank for International Cooperation (JBIC) to jointly finance renewable energy projects.

“This long-term funding that we have signed with JBIC will have an extraordinary effect,” Rosan said.

Indonesia is among the few Southeast Asian countries that have already reached a tariff agreement with the US.

Jakarta cemented a deal with Trump to lower his 32 percent tariffs to 19 percent. Vietnam’s tariff is higher by a percentage point at 20 percent, but much lower than what Trump had originally threatened: 46 percent. Like Indonesia, the Philippines faces a 19-percent import tax. 

Trump has left room for negotiations for the other Southeast Asian neighbors. He even threatened to freeze trade negotiations with Cambodia and Thailand, which recently saw bloody fighting over border issues, until a ceasefire was reached. Trump’s latest trade threats had put the two warring nations on notice that they could face a 36 percent tariff come Friday, unless they managed to strike some deals. Malaysia—to be subject to a 25 percent tariff—has been trying to secure a win-win deal with the US.

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