Washington. President Prabowo Subianto told American business leaders on Wednesday that Indonesia is seeking “serious long-term partners,” as executives from both countries signed 11 memorandums of understanding worth a combined $38.4 billion across sectors ranging from critical minerals to furniture.

Speaking at a Roundtable Business Summit in Washington DC, Prabowo said one of the main objectives of his US visit was to finalize a bilateral trade agreement with the administration of Donald Trump, which currently imposes a 19% tariff on Indonesian goods. He also urged US companies not only to invest but to use Indonesia as a manufacturing base for Southeast Asia.

“We are looking for serious long-term partners who will work together with us, grow our economy together, and provide benefits to each other,” Prabowo told the gathering.

He pledged that his government would ensure good governance, stability, and safety to create a conducive business climate, adding that American investment must deliver “real and tangible benefits” to Indonesians as quickly as possible.

“The hungry stomach cannot wait,” Prabowo said, acknowledging that millions of Indonesians remain below the poverty line. He stressed that only stability and sound governance could attract sustained foreign investment.

The president said Indonesia’s economic fundamentals remain strong, citing fiscal discipline, subdued inflation, foreign direct investment of $53 billion last year, and average growth above 5% over the past decade. He also highlighted efficiency measures that saved $18 billion in nonessential budget spending. He joked that the cost-cutting measures came ahead of Trump’s Department of Government Efficiency.

Prabowo reiterated Indonesia’s commitment to clean energy and digitalization, including renewables, electric vehicles, and green industries, but stressed that the government’s approach is very pragmatic -- “we will go at a speed adjusted to our capacity.” 

From Critical Minerals to Furniture
Of the $38.4 billion in MoUs, agriculture-related agreements accounted for $2.5 billion, while industrial projects made up about $35.9 billion.

One agreement involves mining giant Freeport-McMoRan divesting 12% of its local subsidiary to the Indonesian government. Another pairs state energy firm Pertamina with Houston-based oil services group Halliburton on oil-field recovery.

Energy firm Galang Bumi Industri secured MoUs aimed at supporting Indonesia’s semiconductor ambitions, partnering with Essence and Tynergy Technology Group. The initial semiconductor investment is valued at $4.9 billion, with a potential additional $26.7 billion if the first phase succeeds. The company also signed a “transnational free trade zone friendship pact” with Solanna’s Arizona-based technopark.

Galang Bumi chief executive Ahmad Maruf Maulana said the planned industrial park would process silica quartz into high value-added products, including polysilicon for semiconductors and solar cells.

Meanwhile, furniture association HIMKI partnered with the American Hardwood Export Council in a strategic cooperation agreement. HIMKI chair Abdul Sobur said the collaboration could help boost Indonesian furniture exports, particularly to the US market.

Caution from Economists
Despite the optimism, economist Bhima Yudhistira warned it may be premature to celebrate, pointing to the Freeport deal. Under the MoU, Freeport will retain its 48.76% stake until 2041, with ownership only reduced to 37% in the following year, alongside an extension of its mining permit.

“The government wants divestment to raise revenue and support downstream development,” Bhima said. “But with the current structure, Indonesia risks missing out on capturing greater value from its minerals, while ore reserves continue to decline.”

Erza Killian, an economic diplomacy expert at Brawijaya University, cautioned that MoUs do not always translate into realized investment.

“It may look good on paper, but implementation is not guaranteed,” he said, adding that the agreements would carry more weight if accompanied by reciprocal gestures from Washington, including further tariff reductions.

The $38.4 billion in pledges is widely seen as a prelude to a broader reciprocal trade agreement, which Jakarta says remains on schedule. The deal is expected to follow the terms outlined in a July preliminary accord, under which tariffs on Indonesian goods entering the US would stay at 19%, down from an initially threatened 32%, with palm oil set to receive partial exemptions.

Indonesia, in turn, would allow US products to enter at zero tariffs and lift export restrictions on critical minerals.

The tariff dispute began after Washington raised concerns over its trade deficit with Indonesia. However, the levies have yet to reverse the imbalance. Indonesia’s surplus with the US widened from $14.52 billion in 2024 to $18.11 billion last year, according to the Central Statistics Agency.