Home Industry News The RCEP to Encourage Investments in Indonesia’s Downstream Industries

The RCEP to Encourage Investments in Indonesia’s Downstream Industries


Indonesia, Southeast Asia’s largest economy, is expected to ratify its membership in the Regional Comprehensive Economic Partnership (RCEP) in later 2022, making it one of the few remaining countries that have yet to ratify this trade agreement. The RCEP is estimated to cover 30 percent of the global GDP of US$25.8 trillion and comprise 30 percent of the world’s population.

With the RCEP set to eliminate 92 percent of tariffs on goods traded among its 15 members, Indonesian lawmakers have expressed concerns that this could trigger an influx of imported goods and thus impact the competitiveness of local businesses, particularly micro small medium enterprises (MSME). However, with President Joko Widodo’s coalition controlling 80 percent of parliament, ratification of the RCEP is only a matter of time.

Indonesia’s Chief Economics Minister, Airlangga Hartarto, expects the country to book a trade deficit in the early period after implementation, but by 2040, the RCEP could boost the country’s trade surplus by US$979 million, more than double the current trade surplus of US$383 million. Further, Indonesia could see GDP growth by 0.07 percentage points and an increase in exports and imports by US$5 billion and US$4 billion, respectively.

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