JAKARTA, KOMPAS.com – Indonesia’s Ambassador to the US Muhammad Lutfi said on Monday that the extension of the US Generalized System of Preferences (GSP) duty exemption facility for Indonesia will increase the bilateral trade.
The program — which provides duty-free entry into the US market for some 3,500 exports from designated beneficiary developing countries — will bring a good impact on Indonesian companies, including small and medium enterprises (SMEs).
These special tariff exemptions have been beneficial for the Indonesian SMEs that produce furniture, silver jewelry, handbags, and wooden doors, among others.
“Our SMEs can participate actively in enjoying the GSP program, especially those who produce handbags, wooden doors, jewelry,” Lutfi said in a virtual press conference on November 2.
US import tariffs on Indonesia products will be cut to almost zero percent, benefiting the Indonesian exporters. The GSP program provides the right incentives for Indonesia’s flagship products.
“This will also pave the way for the Indonesian SMEs to compete in the US market,” he added.
Lutfi said in 2019 Indonesia’s exports under the GSP facility reached $2.61 billion or 13.1 percent of the total exports to the US, which amounted to $20.1 billion.
Meanwhile, from January-August 2020, Indonesia’s exports to the US reached $1.87 billion, or up 10.6 percent from the same period last year.
However, the ambassador said, of the 3,572 tariff items under the GSP program, only 729 or 20.4 percent that uses zero percent tariff into the US market.
Therefore, he added, the government and all relevant stakeholders will encourage the use of the GSP program. An intensive familiarization program will be done for the Indonesian exporters, the envoy said.
Besides, a plan that focuses on the 5+7+5 scheme has been developed to increase the bilateral trade. The first five main category covers clothing, rubber products, footwear, electronics, and furniture.
Then the seven potential category includes wood products, travel accessories, chemical products, jewelry, toys, artificial hair, and paper.
And five other strategic products include machinery, plastic, automotive spare parts, optical and medical equipment, and organic products.
He said that the GSP program is very important in helping Indonesia’s export products continue to be competitive in the US market as it is Indonesia’s second-largest non-oil and gas export destination country after China.
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