US Reciprocal Tariff to Hit Indonesia's IT Sector: Analyst

KBRN, Jakarta: Indonesia's telecommunications and information technology sector has the potential to weaken due to the US reciprocal tariff policy. Center of Economics and Law Studies' (Celios) Digital Economy Director Nailul Huda said this weakening is due to limited local production capabilities.

The decline in export demand from the US makes it difficult for domestic products to find alternative markets. In addition, the domestic market risks being overwhelmed by IT products from other countries also affected by the US import tariff policy.

"It is concerning that our industry is under pressure from declining exports, but products from other countries can enter the country," said Huda, as quoted by antaranews.com.

Huda said that the weakening rupiah exchange rate is also another concern. The electronics and IT industry relies on importing main components such as chips, and the increase in import prices due to the weakening rupiah could hamper the technology sector's growth.

Huda suggested that Indonesia-US negotiations be carried out immediately. These negotiations aim to lower Indonesia's trade tariffs to the US.

According to Huda, one of the government's strategies is to build coalitions with other countries, such as through BRICS, to strengthen the bargaining position. "In addition, strengthen our domestic IT or technology industry with incentives," said Huda.

Meanwhile, ICT Institute Executive Director Heru Sutadi also warned that the US reciprocal tariff policy could impact the rupiah exchange rate, which is weakening toward the US dollar.

According to Heru, a weakening rupiah could lead to many stalled projects and vendor payment difficulties. Most telecommunications equipment comes from overseas, and its price follows exchange rate fluctuations.

Heru reminded the government to pay attention to the long-term impact of this policy, including the risk of a decline in people's purchasing power for IT products.

Heru said that these things mark the potential for an economic, social, and political crisis like the one that occurred in Indonesia in 1998. "We must be cautious. The government must improve its communication and governance," Heru said. ***