US’s extension of Indonesia’s Generalized System of Preference (GSP) status from early November 2020, will allow it to push up apparel trade to $500 billion over the next five years. This extension will make 13 per cent of Indonesia’s exports duty-free. In 2019, around 10 per cent of Indonesia’s total $20.1 billion of exports to the US were placed under GSP exemptions.
The US is seeking new ways to cooperate with Indonesia in areas, such as maritime security in the Indo-Pacific region. It is already Indonesia’s second-largest non-oil and gas export partner, with total two-way trade in goods reaching $30 billion in 2019.
The government is also encouraging US companies to invest in Indonesia, especially in areas such as manufacturing, services, pharmaceuticals, and defense. It is preparing a 4,000-hectare industrial park, named the Batang Industrial Park, in Central Java province to accommodate US businesses looking to shift all or part of their operations out of China. US companies are offered special tax incentives in this zone.