Indonesia’s Big Trade Leap: Now Let’s Safeguard Our MSMEs

Indonesia has made a bold move on the global stage. The newly announced Reciprocal Trade Framework between the United States and Indonesia marks a milestone in our economic diplomacy—opening the doors to wider access for goods, services, and investment between two of the world’s largest democracies. As someone who has long advocated for strategic economic transformation, I welcome this breakthrough.

But I also write today with a word of caution—and a call to action.

A Leap Toward Global Integration

The agreement is historic. It promises a reduction of U.S. tariffs on Indonesian exports while Indonesia removes nearly all tariffs and non-tariff barriers on American products—from agricultural commodities and energy to technology and pharmaceuticals. It streamlines regulatory frameworks, supports digital trade, and encourages strategic supply chain collaboration.

For many Indonesian consumers, this will mean access to cheaper, higher-quality imported goods. For some domestic industries, particularly those dependent on U.S. inputs, it may lower production costs. And for exporters who can meet global standards, it could unlock access to a high-value, high-volume market.

This is progress.

But Who Bears the Risk?

Indonesia’s economy is built on the strength and spirit of our MSMEs (UMKM). These small and medium enterprises represent over 97% of employment and are essential to our food security, rural economies, and community welfare. From tofu producers in Central Java to smallholder poultry farms in West Sumatra, these are not just businesses—they are livelihoods.

The hard truth is this: many MSMEs are not yet ready to compete on open terms with American corporations. When heavily subsidized U.S. meat, soy, dairy, or wheat arrive duty-free, how will our small farmers survive? When affordable American electronics or certified medical devices flood the market, will our local manufacturers be displaced?

We cannot afford to be naive. Free trade, if not matched with fair support, can easily become a race to the bottom—for the very sectors we claim to champion.

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Five Ways to Protect Our MSMEs

I believe we must pair this trade agreement with a national shield of economic empowerment. Here is what I propose:

1. MSME Adjustment & Empowerment Fund

Establish a government-backed fund to help MSMEs upgrade their processes, obtain global certifications, digitize operations, and pivot where needed.

2. Transitional Safeguards

Deploy time-limited safeguards in sensitive sectors like poultry, sugar, and dairy. Liberalization should be phased—not forced.

3. Financing & Digital Inclusion

Expand working capital access, export credit schemes, and MSME-friendly tech platforms to help small players tap into the benefits of the agreement, including global e-commerce.

4. Local Value Consolidation

Encourage American firms to partner with Indonesian cooperatives and MSMEs, ensuring that trade creates local value chains, not just import pipelines.

5. Rural Skills & Market Readiness Campaigns

Provide grassroots MSMEs with access to training, trade literacy, and digital marketing. The best protection is preparation.

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Let Trade Serve the People

President Prabowo Subianto has emphasized economic sovereignty and inclusive growth. This trade agreement must reflect that vision—not only in words but in policy execution. Trade liberalization must be balanced with domestic resilience.

Indonesia can and must rise to the occasion. But we must do so without sacrificing the millions of small entrepreneurs who have carried this nation through economic crises and pandemics. They deserve more than applause—they deserve strategic protection, empowerment, and opportunity.

Let this agreement not be a moment of imbalance, but a model of how a middle power like Indonesia can trade boldly without leaving anyone behind.

Let trade serve not only numbers, but people.