February 21, 2026 | 08:59 am
TEMPO.CO, Jakarta - Bhima Yudistira Adhinegara, Director of the Center of Economic and Law Studies (Celios), raised concerns over the Agreement of Reciprocal Trade (ART) between Indonesia and the United States. He argues the pact risks stalling national industrialization.
"Indonesia's industrialization potential could be jeopardized due to the absence of technology transfer obligations. Downstreaming could also be stalled if the United States is able to directly purchase mineral ore from Indonesia," Bhima said in a text message on Friday, February 20, 2026.
Bhima contends that omitting technology transfer mandates and removing Domestic Component Level (TKDN) requirements will likely cripple the ability of domestic industries to achieve self-sufficiency. Without divestment clauses, he asserts Indonesia risks remaining a mere raw material supplier.
According to Bhima, this framework could contract the export market for Indonesian industrial goods. He also cautions that restrictions on Indonesia’s cooperation with nations deemed contrary to U.S. interests could block the export of downstream products, such as batteries, to key partners like China.
Bhima maintains that this reciprocal trade agreement is poised to damage the national economy, characterizing it as a form of economic colonization under U.S. President Donald Trump.
He further predicts the pact could flip Indonesia's trade balance from surplus to deficit and spark mass layoffs across multiple sectors, particularly in agriculture and manufacturing. In the long term, he warns, poverty rates could see a gradual, steady increase.
Celios highlights seven concerns regarding the pact: it endangers Indonesia's sovereignty and economic independence through a flood of food, oil, and tech imports. There is no provision for technology transfer from U.S. firms and no protection for domestic industries following the elimination of TKDN. Furthermore, foreign entities may secure 100 percent ownership in mining, fisheries, and finance without divestment obligations.
Additionally, the deal implies that U.S. trade rivals become Indonesia’s rivals via U.S. sanctions, effectively closing off Indonesia’s transshipment opportunities. The terms are largely detrimental to Indonesia, with the sole exception of worker protection clauses.
Indonesian President Prabowo Subianto and U.S. President Donald Trump signed the Agreement of Reciprocal Trade (ART) in Washington, D.C. on Friday morning, February 20, 2026, Indonesia time. The signing also formalizes a 19 percent tariff on Indonesian exports to the United States.
The outcome of the negotiations is detailed in a 45-page ART document. This agreement outlines specific obligations for Indonesia, the United States, and mutual commitments between the two nations.
In the document, the United States demands that Indonesia fulfill at least 217 obligations. In contrast, the United States has committed to only six obligations, with three additional points of mutual obligation between the parties.
Read: Trump Sweeping Tariffs Struck Down: What Happens Next?
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