infotech

Observers Say US Tariff Policy Has The Potential To Weaken IT Industry

Economist and Director of Digital Economy at the Center of Economics and Law Studies (Celios) Nailul Huda assessed that the impact of the United States' reciprocal tariff policy has the potential to weaken the telecommunications and information technology (IT) sector in Indonesia. 

"I see that the US import tariff policy will weaken the domestic IT or Technology industry. The reason is, our domestic industry is still unable to produce further," said Nailul Huda when contacted by ANTARA, Monday. 

According to him, the policy has the potential to weaken the domestic IT industry because local production capacity is still limited. The decline in export demand from the US is considered to be able to make domestic products have difficulty finding alternative markets. 

On the other hand, the domestic market is at risk of being flooded with IT products from other countries that are also affected by the US import tariff policy. This is feared to further pressure the local industry which is facing a decline in exports as well as competition with imported products. 

"This is worrying that our industry is under pressure from declining exports, but products from other countries can enter the country," he said. 

Huda said another impact that needs to be watched out for is the weakening of the rupiah exchange rate. The electronics and IT industry is highly dependent on imports of key components such as chips, which are not produced domestically. 

The increase in import prices due to the weakening rupiah has the potential to hamper the growth of the technology sector. 

Huda advised the government to immediately negotiate with the US to lower Indonesia's trade tariffs to the United States. 

The US government is considered to have implemented policies that hinder the entry of Indonesian products, while on the other hand it also often imposes "non-tariff barriers" for imported products, including from Indonesia. 

According to Huda, one strategy that the government can take is to build a coalition with other countries, such as through BRICS to strengthen its bargaining position. 

"BRICS could be one of the entry points. In addition, boost our domestic IT or technology industry with incentives and so on," he said. 

Meanwhile, Telecommunications Observer and Executive Director of the ICT Institute Heru Sutadi also reminded that the US reciprocal tariff policy could have an impact on the weakening of the rupiah exchange rate against the US dollar. 

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Tag: BRICS IT Industry Nailul Huda