Indonesia and US Firms Sign Over $7 Billion in Deals
Indonesian and U.S. companies have signed more than US$7 billion in trade and investment deals. The agreements, announced on February 19, coincide with a new comprehensive trade agreement between the two countries. The deals signal a broader trend of trade liberalization in major APAC economies.
- The new comprehensive trade agreement will see Indonesia eliminate tariffs on over 99% of U.S. products and address non-tariff barriers, while the U.S. will maintain a 19% reciprocal tariff on most Indonesian goods. The deals include significant agricultural purchases by Indonesia, such as 1 million metric tons of wheat in 2026, with plans to increase to 5 million tons by 2030. - The agreement is part of a broader trend of trade liberalization in the Asia-Pacific region, including the Regional Comprehensive Economic Partnership (RCEP), which is expected to reduce both tariff and non-tariff barriers for agricultural products among member nations. This could increase intra-regional trade and competition for agricultural exporters. - For Thai rice exporters, the market in 2026 is expected to be challenging due to increased global supply and intense price competition, with Thailand setting an export target of 7 million tonnes. A key competitor, India, lifted export restrictions in 2025, leading to a rebound in its exports and a drop in global rice prices. - Vietnam, another major competitor, plans to strategically reduce its rice export volume beginning in 2026, shifting focus from quantity to higher-quality, premium rice to increase value per tonne. This strategy aligns with a growing global consumer demand for premium and jasmine rice varieties. - Currency fluctuations are a key factor, with the Thai baht to euro exchange rate forecast to be around 0.025 to 0.026 through 2026. A strong baht could further impact the price competitiveness of Thai rice exports in the European market. - European markets are introducing stricter import regulations, with a new safeguard mechanism effective January 1, 2027, that could trigger higher tariffs on rice imports from major suppliers like India and Pakistan if volumes surge. This follows a deal to overhaul the EU's trade preferences for developing countries. - There is a growing demand in Europe for sustainably sourced and certified rice. Certifications like the Sustainable Rice Platform (SRP) are becoming more important for market access, as they provide assurance of sustainable practices across environmental, social, and economic metrics.
