Indonesia could lose US$20 billion of potential trade if it decided not to join the Trans-Pacific Partnership (TPP) — a trade pact between the US and 11 other Pacific Rim countries, including Malaysia, Singapore, Brunei, Japan and Vietnam.
At the opposite end, Indonesia could benefit from US$26 billion of trade by participating in the pact.
A study conducted by the Australia Indonesia Partnership for Economic Governance (AIPEG) also estimated that Indonesia would lose $306 million from the trade market if it did not join the TPP, as a “trade diversion” from Indonesia to neighboring TPP member countries, such as Vietnam, Brunei and Malaysia.
The top three TPP contributors are Japan, the US and Vietnam.
If Indonesia joined the TPP bloc, the country’s exports to the US and other TPP member countries would increase following the liberation of trade tariffs, the Trade Ministry predicted. Currently, the average trade tariff to the country is around 5 percent.
However, by joining the TPP, Indonesia's imports would increase by 3.8 percent, based on the ministry's estimations.