Indonesia says no to US demand to buy American drones

JAKARTA, Indonesia (MNTV) – Indonesia has agreed to a significant number of terms demanded by the U.S. in their trade talks, including a plan to import fuel from the U.S. instead of Singapore, The Straits Times has learnt. 

But Indonesia has rejected provisions that would violate its Constitution, including demands for it to buy U.S.-made drones for surveillance in waters near the South China Sea, two senior government officials said on condition of anonymity.

Indonesia and the U.S. are in the final stages of talks on a so-called reciprocal tariff deal, which will see the U.S. lower tariff rates on South-east Asia’s largest economy from the previously threatened 32 to 19%.

Indonesia ran a $18 billion trade surplus with the U.S. in 2024. In return for lower tariffs, it has had to make concessions so as to balance its trade with the Americans.

Among other things, Indonesia has accepted U.S. demands to ease curbs on American auto imports. Jakarta has also agreed to remove non-tariff barriers, specifically “local content requirements”, for U.S. products in three key sectors – information technology and communications, medical equipment, as well as data center equipment, said the two officials.

These concessions are significant. U.S. tech giant Apple leads Indonesia’s mobile phone market by revenue, with imports of iPhones valued at roughly $2 billion annually, according to government data. 

Sales of U.S. medical equipment, such as GE HealthCare’s MRI and CT scanners, are valued at some $100 million annually, and U.S. giants Hewlett-Packard, Dell Technologies and IBM currently dominate Indonesia’s data centre equipment market.

Indonesia has also pledged to import significantly more fuel from the U.S. while reducing purchases from Singapore. More than half of Indonesian fuel imports are from Singapore, which refines crude oil from the Middle East, Australia and Malaysia, while the U.S. accounted for less than 0.1 per cent of Indonesia’s fuel imports in 2024.

Indonesia would accept U.S.-made automobiles that meet the U.S. Federal Motor Vehicle Safety Standards and the U.S. emission standard, said one official. These imports would not have to meet the safety and emission test required by Indonesia’s transport authority.

Jakarta has also agreed to support the American electric vehicle industry by supplying to U.S. companies any intermediate raw materials to make battery cells, such as nickel precursor chemical compounds.

The U.S. also ventured into non-trade issues during the trade talks.

ST had earlier reported that the U.S. was seeking “a commitment from Indonesia to readjust its South China Sea policy to safeguard its sovereign rights and national jurisdiction, ensure alignment with international law, and enhance maritime domain awareness and regional cooperation”.

However, Indonesia has told the U.S. that it cannot meet this South China Sea demand, nor the demand to purchase U.S.-made drones, said the two sources. Jakarta is adamant that these requests are not related to the aim of the tariff talks, which is to balance trade between the two countries, they added.