October 5, 2025 | 10:26 pm
TEMPO.CO, Jakarta - The United States government ceased non-essential operations, or entered a government shutdown, commencing on Wednesday, October 1, 2025. According to Deni Friawan, a Senior Researcher in the Department of Economics at the Center for Strategic and International Studies (CSIS), this shutdown could affect Indonesia's exports to the US, exacerbate financial market uncertainty, and disrupt ongoing tariff negotiations.
However, Deni assessed that the severity of the effect depends on the shutdown's duration. If the shutdown lasts less than 2-3 weeks, the impact wouldn't be significant. If it lasts longer, such as over a month, as has occurred previously, the impact could be quite significant.
"Considering that the US is one of the world's largest economies, the ripple effects are not only domestic but also affect global economics, including Indonesia," he told Tempo on Sunday, October 5, 2025.
Deni explained that the shutdown could lead to a decline in US domestic consumption. This condition would reduce US demand for imported goods, directly and indirectly disrupting Indonesian exports, especially in the textile, garment, footwear, electronic, and other sectors.
Furthermore, a prolonged shutdown increases uncertainty in the international financial market. Investors tend to seek safer assets and investment certainty, causing a 'flight to safety' effect. Funds would flow out of emerging markets like Indonesia to more advanced economies such as the US, Japan, or Europe. This shift would also see investors move from bonds or stocks of emerging countries like Indonesia to safer alternatives, "such as gold or government bonds of developed countries."
As a result of the US government's operational halt, bilateral negotiations with foreign parties, including Indonesia, are being affected. Negotiations between Indonesia and the US, aimed at securing tariff exemptions for specific goods, have been postponed until the shutdown is resolved.
The Indonesian government must therefore wait for, or accept, the previously agreed-upon 19% tariff decision. "What we want to request is an exemption for specific goods. Until the shutdown is resolved, we certainly cannot obtain that exemption," he stated.
A portion of the US government's operations stopped temporarily after the US Congress failed to approve the federal budget allocation law before the new fiscal year began. Several public services in the country have been halted. The partial US government shutdown had entered its fifth day on Sunday, October 5, 2025.
As reported by USA Today, the leadership of the US Senate has not been able to gather the 60 votes needed to pass the draft law. This means that the government shutdown will continue at least until Monday, October 6, 2025.
Editor’s Choice: IHSG Climbs as Market Stays Indifferent to U.S. Government Shutdown
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