Indonesian Trade Finance Sector Shows Resilience Amid Tariff Uncertainty

Stability in Banking Credit

The Indonesian trade finance sector has demonstrated remarkable stability despite the global trade uncertainties triggered by the introduction of reciprocal tariffs. According to Delia Melissa, Country Head of Global Trade Solutions at HSBC Indonesia, while exporters - particularly those shipping to the US - face challenges such as longer payment cycles and additional costs, the overall banking credit quality remains robust.

Challenges in Trade Finance

The implementation of reciprocal tariffs by the United States, first announced by former President Donald Trump nearly nine months ago, has created significant uncertainty in global trade. Indonesian exporters have experienced delays in receiving payments due to additional costs and unconventional calculation processes. This situation has led to longer working capital cycles, subsequently increasing the demand for loan extensions among businesses.

HSBC Indonesia's Experience

HSBC Indonesia has observed that while there is an increase in demand for loan extensions due to prolonged working capital cycles, the overall trade finance business remains stable. Delia Melissa noted that the bank's customers have generally been prudent in their financial management. Moreover, HSBC's diverse portfolio, which includes significant support for importers, has helped mitigate the impact of the tariff uncertainties.

Market Outlook

The stability observed in the trade finance sector is crucial for Indonesia's economic resilience amid global trade tensions. As negotiations continue between Indonesia and other countries to secure lower tariffs, the banking sector's ability to manage credit risks will be vital. The proactive approach taken by banks like HSBC in managing their trade finance portfolios will likely play a significant role in maintaining economic stability.