January 8, 2019 / 2:45 PM / 3 months ago

The U.S.-China trade war an opportunity for Indonesia: Vice President

FILE PHOTO: Indonesia's Vice President Jusuf Kalla arrives at the ASEM leaders summit in Brussels, Belgium October 18, 2018. REUTERS/Piroschka van de Wouw

JAKARTA (Reuters) - The U.S.-China trade war could offer Indonesia a chance to benefit from shifting global production chains, Indonesian Vice-President Jusuf Kalla said on Tuesday.

“The trade war can be an opportunity for Indonesia,” Kalla said on Tuesday during an economic outlook event in Jakarta. “If Vietnam is booming due to investment relocation from China, why can’t we?”

His remarks, which came as the U.S and China extended trade talks in Beijing late into a second day , contrasted with previous comments by senior Indonesian officials.

They have warned Indonesia could be hurt by the fallout from the spat if it became a dumping ground for cheap Chinese products hit by U.S tariffs.

Experts say that while Southeast Asia stands to benefit from the dispute, Indonesia has disadvantages compared to its neighbors.

“Any positive spillover may ultimately be constrained by relatively low levels of productivity, as well as deficiencies in infrastructure,” said Nick Marro, a China analyst at the Economist Intelligence Unit in Hong Kong.

“Until those hurdles are cleared, the country will face more competition from places like Malaysia and Vietnam, who are also trying to capture redirected investment flows.”

Reporting by Maikel Jefriando and Fanny Potkin; Writing by Tabita Diela and Fanny Potkin; Editing by Jon Boyle

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