Trade Policies and Sea and Air freight : The Impact of COVID-19 Lockdowns on Imports and Exports

This study analyzes how Indonesia’s international trade was affected by its own lockdownpolicies (domestic) and those of its trading partners (external) in response to COVID-19. The study differentiatesbetween sea freight and air freight, as well as products affected by specific non-tariff measures. Event-studyresults show that the decline in imports (which were more negatively affected than exports) was mainly attributed toexternal lockdowns, the impacts of which were more pronounced and persistent for imports entering Indonesia byair (due to restrictions to international travel) and imports subject to port-related non-tariff measures.Domestic lockdowns adversely affected intermediate imports subject to non-tariff measures requiring physicalinspection, testing, and approval processes. External lockdowns, which also had a larger impact on exportsrelative to domestic policies, affected sea and air exports evenly. Demand factors (specifically, workplace closures andstay-at-home orders) in the partner countries were the drivers of the decline in exports. Enhancing tradefacilitation to keep goods moving as smoothly as possible,reforming specific non-tariff measures, and improving customs and other procedures would ensure fewer disruptionsfrom shocks in a globally integrated world.