Indonesia says US agrees tariff exemption for its palm oil, cocoa and rubber

• US fuel storage investment in Indonesia discussed
• Indonesia wants to attract investors into industrial parks
• Focus on silica sand processing for solar panels, semiconductors

JAKARTA, Aug 26 (Reuters) - The United States has agreed in principle to exempt Indonesian exports of cocoa, palm oil and rubber from the 19% tariff imposed by President Donald Trump since August 7, Indonesia's top trade negotiator said on Tuesday.

The exemption will take effect once both sides reach a final agreement, but no timeline has been set because the U.S. is busy in tariff talks with other countries, Airlangga Hartarto, who is also the chief economic minister, told Reuters.

The two countries also discussed potential U.S. investment in fuel storage in Indonesia in partnership with the Southeast Asian nation's sovereign wealth fund Danantara and state energy firm Pertamina, Airlangga said in an interview.

"We are waiting for their response, but during the meeting, basically, the principal (exemption) has been agreed for products not produced in the U.S., such as palm oil and cocoa and rubber ... it will be zero or close to zero," he added.

The U.S. embassy in Jakarta did not immediately respond to a request for comment.

Indonesia is the world's biggest exporter of palm oil and a major rubber supplier.

CERTAINTY ON TARIFFS

Indonesia, the region's largest economy, was among the first nations to strike a tariff deal with Trump in July, but Jakarta ended up facing the same rate as some other countries, such as Thailand and Malaysia, and just below Vietnam's figure of 20%.

During the talks, Indonesia offered billions of dollars worth of investment in the U.S. and purchases of American crude, LPG, planes and farm products. It also promised zero tariffs on almost all U.S. goods entering its market.

Airlangga said certainty over U.S. tariffs and recent progress in talks about a free trade agreement with the European Union could boost Indonesia's economic growth, helping the government reach a 5.4% target for 2026, up from an estimate of about 5% this year.

"They bring an optimistic perception from the global market since most investors are looking for certainty and Indonesia is one of the countries that provide global certainty," he said.

Jakarta wants to draw foreign investors to help develop industrial facilities, particularly in the processing of its key commodities, Airlangga said, replicating the success the country has seen in bringing Chinese investment into nickel projects.

Airlangga said the government is also keen to boost investment in silica sand processing, including the production of solar panels and wafers for semiconductors.