Jayanty Nada Shofa, Jakarta – Indonesia's trade with the European Union or EU is expected to more than double thanks to a tariff-eliminating pact, according to senior minister Airlangga Hartarto.
Both sides have been trying to reach a comprehensive economic partnership agreement (CEPA) since July 2016. They finally made major progress after signing the substantive conclusion of this document a few weeks ago. The accord sees Indonesia and European nations agreeing to remove over 98 percent of the tariffs on goods trade.
The US tariffs had caused countries to rush to forge new trade deals, and Indonesia is no exception. Airlangga recently admitted that Indonesia was hoping that its trade treaty with the EU could offset the damage dealt by the US tariff hikes, although Jakarta was still trying to nudge Washington into freeing its palm oil from import taxes.
"Our current trade with the EU stands at around $30 billion.... We expect these numbers to jump by around 2.5 times within four or five years [since the implementation]," Airlangga told the 2025 Investor Daily Summit in Jakarta on Thursday.
Airlangga said that the deal could benefit Indonesia's labor-intensive industries, including footwear, garment, and furniture producers.
"This way, we can diversify [our exports] to Europe. We will, of course, maintain our US market, but with a 19 percent tariff, [exporting to] Europe can help us expand," Airlangga said.
The trade agreement now has to undergo some legal processes before the major tariff cuts can actually kick in. According to Airlangga, the document will be translated into the bloc's 24 official languages before being sent to the European lawmakers for ratification.
Being a CEPA-level document, the pact also covers investment facilitation, particularly in Indonesia's renewable energy and electric vehicle production. The Indonesian government had even set up the so-called EU Investment Desk, aimed at helping European investors get started on doing business in Southeast Asia's biggest economy.
"When we invest here, we bring the technology, jobs, skills, all the things that are important.... If you look at all commercial partners in Indonesia, Europe is one of the fairest and equal investors. We are also very predictable and reliable," EU Ambassador to Indonesia Denis Chaibi told reporters not long ago.
The government reported that Indonesia-EU trade reached $30.4 billion in 2024. Indonesia also enjoyed a $4.5 billion surplus that year. EU investors had also put around $15.6 billion in the resource-rich Indonesia between 2019 and 2024. This made the regional grouping as Indonesia's fifth-largest investor over the said period.
Source: https://jakartaglobe.id/business/indonesiaeu-trade-to-more-than-double-with-upcoming-pac