A New Chapter of Indonesia - EU Trade Partnership

After nearly a decade of negotiation, the European Union and Indonesia concluded a Comprehensive Economic Partnership Agreement (IEU-CEPA) on 23 September 2025. This landmark agreement is considered to be the most comprehensive trade agreement Indonesia has ever signed. It aims to strengthen the economic cooperation between the two parties by eliminating tariffs and reducing other trade barriers.

While the full legal text is still being finalized, the European Commission has published a helpful summary of the key provisions, offering a glimpse into the significant opportunities this agreement represents for both parties.

In the trade in goods sector, the IEU-CEPA aims to eliminate 98 % of tariff lines within a period of five years. Key sectors affected include agri-food, chemicals, machinery, and automotive for the EU and palm oil, textile, and footwear for Indonesia.

Additionally, Indonesia will also remove high duties on industrial products such as motor vehicles, machinery and electrical equipment, pharmaceuticals as well as chemicals, providing EU manufacturers with significantly improved access to the Indonesian Market. The European Commission expects that such tariffs cuts and eliminations will provide more than EUR 600m in custom duty savings for European exporters.

With regard to non-tariff trade barriers, IEU-CEPA introduces measures to make trade more predictable and cost-effective. These include Indonesia's recognition of EU certification in certain key sectors – eliminating the need for re-testing and re-certification – as well as streamlined labelling, which would simplify logistics and reduce the risk of customs delays.

In the trade in services and investment sectors, IEU-CEPA is expected to open opportunities for EU service providers in Indonesia in sectors such as financial services, telecommunication, postal services, shipping, manufacturing, mining, and renewable energy. Benefits include non-discriminatory treatment, no mandatory local presence as well as simplified licensing and qualification procedures.

Why does this matter for EU Investors?

Amid an increasingly challenging economic climate in Europe, many European investors are seeking to expand their operations abroad, with Southeast Asia emerging as a key destination. While Indonesia - Southeast Asia's largest economy - has made major strides in attracting foreign investment, it is still often outpaced by countries like Singapore and Vietnam in terms of ease of doing business and investor perception.

IEU-CEPA aims to enhance Indonesia's attractiveness to EU investors by improving market access and reducing trade barriers. Whether you're considering a new venture or relocating operations, the agreement will likely influence your investment outlook on Indonesia.

Once implemented, IEU-CEPA will provide EU investors with unprecedented access to the Indonesia’s market of 284 million consumers. Coupled with a more predictable and streamlined trade environment, Indonesia is poised to become an increasingly strategic destination for European investment."