Indonesian President urges accelerated EU CEPA talks aiming for October signing

Indonesian President Prabowo Subianto convened a high-level meeting in Jakarta, instructing various ministries to accelerate the completion of negotiations with the European Union on the Comprehensive Economic Partnership Agreement (CEPA). Trade Minister Zulkifli Hasan told the Central News Agency on the 25th that the agreement is expected to be signed in October and officially take effect early next year upon the completion of ratification procedures by both sides. This acceleration demonstrates that the Indonesian government views the EU market as a vital foreign trade target and has integrated it into its national economic diversification strategy.

Trade between Indonesia and the EU spans over a century. In 2023, bilateral trade reached approximately 120 billion US dollars, with major export goods including machinery and equipment, textiles, agricultural products, and minerals. The EU is Indonesia's second-largest source of imports, trailing only China. Although a free trade agreement framework already exists between the two sides, restrictions such as tariff barriers, rules of origin, and non-tariff hurdles persist, affecting the competitiveness of Indonesian products in the European market. The signing of the CEPA is expected to fundamentally lower import tariffs and harmonize regulations, providing Indonesian businesses with a more transparent and predictable trading environment.

The core content of the CEPA covers multiple areas including trade, investment, services, the digital economy, and intellectual property. For Indonesia, the agreement will facilitate the entry of agricultural products (such as coconut oil and coffee) and manufacturing goods (such as auto parts) into the European market, while providing lower tariffs and more relaxed investment conditions for Indonesian investors establishing factories or R&D centers in the EU. On the EU side, the agreement is expected to enhance its supply chain positioning in Southeast Asia and strengthen cooperation in the digital economy and green energy sectors.

Since 2024, the Indonesian government has made foreign trade diversification one of its key policies, specifically aiming to reduce dependence on the Chinese market. During his tenure, the Prabowo administration has successively signed trade agreements with countries such as the United States, Australia, and Japan, and has promoted the "Indonesia Digital Economy Development Plan" to enhance the international competitiveness of domestic enterprises. The advancement of the CEPA is both an extension of foreign policy and an opportunity for domestic industrial upgrading. If the agreement takes effect as scheduled, it will provide Indonesia's manufacturing sector with a broader European market while bringing new export opportunities to the agricultural sector.

The signing and implementation of the agreement is not merely an administrative procedure; it requires review by the legislative bodies of both countries, signing, and subsequent official approval by both sides. On the Indonesian side, parliament will complete its review before October; the EU must complete the approval process within the European Parliament and the governments of its member states. Although the process is cumbersome, the Indonesian government has begun accelerating internal coordination and maintaining close contact with relevant EU institutions to ensure the feasibility of the timeline. If disputes or delays arise, they could impact import plans and investment schedules for Indonesian businesses, and potentially spark concerns regarding domestic industrial competitiveness.

The implementation of the CEPA will have a profound impact on Indonesia's economy. First, tariff reductions will lower import costs, prompting Indonesia's manufacturing sector to improve cost-efficiency and further enhance the competitiveness of its products in the European market. Second, the agreement will promote technology transfer and knowledge sharing, helping Indonesian companies enhance their innovation capabilities. Finally, the further opening of the EU market will provide new momentum for Indonesia's export diversification, reducing reliance on a single market and further solidifying the resilience of the national economy. As the global trade environment changes, if Indonesia successfully concludes the CEPA, it will play a more prominent role on the trade stage in Southeast Asia and globally.