PALMOILMAGAZINE, BALI – After nearly ten years of intensive negotiations, Indonesia and the European Union have reached a historic milestone in their long-term partnership by signing the substantive agreement of the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU–CEPA). This achievement follows the joint announcement made by Indonesian President Prabowo Subianto and European Commission President Ursula von der Leyen during their meeting in Belgium in July 2025.
The agreement positions Indonesia as the third ASEAN country—after Singapore and Vietnam—to finalize a CEPA with the EU. It ensures a more level playing field for Indonesian products and investments while strengthening the nation’s global economic standing.
“From the first negotiation round in Brussels on September 20–21, 2016, to today in Bali, this nine-year journey marks a historic milestone that reflects our joint and lasting commitment to an open, fair, and sustainable economic partnership through IEU–CEPA,” said Coordinating Minister for Economic Affairs Airlangga Hartarto in a joint press statement with EU Commissioner for Trade and Economic Security Maroš Šefčovič during the Signing and Joint Announcement ceremony in Bali on Tuesday (Sept 23).
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The deal is expected to deliver tangible benefits for Indonesia, particularly in boosting exports and securing broader access to EU markets. Market liberalization under IEU–CEPA will cover goods, services, and investment. On goods, both parties agreed to eliminate tariffs on more than 98% of tariff lines and 99% of total import value. Upon implementation, Indonesian products will immediately enjoy zero tariffs on 90.4% of the EU market, with further tariff reductions phased in over time.
Key export commodities such as palm oil, coffee, textiles and apparel, footwear, and furniture are projected to gain significant traction. Moreover, the agreement opens opportunities for Indonesia to expand exports of high-tech products—including smartphones and telecommunications equipment—supporting export diversification and strengthening national industry competitiveness. Trade facilitation measures will also be enhanced through simplified customs procedures and closer collaboration between customs authorities.
“It is an honor to stand here today alongside Minister Airlangga, EU ambassadors, and Indonesia’s strong, dynamic negotiation team at this historic ceremony. I would like to extend my sincere gratitude to Minister Airlangga for his personal dedication, constructive engagement, and strong political leadership that were key to bringing us to this historic moment,” said EU Commissioner Maroš Šefčovič.
The EU remains one of Indonesia’s top investors, with significant contributions in chemicals and pharmaceuticals, services, housing and industrial estates, hospitality, trade and repair, and the food industry. The IEU–CEPA agreement is expected to provide greater regulatory certainty, drive technology transfer, and strengthen Indonesia’s integration into global value chains.
One of the pioneering features of the agreement is its inclusion of digital trade, aligning with global trends and the ASEAN Digital Economy Framework Agreement (DEFA) launched under Indonesia’s ASEAN chairmanship in 2023. This will help position Indonesia for further growth in the digital economy at both regional and global levels.
With its comprehensive scope, IEU–CEPA is projected to increase Indonesia’s exports to the EU by up to 60% in its early implementation. This growth is expected to contribute an additional USD 2.8 billion to national income, create new jobs, and help reduce poverty. The agreement will directly impact around 5 million workers in Indonesia, particularly in labor-intensive sectors.
The implementation of IEU–CEPA also aligns with Indonesia’s second-semester 2025 Economic Package, which aims to create more jobs, strengthen the tourism and labor-intensive industries, provide fiscal and administrative relief for MSMEs, and support household purchasing power through incentives, subsidies, and social protection programs.
Looking ahead, the Indonesian government will continue regulatory reforms to maximize market access opportunities under IEU–CEPA and leverage the nation’s demographic dividend. These measures are expected to further enhance national competitiveness.
“With today’s signing and joint announcement of the substantive conclusion of CEPA negotiations, a new era begins in bilateral relations. This partnership brings together 723 million people from both sides, representing a combined economic value of more than USD 21 trillion,” concluded Minister Airlangga.
The signing ceremony was attended by the Indonesian Ambassador to Brussels and the EU, the EU Ambassador to Indonesia and Brunei Darussalam, 21 EU member state ambassadors, and senior officials from several Indonesian ministries and agencies. (P3)
Source: Indonesia’s Coordinating Ministry for Economic Affairs
