Indonesia aims to conclude and ratify a comprehensive free trade agreement with the European Union by 2026, according to a senior official from the Ministry of Trade, following the conclusion of the latest negotiation round between the two parties.
Djatmiko Bris Witjaksono, Director General of International Trade Negotiations, told reporters in Jakarta that both sides have made progress in the long-running discussions, which have now entered their ninth year. He stated that the agreement could come into effect as early as late 2026 or by the beginning of 2027.
The Indonesia–EU Comprehensive Economic Partnership Agreement (IEU-CEPA) has been under negotiation since 2016. Talks have faced repeated delays over differences in regulatory standards and trade rules, particularly surrounding sustainability requirements imposed by the EU.
According to Witjaksono, the European Union has committed to granting market access for a number of Indonesian priority export sectors, including palm oil, textiles, footwear, and seafood. These sectors form a significant part of Indonesia’s export base and are expected to benefit from reduced tariffs and fewer trade barriers once the agreement is in force.
The EU’s Deforestation Regulation, which aims to curb the import of goods linked to forest degradation, has been a particular point of contention, especially in relation to Indonesian palm oil exports. Jakarta has expressed concern that such measures could function as non-tariff barriers and undermine the spirit of a free trade pact. However, both parties appear to be moving towards a negotiated resolution.
In return, Indonesia is set to provide improved market access for European agricultural and manufactured products. “This is a reciprocal arrangement,” Witjaksono said. “We want to ensure balance and fairness in the concessions made.”
EU Ambassador to Indonesia Denis Chaibi emphasised that while the talks are progressing, the timeline remains dependent on the substance of what is agreed. “Substance will determine timing,” he said, suggesting that both sides remain cautious about setting firm deadlines ahead of reaching consensus on all major issues.
An internal benefit analysis presented by the Indonesian trade ministry estimates that the agreement could boost Indonesia’s exports by approximately 5.4%. However, Coordinating Minister for Economic Affairs Airlangga Hartarto described this figure as conservative, saying the government is targeting a 50% increase in exports to the EU within three years of the agreement’s implementation.
In 2024, Indonesia exported goods worth approximately €16.1 billion to the EU, while imports from the bloc stood at €11.9 billion, according to official trade data. Despite the overall trade surplus, foreign direct investment from the EU into Indonesia declined sharply, falling to €1.02 billion last year — a drop of more than 50% compared to 2023.
Witjaksono said the trade deal is expected to help reverse this decline by encouraging European investment in key sectors such as renewable energy, semiconductors, and mineral downstream processing — all of which are strategic priorities for Indonesia’s industrial policy.
The Indonesian government is seeking to position itself as a reliable partner in global supply chains, particularly in the context of Europe’s push to diversify away from dependence on China. Jakarta views the IEU-CEPA as a vehicle to strengthen ties not only in trade but also in broader economic cooperation.
Negotiations are continuing with working groups addressing issues such as trade in services, investment protection, rules of origin, and regulatory alignment. If the 2026 target is achieved, the agreement would mark one of the EU’s most significant trade pacts with a Southeast Asian country in recent years, following similar arrangements with Singapore and Vietnam.
Indonesia is the largest economy in the ASEAN bloc, with a population of over 270 million. The EU is currently its fifth-largest trading partner.
The next round of talks is expected to be held later this year. Both sides have indicated their intention to accelerate negotiations in order to meet the 2026 deadline.
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