Government Reveals Indonesia-EU Trade Agreement Ready To Boost National Exports

Director General of International Trade Negotiations of the Ministry of Trade, Djatmiko Bris Witjaksono (right). (Photo: Doc. ANTARA)

JAKARTA The government targets Indonesia's export growth to increase by 5.4 percent per year after the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) is officially implemented.

This agreement is expected to take effect in the fourth quarter of 2026 or the first quarter of 2027 at the latest.

Director General of International Trade Negotiations of the Ministry of Trade, Djatmiko Bris Witjaksono, said that the IEU-CEPA will provide significant benefits, especially in expanding access to the Indonesian export market to the European Union.

According to him, with the increasing expansion of market access, the national export performance is projected to grow by 5.4 percent per year.

Djatmiko explained that there are several leading Indonesian export commodities that have the potential to increase in the European Union market, including palm oil and its derivatives, copper ore and its derivatives, fatty acids, various types of footwear (including sports), bungkil, rubber and plastic, steel rolls, brown fats, copra, coffee, natural rubber, printer machines, monokarboksilat acids, suitcases, furniture, ferro alloys, vehicle seats, gardens, paper and cardboard, as well as fishery products.

"Then also the service market, this opens up opportunities for Indonesian professionals to have more opportunities to enter the labor market in the European Union," he said at the office of the Coordinating Ministry for the Economy, Friday, June 13.

Djatmiko said that other benefits include increasing foreign direct investment (FDI) from the European Union in strategic sectors such as electric vehicles (EV), renewable energy, semiconductors, Information and Communication Technology (ICT), pharmaceuticals, as well as processing of mineral derivatives (specifically pre-smelters).

According to him, the implementation of this agreement is also expected to increase state revenue through Value Added Tax (VAT) and Income Tax (PPh), as well as encourage diversification of imports of raw materials and capital goods for the domestic industry.

The continued impact of increasing industrial productivity is also expected to improve the welfare of the community as well as products from the European Union and Indonesia which are complementary to each other (complementary) providing benefits for consumers through more product choices.

Meanwhile, Coordinating Minister for Economic Affairs Airlangga Hartarto, said that the target of increasing exports by 5.4 percent per year is still considered conservative.

"That's very conservative, where our export increase is only 5 percent. If I say, if we ask for an increase it's not high, 50 percent in 3 years." he said.

According to him, an increase in exports by 50 percent in three years will put Indonesia on par with Malaysia's current position.

"How come we can't race Malaysia? That's why you in this room have to be prepared to fill in, once this (IEU-CEPA) is immediately effective," he said.

Airlangga also emphasized the importance of the readiness of the textile and garment industry, which will enjoy an import duty rate of 0 percent in this agreement, in order to create equality with ASEAN countries.

In addition, he said that the fisheries sector was also asked to increase its exports, especially leading commodities such as tuna which has a main habitat in Indonesian waters.

Airlangga also responded to the European Union's request regarding the opening of the Indonesian automotive market as part of the negotiation process and implementation of the agreement.

"If they want to export how much they give. After all, consumers have their own choice," he said.