Facing Trade War, President Prabowo Orders Push to Maximize CEPA Negotiations

JAKARTA, investortrust.id - Indonesia’s top economic official reveals a bold strategy to navigate a global trade war as Donald Trump returns to the U.S. presidency, prompting a shift toward untapped export markets and stronger international partnerships. This move underscores Jakarta’s urgency to bolster economic resilience amid escalating geopolitical tensions.

Coordinating Minister for Economic Affairs Airlangga Hartarto announced the plan on Thursday, Feb. 20, 2025, at the Trade Ministry office in Jakarta. With Trump’s second term expected to reshape global trade dynamics, Indonesia aimed to diversify its export destinations beyond traditional markets.

The strategy hinged on forging new trade agreements, particularly through the Comprehensive Economic Partnership Agreement (CEPA), a framework designed to deepen economic ties with partner nations. President Prabowo Subianto had instructed officials to prioritize these negotiations, Hartarto said, citing the need to tap into 83% of the world’s trade outside the U.S.

“We must look at trade across the entire world—that’s 83% of global commerce outside America,” Airlangga told reporters. “Per the President’s directive from his recent speech, we need to maximize CEPA efforts.”

The government already secured a landmark deal with Canada, known as the Indonesia-Canada Comprehensive Economic Partnership Agreement (ICA-CEPA). Negotiations concluded earlier, with the signing slated for mid-2025 and implementation targeted for 2026.

This pact marked a significant step in broadening Indonesia’s trade horizons. Hartarto added that discussions with Mercosur—a South American trade bloc comprising Argentina, Brazil, Paraguay, and Uruguay—followed next on the agenda. Plans also emerged to pursue agreements with the Eurasia bloc and the Gulf Cooperation Council (GCC), a political and economic alliance of six Middle Eastern countries.

“We also hope that Indonesia’s access to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will unlock markets in the U.K., Canada, and Latin America,” Airlangga explained. The CPTPP, a major trade pact among Pacific Rim nations, represented a key opportunity for Indonesia to expand its reach.

Beyond these efforts, Indonesia intensified its focus on the “Global South,” a term referring to developing economies. Airlangga highlighted recent moves to strengthen ties with BRICS nations—Brazil, Russia, India, China, and South Africa—and advance Indonesia’s bid to join the Organisation for Economic Co-operation and Development (OECD). These steps reflected a multifaceted approach to safeguard the country’s economic interests.

The push came as Indonesian business leaders signaled support. The Indonesian Chamber of Commerce and Industry (Kadin) met with the Trade Minister to discuss accelerating the Indonesia-European Union CEPA (IEU-CEPA), a deal poised to enhance trade with one of Indonesia’s largest markets.

Airlangga’s remarks underscored President Prabowo’s proactive stance since taking office, with trade policy emerging as a cornerstone of his administration’s agenda. As global trade faces uncertainty under Trump’s leadership, Indonesia’s pivot to new markets and strategic partnerships could redefine its position in the world economy.