Indonesia Secures Favorable Palm Oil Terms in Landmark EU Trade Deal
Main Takeaways
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PARIS, Investortrust.id — Indonesia’s palm oil exports are expected to gain significant momentum following the conclusion of the long-awaited Indonesia–European Union Comprehensive Economic Partnership Agreement (IEU-CEPA), which exempts the commodity from sanctions and secures zero-percent import tariffs.
“The agreement greatly benefits Indonesian exporters, especially those in the palm oil industry,” said Hashim Djojohadikusumo, Chairman of the Advisory Board at the Indonesian Chamber of Commerce and Industry (Kadin), following a business forum hosted by Kadin and France’s MEDEF in Paris on Tuesday, July 15, 2025.
Hashim, who also serves as Special Presidential Envoy for Energy and Climate, said the finalized trade pact ensures that Indonesian palm oil will not be subject to penalties under EU regulations. “There will be no sanctions or financial penalties,” he emphasized.
From Risk to Opportunity
Indonesian crude palm oil (CPO) and its derivatives have long faced scrutiny in Europe over deforestation and sustainability concerns. The European Union’s Deforestation Regulation (EUDR), although not yet fully enforced, classifies Indonesia as a medium-risk country. This classification requires 3% of all imports to undergo due diligence, including proof of traceability confirming no link to deforestation after Dec. 31, 2020.
Despite these challenges, the new trade deal marks a major breakthrough after a decade of negotiations. “After ten years, we finally reached a breakthrough,” Hashim said. “This is a strong opportunity for Indonesian companies and our economy as a whole.”
Hashim added that Indonesian palm oil remains critical to Europe’s supply chains. “European industries rely on palm oil—whether it’s in soaps, processed foods, or other products, the raw materials often come from palm oil,” he said.
Wider Benefits for Indonesia
Under the IEU-CEPA, up to 80% of Indonesia’s exports—including agricultural products—will be eligible for duty-free access to the EU market, according to Coordinating Minister for Economic Affairs Airlangga Hartarto. The agreement is expected to boost trade with the EU, a bloc of over 450 million people, from the current $30 billion (Rp 480 trillion) by as much as 50% in the coming years.
President Prabowo Subianto has endorsed several key requirements from the European side, paving the way for deeper economic integration. “President Prabowo has agreed to the terms, and further details will be managed by Minister Airlangga and the trade minister,” Hashim said.
Enduring Ties with France
Hashim also highlighted the longstanding relationship between Indonesia and France, dating back to the 1960s. He cited French contributions to key infrastructure projects, including the Jatiluhur Dam in West Java and Hotel Borobudur in Jakarta. “These are still in use today,” he said.
Defense cooperation remains strong, with Indonesia continuing to use French military equipment. Hashim noted that current bilateral ties are bolstered by a close rapport between President Prabowo and French President Emmanuel Macron.
“You could say the France-Indonesia relationship is among the closest of any EU member states,” he said.