Indonesia and European Union Sign Substantive IEU-CEPA After a Decade of Talks, Paving Way for Stronger Trade and Investment
Key Takeaways
|
BADUNG, Investortrust.id — Indonesia and the European Union have signed the substantive Indonesia-European Union Comprehensive Economic Partnership Agreement on Tuesday, Sept 23, 2025, in Bali, concluding nearly a decade of negotiations and opening a new chapter in bilateral trade and investment.
The deal marked a historic step following the announcement made in July 2025 by President Prabowo Subianto and European Commission President Ursula von der Leyen in Brussels.
Coordinating Minister for Economic Affairs Airlangga Hartarto and European Commissioner for Trade and Economic Security Maroš Šefčovič led the joint signing ceremony, emphasizing that the agreement will secure fairer competition for Indonesian products and investments, while strengthening the country’s position in the global market.
Airlangga said the journey from the first round of negotiations in Brussels in 2016 to the Bali signing reflected both sides’ commitment to building an open, fair, and sustainable economic partnership. Šefčovič praised Airlangga’s leadership and the Indonesian negotiation team’s determination, calling the signing a “truly historic moment.”
The agreement covers trade in goods, services, and investment, with both parties committing to remove tariffs on more than 98 percent of tariff lines and 99 percent of total import value. Indonesian exports will immediately enjoy zero tariffs on 90.4 percent of the EU market, with further reductions phased in.
European Commissioner for Trade and Economic Security Maroš Šefčovič delivers remarks at the Joint Announcement on the Substantive Conclusion of the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA) in Bali, Tuesday, Sept 23, 2025. Photo: Coordinating Ministry for Economic Affairs.
Key export commodities such as palm oil, coffee, textiles, footwear, and furniture are expected to benefit, while the pact also opens pathways for high-tech products including smartphones and telecom equipment. Simplified customs procedures and closer cooperation between trade authorities are also part of the framework.
On investment, the EU has been one of Indonesia’s largest sources of foreign capital, with strong presence in chemicals, pharmaceuticals, real estate, hospitality, and food industries. The IEU-CEPA is expected to provide greater regulatory certainty, encourage technology transfer, and integrate Indonesia more deeply into global supply chains.
Analyze stocks quickly and easily with InvestingPro — enjoy an exclusive discount for Investortrust readers. Click here to access the offer
Another pioneering feature of the agreement is its digital trade cluster, aligned with global trends and ASEAN’s Digital Economy Framework Agreement initiated under Indonesia’s 2023 chairmanship. Indonesia, whose digital economy was valued at $150 billion in 2025, is poised to leverage European expertise in data centers, connectivity, and technology, including new satellite systems that already provide high-speed internet to more than 100,000 people in remote areas.
The government projected that Indonesian exports to the EU could increase by as much as 60 percent in the early years of implementation, boosting national income by $2.8 billion and directly impacting around 5 million workers in labor-intensive sectors. The agreement is also expected to generate new jobs, reduce poverty, and strengthen purchasing power through linked fiscal incentives and social protections.
Following the signing, the government and the EU held the Indonesia-EU Business Outlook Forum in Bali, gathering senior officials, ambassadors, business associations, and private sector representatives.
Airlangga stressed that the pact must translate into real opportunities for companies, small businesses, and the wider community, calling on the Indonesian Chamber of Commerce (KADIN), EuroCham, and APINDO to focus on “low-hanging fruit” projects that can be realized quickly.
In 2024, bilateral trade between Indonesia and the EU reached $30.4 billion, with Indonesia recording a $4.4 billion surplus. The EU was also the fifth largest investor in Indonesia between 2019 and 2024 with $15.6 billion in realized investments.
President Prabowo Subianto has described the agreement as a potential “game changer” for global markets, with Indonesia and the EU jointly representing 723 million people and an economic value exceeding $21 trillion. Airlangga echoed this, saying the pact would expand market opportunities, strengthen resilience, and deliver shared prosperity.
Looking ahead, Indonesia plans to continue deregulation and policy reforms to maximize the benefits of wider market access and demographic advantages. These measures, coupled with IEU-CEPA implementation, are expected to raise Indonesia’s competitiveness in global trade.