Four rounds of negotiations from May 2024 to August 2025 finally led Indonesia and Peru to a trade agreement. Face-to-face meetings interspersed with online intersessional sessions to bridge the geographical distance reached their final point on August 6, 2025, just days before the Peruvian President landed in Jakarta.
"Alhamdulillah, we can complete this negotiation quickly. This is part of the 2025 target to continue expanding market access for Indonesian products," said Director General of International Trade Negotiations (ITA) of the Ministry of Trade, Djatmiko Bris Witjaksono, during a media briefing in Jakarta, Tuesday (12/8/2025).
Furthermore, President Prabowo, in an Official Release from the State Palace on Monday (11/8/2025), emphasized that this achievement was the result of fast and solid work by both countries. "Usually, negotiations like this take years. We, Peru and Indonesia, managed to complete it in just 14 months. In all sectors, we will work together to increase trade between the two countries," he said.
In line with that, Peruvian President Dina Boluarte also expressed similar optimism. She assessed that the signing of the IP-CEPA will bring real benefits to businesses and communities in both countries.
"When in force, CEPA will strengthen trade relations, promote the exchange of goods, and lay the foundation for agreements in investment, services, e-commerce and more. CEPA is proof of our government's determination to promote freer trade and strengthen the economy," Boluarte said.
The idea of Indonesia-Peru CEPA (IP CEPA) first emerged in 2023 through a term of reference agreement between the Ministers of Trade of the two countries; then officially launched on August 15, 2023 through a virtual joint ministerial statement.
After almost two years of negotiations, the two governments finally signed the Comprehensive Economic Partnership Agreement (CEPA) on Monday (11/8/2025), coinciding with the Peruvian President's state visit to Jakarta. This agreement makes it Indonesia's second CEPA in Latin America after Chile in 2019.
The signing was carried out by Indonesian Minister of Trade Budi Santoso and Peruvian Minister of Foreign Trade Desilu Leon, witnessed by President Joko Widodo and the President of Peru.
This agreement, according to Djatmiko, will open preferential access for more than 90% of the tariff posts of both countries, a leap that is expected to push the value of bilateral trade towards the ambitious target of USD 5 billion.
"This is extraordinary. With this CEPA, our competitiveness will improve, not only in Peru, but also in the South American region. This strengthens our position in the global market," said Djatmiko.
Peru is not Indonesia's largest trading partner. The value of trade between the two countries in 2023 will only reach around USD 331 million. However, the potential for growth is considered large.
Moreover, this CEPA provides tariff elimination or reduction for Indonesia's leading commodities, such as automotive, footwear, textiles, and their derivative products. Conversely, Indonesia also opens access to Peru's key products, including fisheries, mining, citrus, and some typical agricultural commodities.
In addition to the IP-CEPA, two other documents were also signed during the state visit, namely a memorandum of understanding between the National Narcotics Agency of the Republic of Indonesia and the National Commission for Development and Living without Drugs of the Republic of Peru on technical cooperation in the eradication of illicit production, preparation, and trafficking of narcotics, psychotropic substances, and precursors.
90% zero tariff, leading sector opportunity
Although labeled Comprehensive, IP CEPA will initially focus on trade in goods. Thisincremental approach was also previously applied in negotiations with Chile, before being expanded to services and investment sectors.
The first phase includes the elimination or reduction of tariffs,rules of origin, customs procedures, trade security, as well as arrangements related to technical barriers and food health and safety standards (SPS). After implementation, the two countries will continue negotiations on services, investment, intellectual property, and the digital economy.
"We want to quickly provide tangible benefits for businesses, so the goods trade sector is an early priority," Djatmiko explained.
One of the main highlights of the IP-CEPA is the granting of 0% tariff preferences for more than 90% of tariff items from both countries. On the Indonesian side, exports of automotive, footwear, textiles, palm oil products, as well as various manufactured and non-manufactured products will benefit significantly. Some commodities will enjoy zero tariffs immediately upon entry into force, while others will be phased towards zero tariffs over several years.
On the Peruvian side, Indonesia's market access is opened for products such as fish, mollusks, copper, citrus, and other agricultural commodities. Although some sectors in Indonesia, such as fisheries and agriculture, have similar products, the government considers that this openness will strengthen domestic competitiveness and encourage product diversification.
Djatmiko emphasized the importance of businesses, especially UMKM, taking advantage of this opportunity. "We want new players to get involved, not just big exporters who are used to it. IP CEPA should be a way for UMKM to penetrate the Latin American market," he said.
Aiming for IP-CEPA opportunities
This strategic opportunity is also agreed by Mohammad Faisal, economist and Executive Director of CORE Indonesia. He believes that the Comprehensive Economic Partnership Agreement (CEPA) trade deal between Indonesia and Peru is not just a matter of tariffs on trade in goods. "Beyond that, the scope is broader: services, investment, and various non-tariff aspects," he said.
According to Faishal, this agreement requires sharper and more comprehensive calculations, in line with the broad scope of what is discussed. "We need to know what we want to target in terms of exports, what barriers we hope to reduce, as well as targets for investment and trade in services," Faishal said.
The same applies to imports, which goods are really needed for domestic production, especially those that have been difficult to fulfill, such as raw materials.
Based on his records, Indonesia's trade with Peru has actually recorded a surplus. Indonesia exports a lot of high value-added manufacturing products, such as automotive, as well as labor-intensive products such as footwear. Faishal views that CEPA could be a door for greater penetration into the Peruvian market, even making it a "hub" for Indonesian manufactured products to Latin America.
In terms of imports, cocoa is one of the main commodities that Indonesia buys from Peru. "We are indeed short of cocoa beans. Domestic demand continues to rise, imports are also getting bigger," he said. According to Faishal, cocoa imports from Peru should be utilized to meet the shortage of raw materials for the domestic industry. However, he cautioned that this step should not undermine government and private efforts to develop cocoa plantations in Indonesia.
"Cocoa is one of the plantation commodities whose downstream has developed, but the raw materials are lacking," he said. He emphasized the need for rejuvenation and expansion of plantations, including utilizing currently unproductive lands, so that import dependence can be reduced.
Opening a path to the Latin American market
The decision to partner Peru is not without reason. The country on the west coast of South America has an open economy and is a member of various major trading blocs, including the Asia-Pacific Economic Cooperation (APEC) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Geographically, Peru borders Chile, Bolivia, Colombia, and Ecuador, allowing it to become a hub for product distribution to various markets in the region.
So far, some Indonesian products exported to Chile end up in Peru. With CEPA, this direct access is expected to cut distribution costs, increase competitiveness, and open new markets for Indonesian products such as footwear, textiles, processed food, furniture, and automotive components.
"Latin America is big. If we only rely on Chile, there is still a lot of untapped potential. Peru is strategic and has a complementary trade relationship with us," said Djatmiko.
So far, Indonesia already has trade agreements with countries in Asia, Europe, and Australia. However, penetration into Latin America is still limited. Peru is expected to be a strategic entry point to the Latin American region connected to the North American market.
"With this CEPA, we strengthen our presence in South America. In North America we already have, in Europe we are getting stronger, in Asia we are very solid. So this completes our global trade partnership map," said Djatmiko.
Next stage: services and investment
Data from the Ministry of Trade shows that the trend of Indonesia-Peru trade has continued to increase in the last five years. The value of bilateral trade grew by an average of 15% per year, with a surplus for Indonesia reaching 15.7%. In the January-June 2025 period, trade between the two countries reached US$264.8 million, up 34.3% compared to the same period last year.
The government is optimistic that IP-CEPA will accelerate this positive trend. "There is no CEPA yet, the increase is already 34%, let alone after CEPA takes effect," said Djatmiko.
Although the initial focus of the IP-CEPA is trade in goods, the agreement also paves the way for discussions on trade in services and investment. As agreed, negotiations for the services and investment sectors will begin two years after the implementation of IP CEPA. The potential includes tourism, logistics, transportation, education, health services, financial sector, and digital technology.
Peruvian President Dina Boluarte even openly encouraged increased Indonesian investment in Peru. On the other hand, the Indonesian government sees opportunities to increase service exports to Peru, particularly in the fields of education, health, and technology.
Next Steps: ratification and implementation
In accordance with Law No. 7/2014, the Indonesia-Peru CEPA must be ratified by the DPR before it can take effect. The government hopes that the ratification process will run quickly, so that the benefits can be directly felt by business actors.
"We will coordinate with the DPR so that this can be enteredinto force immediately," said Djatmiko.
The ratification process of IP CEPA is expected to take about 12 months, including discussions in the DPR. After ratification, the implementation phase will be followed by periodic evaluations. The government will monitor the level of utilization of this trade facility, among others through data on the use of the Indonesia-Peru Certificate of Origin (SKA).
"Regular evaluation is important to ensure that this agreement is actually utilized. If our exports increase, but SKA utilization is low, it means there is something we need to improve," Djatmiko explained.
In addition, the government plans to intensify socialization through trade fairs, training, and mentoring for businesses. These facilities will be provided in various major cities through the Indonesian Trade Promotion Center and regional trade offices.
Looking to a broader market
With the entry into force of the IP-CEPA, Indonesia will have three comprehensive trade agreements in the Americas: Chile, Peru, and (in the near future) Canada. This strategy is expected to expand Indonesia's market network in Latin America and North America.
At the same time, Indonesia is exploring trade agreements with the Eurasian Economic Union (Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia) and continuing discussions on a preferential trade agreement with Tunisia.
However, Djatmiko acknowledged that the government's negotiation resources are limited. Therefore, prioritization strategies are important. "Peru came later, but the process was fast. We need to appreciate that," he said.
For businesses, the opportunities are wide open. Not only for primary commodities, but also high value-added products that can compete in a market that demands quality.
With more and more free trade agreements in place, the biggest challenge is to ensure businesses understand and utilize the existing facilities. "CEPA is two-way. Not only for our exports to Peru, but also for imports from Peru to Indonesia. The key is in the understanding and readiness of business actors," Djatmiko concluded.
