Hundreds of documents, dozens of official forums have been conducted. Since last July the government has held meeting after meeting with the EU delegation, both online and face-to-face, held almost every week to tidy up all the articles.
All the hassle finally paid off: the finalization of the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) was achieved.
The agreement, which is claimed to be more than just a trade promise, is expected to make Indonesia an important player in the global supply chain, especially in the renewable energy sector such as electric vehicles (EVs) and green investments.
"I don't think it should be delayed anymore. This is the right momentum, the best momentum," said Djatmiko Bris Witjaksono, Director General of International Trade Negotiations at the Ministry of Trade, in a discussion in Jakarta, Monday (04/08/2025).
For Indonesia, breaking this agreement is like getting a golden ticket into one of the tightest markets in the world with a population of more than 700 million.
"IEU is really interested, committed to investing in renewable energy, EV(electronic vehicle), ICT(information, communication, and technology), and pharmaceuticals," Djatmiko explained.
After taking effect, the government targets that almost 99 percent of Indonesian export products to Europe will receive 0 percent tariff preference.
Pahala Mansury, Deputy Chairman for Trade and Foreign Agreements at Kadin Indonesia, said the agreement will pave the way for Indonesia to reduce its export dependence on the Chinese market.
"Of the 25 chapters agreed upon, one of them is about concrete steps so that business actors, especially UMKM , are able to penetrate European strict standards ranging from product certification, sustainability, to product safety," he said.
The government is targeting to agree on the IEU-CEPA agreement by the end of September. It is estimated that after the domestic legal and ratification process runs for 6 months, the agreement will be signed no later than the second- third quarter of 2026.
Main stage
Kadin Deputy Chairman for Foreign Affairs James T Riady said the development of the green industry ecosystem will also focus on technology transfer and capacity building.
"We don't want to just sell raw nickel. Our target is to be part of the global supply chain, producing batteries, EV components, even electric cars," said James.
According to him, several European manufacturers have shown interest. Among others, Eramet, a French company that has started production in Indonesia.
Other companies, such as Schneider Electric, are targeting an increase in electrical equipment assembly capacity and Volkswagen.
"Indonesia has the critical minerals they need. But the key to success is downstream, technology transfer, and green standards compliance," James added.
James mentioned a number of challenges in dealing with the European market, such as low carbon footprint requirements, traceability, and full compliance with sustainability protocols, which industry players do not necessarily understand.
"This is a rare opportunity. We don't want to just be spectators," said James.
The IEU-CEPA trade agreement not only paves the way for textiles and furniture, but also low-carbon products such as steel. The domestic steel industry now has the opportunity to penetrate the European market, which is increasingly demanding sustainability standards, especially from the automotive, construction and electronics sectors.
According to Bhima Yudhistira, Director of Celios, this opportunity will really be felt if the government prepares the right incentives.
"For example, providing electricity tariff discounts for the steel industry that switches from blast furnace to electric arc furnace (EAF) technology to reduce carbon emissions," Bhima told SUAR through an online written statement, Monday (07/14).
In addition to incentives, he emphasized the importance of the government's role in opening market access through diplomacy. "There needs to be a trade diplomacy facility that helps match our steel producers with potential buyers in Europe," he said.
No less important, according to Bhima, is a cheaper financing scheme to encourage investment in the export-oriented steel sector. "Low-interest loans can accelerate the transformation of the steel industry to become greener and more competitive in the global market," he concluded.
Indonesia and Malaysia, as the world's largest palm oil exporters, consider the European Union (EU) to be engaging in trade discrimination. Conversely, they also question the impact of palm oil production on the environment.
Oil palm clearing has been criticized for causing deforestation and illegal logging, as well as habitat loss for many animals.
