IEU-CEPA viewed as providing double advantage for Indonesia
Jakarta (ANTARA) - The Indonesia–European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) is considered capable of providing a double advantage for Indonesia.
William Simadiputra, Head of Research at DBS Group Research, stated that this agreement serves as a windfall resulting from United States tariff-related protectionism, allowing Indonesia to seize opportunities for deeper cooperation with European nations.
“This actually provides a double advantage for Indonesia,” William remarked during a media briefing in Jakarta on Thursday.
According to him, through IEU-CEPA, Indonesia has the opportunity to become a manufacturing hub for European companies, particularly if they need to establish new factories in certain countries. Indonesia could be considered an alternative destination.
“Therefore, this serves as a positive point for Indonesia to attract foreign direct investment (FDI). Another opportunity we might see is that Indonesian commodities, such as palm oil, could also provide broader benefits,” he said.
On the same occasion, Radhika Rao, Senior Economist at DBS Group Research, stated that strengthening the relationship between Indonesia and the European Union is vital, noting that the EU has been closely monitoring Asia.
“This is very good news as it opens up the Blue Continent (Europe) to work closely with Indonesia. One of the sectors, of course, is the automotive sector,” said Radhika.
He continued that European nations such as Germany are currently facing challenges arising from the electric vehicle (EV) sector, but collaboration with Indonesia regarding commodity supply chains would be highly beneficial.
“Therefore, I certainly see this as a good counterbalance to geopolitical risks,” he added.
For information, the Government aims to have the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) documents finalised and signed by October 2026.
Following the ratification process, the trade cooperation framework will be brought to the respective parliaments for discussion.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated that a Presidential Regulation (Perpres) will be issued to ensure IEU-CEPA becomes a priority in discussions within the Indonesian House of Representatives (DPR RI).
Once the derivative regulation in the form of a Government Regulation (PP) is issued, IEU-CEPA is expected to come into effect by the beginning of 2027.
Furthermore, Airlangga assessed that the implementation of this trade agreement will be a game changer for Indonesia by opening up wider market access for both parties.