Indonesia Opens New Markets, Expands Trade Partnerships Amid Global Uncertainty

Expanding export markets has become increasingly urgent amid global trade challenges, ranging from the Russia-Ukraine war and United States reciprocal tariffs to conflict in the Middle East, the weakening role of the World Trade Organisation, and growing non-tariff barriers in several countries.

Trade Minister Budi Santoso cited the Middle East as a significant market with an export value reaching US$9.87 billion, or 3.49 per cent of the total. “When our market in the Middle East is disrupted, we must be able to find other markets. People might say this is short-term. When geopolitics is unfolding, market changes can sometimes be very rapid,” he said in Jakarta on Monday.

To address this, one of the Trade Ministry’s key programme focuses is export market expansion. The government aims to create greater access for domestic products to other countries, including through trade agreements. “Without trade agreements, it is not easy for us to enter other countries’ markets, including trade promotion and resolving trade barriers. We must be able to resolve these so our market grows larger,” the minister added.

To date, 25 trade agreements between Indonesia and international partners have been implemented, five of which were realised under the administration of President Prabowo Subianto. Thirteen more agreements are under negotiation, and two are awaiting signature. The two pending agreements are the Indonesia-Tunisia Preferential Trade Agreement and the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA).

“The Indonesia-EU CEPA was concluded last year. After completion, there is a legal drafting process and consultation with each country. There are 27 countries, so it takes time. We are aiming for a signing in September this year. If it is signed in September, we will push for implementation by January 2027,” Budi explained.

Indonesia is also finalising negotiations on the Indonesia-Gulf Cooperation Council Free Trade Agreement (I-GCC FTA). The minister is targeting the conclusion of these talks by September. “Previously, our negotiations with the GCC were never-ending. Then we decided to first engage the UAE, which is also a GCC member. The UAE already has a CEPA with us. Once our bilateral trade with the UAE progressed well, the other Middle Eastern countries became interested, seeing that it worked well with Indonesia,” he said.

Traditional export markets will also be maintained, including the United States. The minister noted that with President Donald Trump’s reciprocal tariff policy, Indonesia still needs to negotiate with the US. “Why must we negotiate with the US? In 2025, our surplus with America was US$18.11 billion. The US is number one, followed by India, the Philippines, the Netherlands, and Vietnam. If we have no Agreement on Reciprocal Trade and we stop exporting to America, where will that US$18.11 billion surplus go?” he asked, noting that exports to the US are dominated by labour-intensive manufactured products such as footwear, apparel, and electronics.

Andry Satrio Nugroho, head of the Center of Industry, Trade, and Investment at the Institute for Development of Economics and Finance, assessed that the IEU-CEPA presents a strategic opportunity for Indonesia to pursue trade diversion amid the dynamics of US import tariff policies. He noted that before the agreement, Indonesia exported heavily to the US due to competitive tariffs, but with the US imposing higher tariffs and the EU offering duty-free access under the CEPA, Indonesia can shift its exports from the US to the more promising European market. Sectors projected to benefit directly include fisheries, as well as textiles and textile products, which will see tariff eliminations of 10 to 20 per cent for processed seafood and relief of around 10 to 17 per cent for textile and apparel products, boosting competitiveness against rivals like Vietnam.

The Indonesian Employers Association (Apindo) is urging the government to accelerate the finalisation and implementation of various international trade agreements. Chairwoman Shinta Kamdani said the business community needs policy certainty, end-to-end resolution of barriers, and implementation-oriented collaboration. She noted that pressures on businesses are mounting, highlighted by the rupiah exchange rate which recently touched Rp18,200 per US dollar, and logistics costs that remain high at 14.29 per cent of gross domestic product, above the regional average.