Time for Indonesia to Expand: The UK Could Be a New Gateway of Opportunity
Jakarta, CNBC Indonesia - Economic cooperation between Indonesia and the United Kingdom has entered a new chapter through the Economic Growth Partnership (EGP) scheme. This agreement is expected to be further developed to foster a more strategic and comprehensive long-term partnership.
The EGP was signed by British Prime Minister Keir Starle and President Prabowo Subianto on 20 January 2026. The agreement serves as a vital foundation for driving economic cooperation, trade, investment, and innovation between Indonesia and the UK. It is designed as a practical, business-oriented framework covering priority sectors including clean energy, the digital economy, finance, education, infrastructure and transport, agriculture and food, health and life sciences, supply chain strengthening, as well as trade and sustainable development.
“Through this partnership, Indonesia and the UK are expected to optimally utilise their respective economic potentials amidst global economic dynamics,” stated the Coordinating Minister for Economic Affairs, Airlangga Hartarto, on Wednesday (21/1/2026).
This agreement is part of Indonesia’s broader effort to expand bilateral cooperation, similar to its approach with several other nations. Indonesia has expanded its global market access through 18 Free Trade Agreement (FTA) schemes. Key agreements include the ASEAN Trade in Goods Agreement (ATIGA), ASEAN-China FTA (ACFTA), ASEAN-Korea FTA (AKFTA), ASEAN-India FTA (AIFTA), and the Regional Comprehensive Economic Partnership (RCEP), which is the world’s largest trading bloc.
Beyond ASEAN, Indonesia maintains bilateral partnerships such as the Indonesia-Japan Economic Partnership Agreement (IJEPA), Indonesia-Australia CEPA (IA-CEPA), Indonesia-Korea CEPA (IKCEPA), and the Indonesia-UAE CEPA (IUAECEPA). Furthermore, Indonesia and the European Union (EU) officially agreed on the substance of the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) on 23 September 2025, following ten years of negotiations.
The UK’s Position in Indonesia
Diplomatic relations between Indonesia and the UK officially began in 1949, spanning 77 years. British companies have long established a significant presence in Indonesia, with some operating for over a century, including Standard Chartered, Unilever, and Prudential. Their presence reflects the strength of the bilateral economic relationship.
According to data from the Central Bureau of Statistics (BPS), total trade between Indonesia and the UK reached US$ 2.68 billion in 2025, a 4.35% increase compared to 2021. Indonesian exports reached US$ 1.6 billion, while imports stood at US$ 1.07 billion, resulting in a trade surplus of US$ 529.8 million in 2025.
Despite the increase, the trade value between Indonesia and the UK remains significantly lower than with other European nations. Indonesia’s largest European trading partner is the Netherlands, with exports reaching US$ 5.69 billion. For the UK, Indonesia is not yet a primary trading partner, ranking 55th in the UK’s list of partners and contributing 0.2% of the UK’s total trade. Indonesia is the 54th largest export market for the UK.
BPS data shows that Indonesia’s top five exports to the UK include footwear, wood, coffee, and toys. Notably, certain goods have seen an export surge in the past year, such as cork and pearls. Conversely, Indonesia’s primary imports from the UK include mechanical equipment, machinery, vehicles, and pharmaceutical products.
British investment in Indonesia shows a more positive trend. According to the Investment Coordinating Board (BKPM), British investment in Indonesia was recorded at US$ 142.1 million in 2019 across 757 projects. The UK ranks 20th among foreign investors in Indonesia. This figure surged to US$ 628.3 million in 2022 before declining to US$ 488.1 million in 2025.
Great Potential, Yet Untapped
Indonesia is the largest economy in ASEAN, maintaining consistent 5% growth over recent decades. With a population exceeding 280 million, a dominant working-age demographic, and rising urbanisation, Indonesia possesses a massive market with vast potential for middle-class growth. Rapid middle-class expansion and improving purchasing power are driving demand in sectors such as healthcare and education, creating opportunities for foreign nations to supply goods and services.
On the other hand, the UK offers the Developing Countries Trading Scheme (DCTS). This scheme provides advantages through the removal or reduction of tariffs on various products from developing nations, making Indonesian exports more competitive in the UK market. This presents an attractive opportunity for Indonesia, as the UK is a high-purchasing-power market. British consumers are known for seeking quality and sustainable products, particularly in agricultural commodities such as coffee, spices, chillies, and horticultural products.
Furthermore, the UK is a global trading hub with high import volumes. Post-Brexit, the UK has become more active in establishing independent trade policies through various practical and flexible economic agreements. This differs from the EU, where trade requirements can be more complex, involving issues ranging from quotas to sustainability standards.
Despite the immense potential, trade between Indonesia and the UK still faces several challenges, including strict standards and regulations, as the UK implements rigorous quality and safety standards.