- Deal milestone: Political pact reached on long-awaited trade deal.
- Finalisation expected: Agreement set to conclude by September.
- Boost for industry: Opens markets in agriculture, auto & services.
Indonesia and the European Union have taken a significant step towards diplomatic relations as they have reached a “political agreement” on the long-touted Comprehensive Economic Partnership Agreement (CEPA). The agreement, which was jointly announced on June 26 in Brussels, Belgium, by EU Commission President Ursula von der Leyen and President of Indonesia Prabowo Subianto, may be finalized by September 2025.
“We’re living in turbulent times, and when economic uncertainty meets geopolitical volatility, partners like us must come closer together,” said von der Leyen. “This political agreement marks a big step forward in our partnership.”
The CEPA negotiations began in 2016, aimed at deepening trade and investment between the 27 nation EU block and Southeast Asia’s largest economy. The agreement is expected to open up new markets and boost collaboration across key sectors such as agriculture, automotive, services, and manufacturing.
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Prabowo termed it a “breakthrough” after nearly ten years of conversation, while stating that Europe is an important partner for Indonesia. He stated, “We consider Europe as a very important factor because we want to see a very strong Europe.”
Even with the agreement, Indonesia continues to very good relationship with the United States, which Prabowo recognized will “always be a very important leader in the world”.
The EU is Indonesia’s fifth-largest trading partner, with bilateral trade reaching US$30.1 billion in 2024. The deal is particularly timely amid US tariff threats under Donald Trump and growing global trade tensions. Von der Leyen noted this partnership shows the EU’s commitment to open and diversified markets.
However, tensions remain over the EU’s proposed deforestation-linked import ban, which Indonesia opposes due to its large palm oil exports. The legislation has been delayed until the end of 2025, easing trade discussions for now.