Indonesia is actively pursuing a comprehensive free trade agreement (FTA) with the European Union, with recent discussions taking place at the World Economic Forum in Davos, despite the current caretaker status of the Indonesian government. Trade Minister Zulkifli Hasan, speaking at the forum, emphasized the importance of accelerating negotiations, signaling Jakarta’s commitment to finalizing the deal.
The push for the FTA comes as both sides seek to bolster economic ties. According to policy documents from the European Commission, negotiations have been ongoing for several years, covering a broad range of issues including trade in goods, services, investment, and sustainable development. The EU views Indonesia as a key partner in the Southeast Asian region, with a growing middle class and significant economic potential.
Recent developments indicate a potential shift in the dynamics of the negotiations. In July 2023, the EU and Indonesia concluded negotiations on a Comprehensive Economic Partnership Agreement (CEPA), which is a precursor to a full FTA. This CEPA focuses on trade in goods and includes commitments to reduce tariffs and eliminate non-tariff barriers. However, broader aspects of the FTA, including investment protection and geographical indications, remain under discussion.
The India-EU trade deal, finalized recently with eased tariffs and new service openings, provides a parallel context for the Indonesia-EU negotiations. The agreement between India and the EU demonstrates a willingness from the European bloc to forge new trade partnerships, potentially creating momentum for finalizing the Indonesian FTA. The Indian deal, however, took years to negotiate, highlighting the complexities inherent in such agreements.
While Minister Hasan’s presence at Davos and his advocacy for the FTA signal Indonesia’s eagerness, the caretaker status of his government introduces a degree of uncertainty. The upcoming Indonesian presidential elections in February 2024 could influence the future direction of the negotiations, depending on the policy priorities of the new administration. As of February 17, 2026, no official statement has been released regarding a definitive timeline for the completion of the FTA.
