95% of Indonesian Exports to Europe Are Tariff-Free Under IEU-CEPA

August 4, 2025 | 05:27 pm

TEMPO.CO, Jakarta - The Director General of International Trade Negotiations at the Ministry of Trade, Djatmiko Bris Witjaksono, stated that 95 percent of Indonesia's export products will enjoy zero-tariff benefits after the IEU-CEPA trade agreement is implemented. Djatmiko mentioned that the benefits of tariff elimination will be felt immediately in the first year of implementation.

"In terms of trade value, almost 99 percent will already receive a 0 percent tariff preference. Meanwhile, in terms of the number of product items, around 95 percent will enjoy this facility," Djatmiko told reporters at the Kadin Tower, South Jakarta, on Monday, August 4, 2025.

Djatmiko stated that there are still some products that are not included in the duty-free scheme. However, he said that the number is very limited and not significant. "Our target is actually for all products to be duty-free, but of course not everything. Those excluded by the European Union are very few," he said.

Furthermore, he explained that labor-intensive industries are expected to benefit most from the elimination of tariffs on exports to Europe. Products such as textiles, garments, footwear, electronics, and apparel will become more competitive in the European Union market due to higher cost efficiency.

He hopes that this condition will not only boost export volumes but also create new jobs domestically. In addition to the benefits on the export side, Djatmiko stated that the IEU-CEPA also opens the door for Indonesia to import complementary high-quality products from Europe.

He said the government will provide broader access to high-tech products that cannot yet be produced domestically, such as machinery and medical equipment from countries like Germany and France. "We facilitate these high-tech products because they are very important to support the domestic industrial sector. For example, medical equipment that we cannot produce yet, but is greatly needed," he said.

Djatmiko continued, with the opening of access to European technology, the process of industrialization in Indonesia can be accelerated and become more efficient. Moreover, the government also projects that Indonesia's exports to the European Union will double after the full implementation of the IEU-CEPA agreement in 2027.

One important point of this agreement is the continued opening of the European market access for Indonesian palm oil products. Palm oil will continue to be accepted, both for food purposes and as a raw material for energy.

"This shows that our constructive dialogue with the European Union has produced results, especially in terms of sustainability and recognition of national superior products," said Djatmiko.

Previously, the government announced that Indonesia had agreed on a trade agreement with the European Union outlined in the IEU-CEPA. This agreement was signed by President Prabowo Subianto when meeting with European Union leaders in Brussels on Sunday, July 13, 2025.

Airlangga Hartarto, Coordinating Minister for the Economy, said the IEU-CEPA could enhance Indonesia's export competitiveness. Through this agreement, Indonesia is said to be able to equal Vietnam and Malaysia, which already have similar agreements.

One of the main benefits of the Indonesia-CEPA is that it eliminates import tariffs on Indonesian exports, including textiles, footwear, automotive products, fish, and palm oil. Palm products, which were previously excluded due to environmental concerns, are now accepted for both food and energy needs.

The government also targets domestic vehicles, including electric cars, to compete in the European market through incentives and relaxation. This agreement encompasses 24 key elements, including trade in goods and services, investment, intellectual property, sanitary standards, digital trade, energy, and government procurement.

The IEU-CEPA is also projected to open up greater foreign direct investment opportunities from Europe, after previously declining from US$2.33 billion (2023) to US$1.1 billion (2024). The government targets completing the legal documents of the IEU-CEPA by September 2025 and full implementation to begin in the first quarter of 2027, following ratification by the 27 member countries of the European Union.

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