Indonesia expects 58% export rise with EU deal - economist
Airlangga Hartarto, Indonesia's Coordinating Minister for Economic Affairs, and Maros Sefcovic, European Commissioner for Trade and Economic Security at a signing ceremony on the Indonesia-European Union Comprehensive Economic Partnership Agreement.
KUALA LUMPUR: Indonesia expects its exports to the European Union to grow by nearly 60% within three years after its long-awaited trade agreement with the bloc comes into force in 2027, an economist said.
Dr Fithra Faisal Hastiadi, expert staff at Indonesia’s government communication agency, said the deal comes at a crucial moment as global trade faces rapid shifts in tariffs and market strategies.
"We have, for example, 90% of most of our products subject to zero tariff," he said, adding that this level of access would provide Indonesian exporters with unprecedented opportunities in the EU market.
"This agreement is also expected to add 0.2% to GDP, which is important as Indonesia needs consistent growth of 6.5% to 7% over the next 15 to 20 years to escape the middle-income trap," he told AWANI International.
On Tuesday, Indonesia and the EU finalised their negotiations on a comprehensive economic partnership agreement after nine years of talks, aimed at boosting trade and investment.
The agreement will remove import duties on 98.5% of EU goods exported to Indonesia and simplify procedures for entry for EU products including cars and food products such as milk powder, cheeses, meats, chocolates and bakery items.
Meanwhile, Indonesian goods will enjoy zero tariffs in 90% of the EU market upon implementation, the Indonesian economic ministry said, which should boost shipments for palm oil, coffee, textile and clothing and other products.
Fithra also said that the EU’s recognition of palm oil as a renewable product was significant not only for Indonesia but also for Malaysia, as both countries dominate the global palm oil market.
"This is actually a big news for us, Indonesia, as well as other ASEAN member countries, especially Malaysia, because altogether we are actually dominating the CPO market.
"So, in that sense, this can also create a precedent for Malaysia to enter the EU market, especially the CPO," he said.
Malaysia's palm oil exports to the EU face regulatory challenges under the EU's upcoming deforestation law.
Its palm oil exports to the EU have also fallen by more than 20% over the past seven years.
In 2022, Malaysia’s palm o exports to the EU dropped to 1.47 million tonnes, down from 2.43 million tonnes in 2015.
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