KUMPARAN – Indonesia and the European Union (EU) have officially signed the Indonesia–European Union Comprehensive Economic Partnership Agreement (IEU–CEPA). The agreement is a free trade deal that eliminates more than 98 percent of tariffs on goods between the two parties. This deal presents significant opportunities for Indonesia’s automotive industry to expand exports and attract more investment.
For the EU, the IEU–CEPA enables easier export of vehicles and automotive components to Indonesia, which is the largest automotive market in Southeast Asia. Meanwhile, for Indonesia, the agreement is expected to boost exports of electric vehicle components, cables, and parts to European countries.
Maroš Šefčovič (the European Commissioner for Trade and Economic Security, an institution under the European Commission responsible for international trade and economic security issues) said the agreement represents a strategic step for both sides. Major sectors on both sides will benefit—from palm oil, textiles, and footwear in Indonesia to agri-food, automotive, and chemical sectors in the EU. “Importantly, the agreement is designed with full respect for each side’s priorities and sensitivities, resulting in a balanced outcome,” he said during his speech in Bali, several weeks ago.
The import tariff on Indonesian-made cars, which was previously at 50 percent, will be gradually phased out over five years. This change will create new export opportunities for European car manufacturers while encouraging more investment in Indonesia.
Beyond tariffs, the agreement also covers cooperation on technical standards, safety, and environmental sustainability. These provisions will help Indonesian automotive products comply with the EU’s strict regulations while driving improvements in local production quality.
The automotive trade remains one of the key pillars in the economic relationship between Indonesia and the European Union. The elimination of tariffs on goods trade through the IEU–CEPA is expected to positively impact export and investment activities across both regions. (*) (*)
