EU–Indonesia CEPA: Unlocking Market Access and Growth Strategies for Investors

The European Union and Indonesia signed the Comprehensive Economic Partnership Agreement (CEPA) in September 2025 after nearly a decade of negotiations. The agreement grants tariff-free access for most bilateral goods trade and establishes frameworks for services, investment, intellectual property, and digital trade.

For foreign investors, CEPA represents a structural shift that will influence both new market entry and the way existing operations are managed in Southeast Asia’s largest economy.

Key elements of the agreement

The most immediate feature of CEPA is the removal of tariffs. In 2023, trade in goods between the EU and Indonesia reached approximately €27 billion, with Indonesia exporting €17 billion to the EU and importing €10 billion in return. Tariff elimination across nearly all trade lines is expected to save European exporters more than €2 billion annually and improve the competitiveness of Indonesian goods entering Europe, particularly in textiles, footwear, coffee, cocoa, and fishery products.

Beyond goods, CEPA liberalizes selected service sectors, including finance, logistics, and telecommunications, giving European firms clearer licensing pathways. Provisions on digital trade safeguard cross-border data flows and e-commerce, creating predictability for fintech and cloud service providers.

Intellectual property rules are reinforced to cover patents, trademarks, and geographical indications, providing stronger protection for industries reliant on branding and innovation.

The agreement also codifies investment protections through guarantees of fair and equitable treatment, transparency in licensing, and investor–state dispute settlement mechanisms.

Market entry prospects

CEPA enhances Indonesia’s attractiveness as a destination for new investment by lowering tariffs, modernizing customs processes, and embedding clear rules for services and digital trade. For companies assessing entry, the agreement alters calculations on cost, timing, and compliance.

Tariff elimination and timing

European officials confirm that tariffs will be lifted on roughly 98 percent of EU products entering Indonesia. Indonesian authorities estimate that around 80 percent of Indonesian exports will enter the EU tariff-free either immediately or under phased schedules for sensitive goods. Since ratification is not expected until late 2026 or 2027, investors have a defined period to prepare licensing, supply relationships, and partnerships before competition intensifies.

Rules of origin and customs procedures

Preferential access is conditional on meeting CEPA’s origin requirements, which cover supplier declarations, certification, and customs facilitation. Manufacturers intending to use Indonesia as a base for EU exports must align sourcing and documentation well in advance so that products qualify on day one.

Sector-specific opportunities

The gains from CEPA are distributed unevenly across industries. For European exporters, liberalization lowers costs for capital goods, machinery, and chemicals used in Indonesian plants.

For Indonesian exporters, apparel, footwear, fisheries, and agro-industrial goods are set to benefit from EU tariff elimination, though some categories remain subject to staging.

A German electric vehicle battery producer assessing Asian capacity could now include Indonesia as a credible option, given CEPA’s preferential tariff framework for re-exports to Europe.

Services and digital trade

The agreement also opens opportunities in finance, logistics, telecommunications, and IT. Clearer rules on data flows and e-commerce provide greater certainty for service providers designing operating models that connect Indonesia with European clients. A Spanish fintech firm, for instance, could establish a PT PMA in Jakarta to capture local demand while integrating digital platforms with EU operations.

Sustainability and compliance as entry costs

Sustainability and labor standards embedded in CEPA, combined with the EU’s deforestation regulations, make compliance a condition of market access. Indonesian tuna exporters will need internationally recognized sustainability certification to retain EU buyers, palm oil producers must implement traceability systems, and nickel miners tied to Europe’s EV supply chain will face higher ESG requirements.

Firms that build compliance systems early will secure contracts and reputational advantages.

Expansion strategies for existing investors

CEPA also compels established investors to reposition Indonesian subsidiaries, so they serve both local demand and European markets. The agreement allows existing operations to evolve from being primarily domestic in focus to becoming integral parts of global strategies.

Manufacturing and industrial upgrading

Export-oriented manufacturers in electronics and machinery can reconfigure Indonesian operations for regional and EU markets. A French pharmaceutical company with production facilities in Jakarta could upgrade lines to EU standards, transforming its subsidiary into a hub benefiting from tariff preferences and stronger intellectual property protections.

Consumer and retail expansion

Consumer brands gain security through CEPA’s trademark and geographical indication protections. An Italian fashion house already present in Indonesia could expand its retail network with confidence that its designs will be safeguarded from counterfeiting, strengthening long-term brand investment.

Infrastructure and logistics integration

Infrastructure and logistics service providers stand to benefit from CEPA’s liberalization of services. A Danish shipping and logistics company operating in Indonesia could integrate with local terminals more directly into its global network, expanding throughput and reducing supply chain friction.

ESG and compliance imperatives

The sustainability and labor provisions of CEPA carry binding obligations. Palm oil exporters, nickel producers, and fisheries operators must prove compliance with traceability and environmental standards to retain EU market access. Investors who act ahead of enforcement by building certification and compliance frameworks will protect contracts and secure long-term market confidence.

Investor roadmap for Indonesia after CEPA

This framework shows how CEPA changes the business case within Indonesia itself, contrasting the pre-CEPA and post-CEPA environment without shifting focus to regional competitors.

Investor Profile	Before CEPA	After CEPA
Export-oriented manufacturer	Tariffs up to 15% on EU shipments from Indonesia	Zero tariffs on 97% of goods, lowering landed costs
Agri-food exporter	Faced tariffs plus barriers on sustainability rules	Tariff-free entry if certified for ESG and traceability
Digital and fintech firm	Limited clarity on cross-border data and licensing	Predictability on digital trade and services commitments
Existing EU subsidiary	Domestic focus with limited EU export role	Can expand, re-export to EU, and rely on IP protection

Investor takeaway

The EU-Indonesia CEPA reshapes the country’s role in global supply chains by lowering tariffs, liberalizing services, and embedding sustainability standards that mirror European requirements. For foreign investors, the agreement creates real opportunities but does not eliminate uncertainty. Implementation may be uneven in areas such as licensing and customs, and disputes over sustainability rules could still create friction in sensitive sectors like palm oil and nickel.

Competitive dynamics also factor into the calculation. Singapore and Vietnam already operate under EU trade agreements, giving them a time advantage in some export industries.

Yet Indonesia’s scale, middle-class growth, and resource base provide a structural advantage that smaller ASEAN economies cannot match.

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