JAKARTA: Indonesia needs to ensure regulatory stability and reduce trade barriers to attract more European investment as it prepares to implement its trade deal with the European Union (EU), says Denis Chaibi, the outgoing EU Ambassador to Indonesia and Brunei Darussalam.
“Most of the European businesses will be happy with rules because that’s the environment in Europe, lots of rules, but to have stable rules, rules that don’t change or policies that don’t change often,” Chaibi told The Jakarta Post.
“I think regulatory stability is the first element,” he added.
Chaibi said concerns over Indonesia’s regulatory environment had deterred some European investors, while reducing non-tariff barriers would help companies import raw materials and export finished products as part of global value chains.
Meanwhile, wider recognition of European halal certification processes could facilitate trade and investment.
He added the country also needed to move quickly to take advantage of tariff-free access to the bloc under the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-Cepa), as competing South-East Asian economies were also securing preferential access to the EU.
“The Cepa is a very good platform of engagement that brings Indonesia at the level of competitiveness in the region of the countries that already have a free trade agreement (FTA) or will have one soon,” he said.
For example, Singapore and Vietnam already had FTAs with the EU, while Cambodia and Laos were benefitting from the bloc’s tariff facility, dubbed the Generalised Scheme of Preferences Plus (GSP+). Thailand, Malaysia and the Philippines were negotiating agreements with the EU, with the latter expected to conclude talks in the coming months.
“So, it is essential for Indonesia to be able to be in the same competitive field with a zero percent tariff,” Chaibi said.
His remarks come as Jakarta and Brussels prepare to sign the IEU-Cepa in mid-October, a month later than the bloc’s initial target of mid-September.
The agreement is expected to take effect in early 2027, following ratification by both the European Parliament and the Indonesian House of Representatives.
Chaibi did not anticipate major difficulties with ratification, noting that the European Parliament could approve or reject the deal without amending its terms.
Last Friday, Coordinating Economy Minister Airlangga Hartarto said the Indonesian side was finalising the English version of the Cepa.
Airlangga also said Trade Minister Budi Santoso had consulted the House on the ratification mechanism, and that the government was considering using a presidential regulation to speed up implementation.
Chaibi urged Indonesian companies to adapt their products to EU standards to enjoy wider market access, noting the country’s competitiveness in palm oil, footwear, textiles and furniture as well as its strong halal industry.
Ade Jona Prasetyo, who chairs the Indonesian Young Entrepreneurs Association, said the agreement’s success should be measured by not only export volumes but also the involvement of new exporters, stronger small and medium enterprises (SMEs) and investment in domestic industries.
“Once market access is more open, our goal is not only to sell more goods to Europe but also to have more Indonesian companies move up, meet global standards and build international business networks,” Ade said in Jakarta last Saturday, as quoted by news agency Antara.
To capitalise on the Cepa, businesses will need better access to certification, competitive export financing, international buyers through trade missions and business matching, and greater production capacity.
EU requirements on quality, traceability, product safety and sustainability could challenge smaller businesses, making it important for the benefits to reach SMEs and regional businesses as direct exporters or suppliers.
The Indonesian Employers Association has called for a joint task force to support IEU-Cepa implementation at the level of EU and individual member states, Chaibi said. — The Jakarta Post/ANN
