Indonesia In Free Trade Agreements

Indonesia has signed and implemented a number of free trade agreements with countries and regions around the world as an independent market as well as a member state of the Association of South East Asian Nations (ASEAN). Among the agreements are:

1. Indonesia-Japan Economic Partnership Agreement This agreement was signed on 20th August 2007 and came into effect on 1st July 2008. At the present state of its implementation, more than 92% of goods have been subjected to tariff cuts. As one of Indonesia’s foremost trading partners, Japan and Indonesia recorded a total trade value of $31.2 billion USD in 2015.

2. ASEAN-People’s Republic of China Comprehensive Economic Cooperation Agreement Indonesia is a member of the free trade arrangement between ten ASEAN member states and China. The initial framework was signed on 4th November 2002. Under this agreement which came into full effect on 1st January 2010, China and the six original members of ASEAN ‒ namely Indonesia, Malaysia, Brunei Darussalam, the Philippines, Singapore and Thailand ‒ sought to reduce import tariffs on more than 90% of traded goods.

3. ASEAN Free Trade Area Signed on 28th January 1992, more than 99% of goods categories in this trade bloc are currently already tariff free. For Indonesia’s intra-ASEAN trade activities in 2015, Singapore and Malaysia top the list in terms of total value with $30.6 billion USD and $16.1 billion USD respectively.

4. ASEAN-Australia and New Zealand Free Trade Agreement Indonesia as a member of ASEAN also has a free trade agreement with Australia and New Zealand. The trade bloc came into effect on 1st January 2010 having main programmes for progressively reducing import tariffs to zero within specified timelines, removing barriers to trade in services, and simplifying customs procedures. Australia and New Zealand are significant trading partners to Indonesia, recording a total trade value of $8.4 billion USD and $1 billion USD, respectively, in 2015.

5. ASEAN-India Comprehensive Economic Cooperation Agreement This agreement was signed by ASEAN member states and India on 13th August 2009 and came into effect on 1st January 2010. India and Indonesia registered a total trade value of $14.4 billion USD in 2015.

6. ASEAN-Japan Comprehensive Economic Partnership Indonesia is also involved in another trade agreement with Japan through the ASEAN-Japan Comprehensive Economic Partnership which was signed and came into effect in 2008. In addition to tariff elimination, the agreement also allows cumulative rules of origin and provides a mechanism for settling disputes.

7. ASEAN-Korea Comprehensive Economic Cooperation Agreement Similar to the ASEAN-Japan Comprehensive Cooperation Agreement, the establishment of a free trade area between ASEAN member states and South Korea which came into effect in 2007 also aims to vitalise trade through the elimination of tariff and non-tariff barriers. Indonesia has a sizeable annual trade volume with South Korea; $16 billion USD in 2015.

8. Pakistan-Indonesia Preferential Trade Agreement Indonesia’s trade agreement with Pakistan was signed in 2012 and came into effect in 2013. Under the preferential trade agreement, Indonesia and Pakistan grant each other preferential tariff rates for more than 200 products. The annual trade value between Indonesia and Pakistan amounted to $2.1 billion USD in 2015.

9. Preferential Tariff Arrangement ‒ Group of Eight Developing Countries This agreement, which came into effect in 2011, involves countries that are members of the D-8 Organisation for Economic Cooperation, namely Indonesia, Malaysia, Bangladesh, Pakistan, Iran, Egypt, Turkey and Nigeria.

In addition to trade agreements that are already in effect, Indonesia has also signed a cooperation that is yet to be implemented, namely the Trade Preferential System of the Organisation of the Islamic Conference which has the participation of 35 countries.

India-Indonesia Comprehensive Economic Cooperation Arrangement (India-Indonesia CECA).

Indonesia-Australia Comprehensive Economic Partnership Agreement (Indonesia-Australia CEPA).

Indonesia-Chile Free Trade Agreement (Indonesia-Chile FTA).

Indonesia-European Free Trade Association Free Trade Agreement (Indonesia-EFTA FTA); with Switzerland, Lichtenstein, Norway and Iceland.

Regional Comprehensive Economic Partnership (RCEP); with Australia, Cambodia, India, Japan, Laos, Myanmar, Philippines, Thailand, Brunei Darussalam, China, South Korea, Malaysia New Zealand, Singapore and Vietnam.

Korea-Indonesia Free Trade Agreement; with South Korea.

For more information about Indonesia and international cooperation or finding a local partner in Indonesia, contact GBG Indonesia