2025 List of Indonesia’s International Free Trade Agreements

A Complete List of Indonesia’s Active International Free Trade Agreements

  • InCorp Editorial Team
  • 15 January 2025
  • 5 minutes reading time

As globalization continues to shape the economic landscape, free trade agreements (FTAs) play a vital role in connecting countries, enhancing competitiveness, and fostering economic growth. For Indonesia, these agreements are more than just trade deals. They are pathways to greater integration into the global economy.

Indonesia has used FTAs to reduce trade barriers, improve market access, and attract foreign investment. These agreements help businesses expand internationally and support domestic industries through innovation and competition.

Understanding a Free Trade Agreement in Indonesia

A free trade agreement is a formal arrangement between Indonesia and its trading partners to enhance economic collaboration by reducing trade barriers in three main areas: trade in goods, services, and investments.

The FTA aims to boost Indonesia’s global trade presence while creating opportunities for economic growth. Below is an overview of how FTA functions specifically in the Indonesian context:

Trade in Goods

Free trade agreements remove or lower tariffs and other trade restrictions, making Indonesian products more affordable in partner countries. Goods must meet specific Rules of Origin (ROO), which verify they are genuinely Indonesian to qualify for the benefits.

Trade in Services

These agreements allow Indonesian service providers, such as in finance or logistics, to operate more easily in international markets while attracting foreign expertise locally.

Investments

FTAs encourage foreign investment by protecting investor rights and creating a stable business environment, which helps boost Indonesia’s economic growth and infrastructure development.

Why are Free Trade Agreements Important for Indonesia and Its Partners?

Free trade agreements create a win-win scenario for Indonesia and its trading partners by fostering mutual economic growth and enhancing trade relations. The key benefits include:

Access to Affordable Goods

Consumers in all participating countries, including Indonesia, benefit from accessing cost-efficient, high-quality goods sourced globally. This enhances purchasing power and improves the standard of living.

Mutual Advantage in Production

Countries involved in FTAs maximize productivity by capitalizing on their respective strengths. Indonesia, for instance, exports goods like palm oil, textiles, and seafood while importing machinery or technology that is more efficiently produced abroad.

Boosting Economic Opportunities

FTAs promote trade flows and investments on both sides, creating jobs, fostering innovation, and driving overall economic growth. This mutual exchange strengthens industries and opens avenues for businesses to expand.

Shared Global Efficiency

Through specialization and the division of labor, partner countries collectively produce more goods at lower costs. This increases product availability globally while supporting sustainable development.

Comprehensive List of Indonesia’s Free Trade Agreements

Indonesia actively engages in free trade agreements as an independent nation and a key member of regional organizations. Below is an overview of the major FTAs shaping Indonesia’s trade landscape in 2025:

Regional Comprehensive Economic Partnership (RCEP)

The largest FTA globally, covering 15 nations and 30% of global GDP. RCEP eliminates 92% of tariffs, simplifies trade regulations, and is projected to double Indonesia’s trade surplus by 2040.

ASEAN-China Free Trade Agreement (ACFTA)

This partnership facilitates over $731 billion in annual trade. ACFTA reduces tariffs on more than 7,000 products and strengthens China’s role as ASEAN’s largest investor.

Indonesia-Korea Comprehensive Economic Partnership Agreement (IK-CEPA)

This agreement eliminates 95% of Indonesia’s tariffs on South Korean imports and 92% of South Korea’s tariffs on Indonesian exports, enhancing trade in agriculture, fisheries, and industrial goods.

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

Beyond tariff reductions, IA-CEPA fosters cross-border work opportunities in mining, healthcare, and finance sectors while boosting agricultural trade.

Indonesia-European Free Trade Association Comprehensive Economic Partnership Agreement (IECEPA)

Strengthens trade with EFTA countries (Iceland, Liechtenstein, Norway, and Switzerland) by eliminating tariffs on most goods and promoting market access for Indonesian exporters.

Additional Free Trade Agreements

Besides the significant FTAs mentioned above, Indonesia is involved in several other agreements, each contributing to its growing global trade network. These include:

2025 List of Indonesia’s International Free Trade Agreements

How to Take Advantage of Indonesia’s Free Trade Agreements

Leveraging FTAs can enhance the competitiveness of Indonesian goods in international markets. To effectively utilize these agreements, consider the following steps:

  • Identify Relevant FTAs: Research which FTAs apply to your target markets and understand the benefits, such as reduced tariffs.
  • Check Product Eligibility: Use Harmonized System (HS) codes to classify your goods and verify their eligibility under the FTA.
  • Understand Rules of Origin (ROO): Ensure your products meet the origin criteria for preferential tariffs and prepare a Certificate of Origin if needed.
  • Calculate Tariff Savings: Use tariff finder tools to compare current rates and potential savings under applicable FTAs.
  • Prepare Documentation: Gather all necessary paperwork to ensure smooth trade processes, including proof of compliance with FTA provisions.
  • Seek Expert Advice: Consult trade authorities or experts like InCorp Indonesia for guidance on utilizing FTAs effectively and avoiding common pitfalls.

By streamlining these steps, businesses can unlock FTAs’ full potential, expand their market reach, and reduce trade costs.

Guide to Doing Business in Jakarta

Mailchimp Free eBook Indonesia Business Insight

Take Advantage of Indonesia’s Free Trade Agreements with InCorp

Indonesia’s free trade agreements are more than just trade policies; they are powerful tools for economic growth, offering businesses and investors unprecedented access to global markets.

However, navigating FTAs requires strategic planning, compliance with trade regulations, and effective market entry strategies. InCorp can assist you with a wide range of services to streamline your operations:

  • Company Registration: Simplify setting up your business and leverage Indonesia’s advantageous trade environment.
  • Investor KITAS: Secure the necessary permits to reside and invest in Indonesia, ensuring a seamless transition into the country’s dynamic economy.

Fill out the form below to navigate regulatory requirements and leverage Indonesia’s trade and investment opportunities.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

Lead Form

Frequent Asked Questions

As an investor, you are required to have a minimum investment of IDR 1 billion in invested shares to be eligible for an investor KITAS.

An Index 313 Investor KITAS will allow its holder to stay in Indonesia for a year, while an Index 314 Investor KITAS allows for a 2 year stay.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.