Indonesia aims to seal EU free trade agreement in 2026, official says

JAKARTA (Reuters) -Indonesia aims to seal a free trade agreement with the European Union in 2026, Indonesian trade ministry official Djatmiko Bris Witjaksono said on Friday, after the two sides completed their latest round of negotiations.

Indonesia and the EU have been in discussions on the agreement for about nine years, and are aiming to sign and ratify it by next year, Djatmiko told reporters, adding it could come into effect by late 2026 or early 2027.

The EU has committed to provide market access to priority Indonesian products such as palm oil, textiles, footwear and seafood, Djatmiko said.

Indonesia and the EU have previously clashed on tougher EU trade rules for products with potential links to deforestation, which could have an impact on shipments of Indonesian palm oil.

In turn, Indonesia has also pledged to increase market access for agricultural and manufactured goods from the EU, Djatmiko said.

EU ambassador to Indonesia Denis Chaibi said negotiations are ongoing and "substance will determine timing."

The main benefits of the free trade deal for Indonesia include increased foreign direct investment from the EU in sectors like renewables, semiconductors, and mineral derivatives, a presentation slide presented by Djatmiko showed.

The deal could increase exports by 5.4%, according to an internal benefit analysis, but senior economic minister Airlangga Hartarto said this was a conservative estimate and he targets a 50% increase in three years.

In 2024, the EU invested $1.1 billion in Indonesia, a drop of more than 50% from the previous year.

Indonesia's exports to the EU last year were worth $17.3 billion, while imports from the EU were worth $12.8 billion, Indonesian government data showed.

(Reporting by Gayatri Suroyo; Writing by Stanley Widianto; Editing by John Mair, David Stanway and Susan Fenton)