Indonesia-EAEU FTA opens US$3 trillion market for local products

The ratification of the Indonesia-Eurasian Economic Union Free Trade Agreement (IEAEU-FTA) has officially opened access to a US$3 trillion market for Indonesian products, according to Trade Minister Budi Santoso. Speaking before Commission VI of the House of Representatives (DPR RI) in Jakarta, Budi highlighted that the agreement will significantly boost major national exports, including palm oil, coffee, textiles, and footwear. The IEAEU-FTA was signed in December 2025 in St. Petersburg, Russia, and marks a pivotal step in expanding Indonesia’s economic reach into the Eurasian region. The agreement involves five EAEU member states, Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan, which have agreed to eliminate or reduce tariffs on 11,882 tariff lines, accounting for 90.5 percent of their total tariff lines. This reduction is expected to create substantial opportunities for Indonesian exporters, especially in sectors such as palm oil and its derivatives, natural rubber, coffee, fishery products, textiles, footwear, furniture, electrical machinery, wood, and wood products. The market access extends to a population of 183.7 million people, with a combined GDP of US$3.04 trillion. Budi emphasized that the IEAEU-FTA serves as a strategic gateway for Indonesian goods, particularly from micro, small, and medium enterprises (MSMEs), to enter Central Asia, West Asia, and Eastern Europe. In return, Indonesia plans to reduce tariffs on 10,257 domestic tariff lines, or 89.9 percent of its national tariff lines, focusing mainly on industrial inputs and raw materials such as wheat, fertilizers, pharmaceuticals, basic chemicals, dairy, paper, and pulp. These measures aim to enhance competitiveness and support domestic industries. The Trade Ministry estimates that once fully implemented, the IEAEU-FTA could increase Indonesian exports to the Eurasian region to between US$2.87 billion and US$2.89 billion annually. Additionally, the agreement is projected to raise national welfare by approximately US$69.98 million and contribute to a modest increase in real GDP by 0.0059 percent. These figures underscore the potential economic benefits for both Indonesia and the EAEU members. The agreement aligns with broader efforts to strengthen bilateral ties and promote regional cooperation. Indonesia has already unveiled the Strategic Business Investment Network (SBIN) to attract Eurasian investments, and there are ongoing discussions about major infrastructure projects that could further deepen economic integration. The IEAEU-FTA is viewed as a key component of Indonesia’s strategy to diversify its trade partnerships and tap into new markets. Industry experts and business leaders have expressed optimism about the implications of the agreement. They believe that the reduced tariffs and expanded market access will provide a competitive edge to Indonesian producers, particularly in the manufacturing and agricultural sectors. However, some analysts caution that success will depend on effective implementation and the ability of local businesses to adapt to new market conditions. As the IEAEU-FTA moves closer to full implementation, stakeholders are preparing for the challenges and opportunities ahead. The agreement represents a significant milestone in Indonesia’s foreign trade policy and underscores the country’s growing role in global economic diplomacy. With the Eurasian market now more accessible, Indonesian businesses are poised to capitalize on this newfound opportunity.