Indonesia and Canada Formalize Comprehensive Economic Partnership Agreement
Indonesia and Canada have officially signed the Indonesia-Canada Comprehensive Economic Partnership Agreement (ICA-CEPA), a move designed to boost global economic ties and reduce trade barriers. The agreement aims to simplify investment procedures and improve market access for goods from both countries following increased tariffs implemented by the United States.
Key Highlights of the Agreement
The signing ceremony took place in Ottawa on Wednesday, September 24, 2025, during a visit by Indonesian President Prabowo Subianto following his participation in the United Nations General Assembly in New York. He and Canadian Prime Minister Mark Carney witnessed the signing. This marks Indonesia's first comprehensive economic partnership agreement with a trade partner in North America.
- Tariff Reductions: Canada will eliminate tariffs on over 90% of Indonesian products.
- Market Access: Indonesia will provide limited market access to Canada for 85.8% of its products, including frozen beef and wheat.
Economic Impact and Future Projections
While Indonesia is not among Canada's top ten trading partners, it is Canada's largest export market in Southeast Asia and a gateway to the rapidly growing region. Bilateral trade between the two countries amounted to approximately $4 billion (approximately S$5.2 billion) last year. Projections estimate that Indonesian exports to Canada could reach $11.8 billion by 2030. This growth is expected to contribute an additional 0.12% to Indonesia's GDP and a 0.38% increase in investment.
Diversification and Strategic Alliances
In a related move, Indonesia also finalized a comprehensive economic partnership agreement with the European Union (EU) this week, marking the culmination of nearly a decade of negotiations. These agreements underscore Indonesia’s strategic efforts to diversify its economic relationships and reduce dependence on the U.S. market.
Defense and Security Cooperation
Beyond trade, Indonesia and Canada signed a memorandum of understanding on defense cooperation. This agreement aims to enhance existing defense dialogues and joint military training exercises, adding new dimensions to their collaboration. The two G20 nations also committed to supporting the development of their respective defense industries.
"We will deepen our cooperation in maritime security, cyber defense, peacekeeping, and military education. This is crucial to Canada's Indo-Pacific strategy," said Prime Minister Carney at a joint press conference.
Commitment to Regional and Global Stability
Both leaders emphasized their commitment to maintaining regional and global peace and stability. President Prabowo highlighted the importance of Indonesia's relationship with Canada and expressed a desire to expand cooperation in defense, including training opportunities for young Indonesians.
"We value our relationship with Canada and hope to send more young people here for training and to work together in the defense sector," President Prabowo added.
Enhanced Trade and Investment Cooperation
To further strengthen economic ties, the Indonesian Chamber of Commerce and Industry (KADIN) and the Canadian Council for Business (BCC) signed a memorandum of understanding focused on trade and investment cooperation. This agreement aims to foster closer collaboration between the business communities of both nations, aligning with the objectives of the ICA-CEPA.
Key Provisions of the ICA-CEPA
| Area of Cooperation | Details |
|---|---|
| Tariff Liberalization (Canada) | Canada commits to eliminating tariffs on 90.5% of Indonesian products. |
| Tariff Liberalization (Indonesia) | Indonesia offers liberalization on 85.8% of tariff lines. |
| Regulatory Transparency | Ensuring transparent regulatory frameworks. |
| Investment Protection | Safeguarding investments. |
| SME Empowerment | Strengthening small and medium-sized enterprises. |
| Digital Market | Promoting collaboration in the digital economy. |
| Intellectual Property | Protecting intellectual property rights. |
| Sustainable Trade | Fostering environmentally and socially responsible trade. |
President Prabowo's Arrival and Bilateral Meetings
President Prabowo Subianto arrived at Ottawa's Macdonald–Cartier International Airport on Wednesday, September 24, 2025, after completing his working visit to the United States. He was greeted by Canadian International Trade Minister Maninder Sidhu and Canadian Ambassador to Indonesia Jessie Dutton. During his official visit, President Prabowo held bilateral meetings with Canadian Governor General Mary Simon and Prime Minister Mark Carney to strengthen strategic cooperation across various sectors.
The signing of the ICA-CEPA represents a significant milestone, being Indonesia’s first free trade agreement with a North American trade partner. It is expected to create new opportunities for businesses and investors in both countries.