Indonesia Pushes For Early Completion Of IEU-CEPA To Boost Textile Industry
The Indonesian government has called for the swift completion of the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) to protect and strengthen its textile industry amid global geopolitical uncertainty.
Coordinating Minister for Economic Affairs Airlangga Hartarto highlighted that the European Union (EU) is Indonesia’s largest market for textile products, accounting for around 30% of the country’s global textile exports. The United States follows with approximately 15% of the total demand.
“The EU, with its large market, contributes around 30% of our global demand, followed by the US with about 15%,” Hartarto said at the Presidential Palace in Jakarta on Wednesday.
He pointed to Vietnam’s success in increasing its textile exports by 50% after securing a similar trade agreement with the EU, underscoring the importance of finalizing the IEU-CEPA to maintain Indonesia’s competitive edge.
To enhance the textile industry’s competitiveness, particularly for small and medium enterprises (SMEs), the government is implementing strategic domestic measures. These include a machinery revitalization program, backed by an investment subsidy of Rp20 trillion (approximately US$1.2 billion) to modernize production equipment and improve efficiency.
“If the machines are not revitalized, our competitiveness—both in terms of energy use and production—will weaken,” Hartarto stated.
To further support labor-intensive sectors such as textiles, footwear, food and beverages, furniture, and leather, the government has introduced an investment credit scheme with an eight-year repayment period and a 5% interest subsidy.
The Indonesian government aims to finalize the IEU-CEPA negotiations in the first half of this year. Over the past nine years, 19 rounds of negotiations have been held.
The agreement is structured around three main pillars: improving market access for trade in goods and services, facilitating investment and public procurement, and aligning trade regulations while fostering cooperation and capacity building.
The government expects that the completion of the IEU-CEPA will provide a significant boost to Indonesia’s textile sector and create more employment opportunities.
