Indonesia is developing a new system to simplify access for local businesses to benefit from preferential tariffs under its trade agreements. Trade Minister Budi Santoso said that despite Jakarta securing dozens of tariff-cutting deals, utilisation remains at just 60–70%. The new mechanism will issue automatic preferential certificates of origin (COOs), ensuring exporters gain zero or reduced tariffs without additional administrative hurdles. Budi explained that this system will particularly help industries like steel when exporting to markets such as Canada, where the CEPA offers substantial tariff exemptions. The government has been working on this initiative for the past three weeks, though the minister acknowledged that full effectiveness will take time.
The reform coincides with Indonesia’s recent trade breakthroughs, including the substantive conclusion of a free trade agreement with the EU and a CEPA with Canada. Under the EU deal, more than 98% of tariff lines will be eliminated, with trade between both sides already exceeding USD 30 billion in 2024 and Jakarta recording a USD 4.5 billion surplus. Canada, meanwhile, agreed to remove 90.5% of import taxes on Indonesian products, marking its first bilateral trade pact with an ASEAN member. Bilateral trade between Indonesia and Canada reached USD 2.7 billion from January to July 2025, though Indonesia posted a deficit of USD 689.4 million. Both agreements still require parliamentary approval before implementation, but the government hopes the automatic COO system will boost utilisation and maximise benefits once the deals take effect.
