Jakarta. Indonesia's upcoming trade pact with the European Union could do more than boost exports of existing products, with EU Ambassador Denis Chaibi saying the agreement could help attract investment into higher-value green industries such as recycling and solar manufacturing.

The Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA), in which Chaibi said could take effect in early 2027, should serve as a platform for Indonesia to move further up the value chain while responding to growing sustainability requirements in global supply chains.

“We can go to the recycling of fibres, because the clothes that will be sold in the EU in a few years will have to have a minimum content of recycled materials,” Chaibi said in an interview with Jakarta Globe on Monday.

“With 285 million consumers here, you have the critical mass for recycling and mixing,” he added.

Chaibi also pointed to solar panel manufacturing as another potential area for Indonesia to build higher-value industries.

“We hope that Indonesia can start manufacturing solar panels on a greater scale, so that first of all it can feed its own industry,” he said.

The shift toward renewable energy could also strengthen Indonesia's export competitiveness, according to Chaibi, as sustainability increasingly becomes a consideration across global supply chains.

“If the industry is fed with solar panels rather than coal, it will be much easier for exports to grow to Europe,” he said.

The EU and Indonesia are already seeking to deepen cooperation on the energy transition. Chaibi said the Just Energy Transition Partnership (JETP) had struggled to deploy some of the funds committed to Indonesia because conditions for green investment had not been met.

However, he said President Prabowo Subianto's vision to develop 100 gigawatts of solar power had created new momentum. Prabowo has set a target to begin developing 30 GW of solar capacity this year as part of a broader plan to build 100 GW of solar power plants within four years.

Indonesia currently has only about 1.5 GW of installed solar capacity, meaning the government would need to expand it more than 60-fold to reach the target as part of its push to strengthen energy security and accelerate the transition toward cleaner energy.

“Now, with the President's vision of 100 gigawatts of solar, we feel that we have fertile soil to move forward with the deployment of solar energy through the JETP,” Chaibi said.

The two sides are also preparing to restart a working group on the environment after an interruption of more than seven years, with renewable energy expected to be among the issues discussed.

While green manufacturing represents a longer-term opportunity, Chaibi said several of Indonesia's existing industries could see more immediate gains from greater access to the European market under IEU-CEPA.

“For Indonesia, the sectors that are really naturally destined for greater exports are those where you have a mix of competitive advantages, such as cheap labor, good resources, critical mass,” Chaibi said.

He pointed to textiles, footwear and furniture as industries where Indonesian exports could increase relatively quickly.

“Immediately, what we can see is that textile, footwear, furniture, because there is a sustainable timber scheme in place, all that can increase the volume quite quickly,” Chaibi said.

For Chaibi, however, the long-term value of IEU-CEPA lies beyond increasing the volume of Indonesia's existing exports.

“We are really looking at CEPA as a catalyst for more investment in a higher value chain with a good sustainability approach,” he said.

Add as a preferred source on Google +