Jakarta. A Polish diplomat said Friday that investors from the European Union or EU nations preferred to wait for the bloc’s free trade agreement with Indonesia before they actually invest in a major project.

Indonesia has been trying to secure a comprehensive economic partnership agreement (CEPA) with the EU since July 2016. The deal is expected to not only grant goods from both sides easier market access, but investors will feel more at ease thanks to the better investment climate that the deal can potentially bring.

President Prabowo Subianto wants to attract investments to propel an annual economic growth of 8 percent within his presidency. The retired army general also has some ambitious programs in place, including a plan to build 3 million affordable homes for Indonesia’s low-income families annually. This housing program is open to foreign investors, and has recently gotten a Qatari investment.  Like his predecessor Joko “Jokowi” Widodo, Prabowo wants to promote the domestic processing of Indonesia’s natural resources.

“I don’t think any European country would make a huge investment [in Indonesia] without the CEPA,” Maciej Tumulec, the chargé d'affaires ad interim at the Polish Embassy to Indonesia, told reporters in Jakarta.

Tumulec said: “The CEPA is very important for both sides. … European and Polish investors want to invest in Indonesia. But they want to feel secure in their investments. It will also help with our trade.”  

According to the Polish envoy, the CEPA is also “very necessary” for Indonesia to unlock the 8-percent growth.

The Trade Ministry wants to conclude the  Indonesia-EU CEPA negotiations by the first half of 2025. Poland, which currently chairs the EU Council, is keeping its fingers crossed that they could finally reach an agreement this year. Tumulec is even hoping that both sides can close the deal before the Polish presidency of the EU council ends in late June. Tumulec admitted that there were challenges to the negotiations, particularly on public procurement -- something that senior minister Airlangga Hartarto had mentioned.

“For instance, on procurement. We [the EU] have our own interests. Indonesia is a huge, extremely important country, and one of the Global South leaders. [Indonesia] has its right to protect its own market. So it’s very hard, but the discussions are going very well,” Tumulec said.

In 2023, Airlangga -- who was still under Jokowi -- revealed that public procurement was among the key issues that had slowed down the trade deal negotiations. Airlangga said at the time the EU had requested Indonesia to make its government procurement open to foreign-made goods. Indonesia had been trying to encourage purchases of domestic goods in its public procurement. Airlangga said that Jakarta had proposed to the European grouping that it would come up with the so-called “positive list” that lay out which goods are open to international businesses.

The 19th round of the Indonesia-EU CEPA negotiations took place last July. A report issued post-meeting wrote that the discussions on export and import restrictions as well as investment conditions “remained inconclusive”.

Government data shows Polish investors invested $7.4 million in Indonesia in January-September 2024. This puts Poland to rank 53rd globally as Indonesia’s biggest source of foreign direct investment (FDI).

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