Jakarta. President Prabowo Subianto recently said that it was about time for Indonesia and Turkiye to get rid of trade barriers as the two countries are trying to secure a deal that can open up each other's market access.

The comment -- which Prabowo made in a joint statement with his Turkish counterpart Recep Tayyip Erdogan on Thursday -- came at a time when US President Donald Trump’s tariff salvo shook the global trade order. Speaking from Ankara, Prabowo said Turkiye and Indonesia were working on a preferential trade agreement (PTA).

“We have agreed to expand our market access and get rid of trade barriers. … Only by growing together as economic powers will our voices be heard in this world. We have instructed our trade ministers to finish the PTA as a first step to a comprehensive economic partnership agreement [CEPA],” Prabowo told a joint news conference.

A PTA gives preferential access to certain products to be agreed by both Turkiye and Indonesia. Under a PTA scheme, the selected goods from Indonesia are expected to enjoy reduced import taxes when entering the Turkish market, thus slashing consumer prices. A similar scheme may apply to imports coming from Turkiye. A CEPA deal, on the other hand, is far more comprehensive. Not only does it eliminate tariffs but a CEPA also includes provisions related to investments for greater economic integration. When Erdogan visited Indonesia a few months ago, both leaders agreed to finish a limited PTA negotiations by 2026.

Erdogan reiterated his wish for a “mutually beneficial trade” with Indonesia as both countries want to increase its volume by fivefold. Indonesia-Turkiye trade has been standing at around the $2 billion range over the past few years with the numbers reaching nearly $2.4 billion in 2024. Statistics show that Indonesia is exporting more goods to Turkiye than what it is buying from the Middle Eastern country. Indonesia ran a surplus of almost $1.5 billion when trading with Turkiye last year.

“We have discussed the potential steps to expand the trade volume to the target of $10 billion in a balanced manner, based on mutual benefit,” Erdogan said.

Both countries are subject to Trump’s tariffs, although the rates for Jakarta is threefold than that of Ankara. Turkiye gets a 10 percent baseline tariff, while the US will charge a now-paused, much steeper reciprocal tariff of 32 percent on imports from Indonesia.  Shortly after the duties took effect, Trump decided to pause the duties on dozens of countries, including Indonesia. However, the universal 10 percent rate still applies to all trade partners. 

In a White House document, the Trump government accused Indonesia and Turkiye of tariffing American goods at much higher rates. The US said that it had been imposing a 2.7 percent tariff on rice in the husk, while Turkiye charged a 31 percent rate for the same product. Indonesia also slaps a 30 percent tariff on ethanol, twelve times as big as Washington’s 2.5 percent rate, according to the White House.

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