Jakarta. Peru is willing to drop most of the tariffs that it charges on Indonesian goods in the freshly signed trade pact with Lima, according to a senior government official.

The Comprehensive Economic Partnership Agreement (CEPA) became the highlight of Peruvian President Dina Boluarte’s recent Jakarta trip. This bilateral agreement, which is currently limited to goods trade, will see Indonesia and Peru getting rid of nearly all of its tariffs, many down to 0 percent. The reduction will take place in phases. 

Djatmiko Bris Witjaksono, a director-general at the Trade Ministry, told reporters that Peru would either lower or entirely eliminate the duties across 90.68 percent of the tariff lines that it has set for Indonesian goods. Jakarta is granting Lima zero or lower duties across 92.26 percent of its tariff lines, enabling greater volumes of Peruvian fruits entering Southeast Asia’s largest economy.

Indonesia’s top export palm oil is set to have its tariffs dropped to 0 percent when being sold to Peru. Many processed palm oil products will also get similar treatment. Government data showed Indonesia exported $21.4 million worth of palm oil and its derivatives to Peru throughout last year.

“Our Peru-bound palm oil will get 0 percent tariffs. Many of our products get the tariff-free treatment as soon as the deal enters into force,” Djatmiko said at a news conference in Jakarta on Tuesday.

“Palm oil has many derivatives. Importers usually bring in unprocessed products, including crude palm oil or palm kernel oil [PKO] for them to refine in their own soil. … Countries who trade with us usually wish to add value [to their imported palm oil], but they still need to buy the raw materials from overseas,” Djatmiko said.

Other key Indonesian exports that will gain a better market access following the deal with Peru include vehicles, footwear, and freezers.

The first round of negotiations took place in May 2024, meaning that it only took 14 months for Jakarta to clinch the deal. The current CEPA document focuses on trade in goods alone, but there are plans to include services and investments in later updates.

Official statistics revealed that Indonesia-Peru trade amounted to $480.7 million throughout 2024. Indonesia enjoyed a $181.6 million surplus that year. Jakarta remains upbeat that the agreement can bring bilateral trade to $5 billion over the coming years once the pact is in force. The document now awaits the ratification process before it can finally come into effect for both nations.