Indonesia-Canada CEPA: Prioritizing Pragmatic Partnerships, Co Investment, Growth

One of the most significant achievements from President Prabowo Subianto’s visit to North  America in September was the signing of the Indonesia–Canada Comprehensive  Economic Partnership Agreement (ICA-CEPA) in Ottawa. The meeting between President Prabowo Subianto and Canadian Prime Minister Mark Carney was warm and engaging, reflecting genuine mutual respect and a shared vision for deeper cooperation.

At a time of global disruption to rules-based trade, ICA-CEPA builds upon decades of cooperation and underscores the importance both leaders place on the benefits that a closer Canada-Indonesia partnership can bring to our people,  businesses, and economies. The ICA-CEPA also marks a historic milestone as Indonesia’s first free trade agreement with a North American country and Canada’s first with an ASEAN Member State. 

Negotiations for ICA-CEPA began only in June 2021 and reached a substantial conclusion by November 2024 before being signed in September 2025. Compared to Indonesia’s other trade agreements, such as the Indonesia-EU CEPA, which took nearly eight years to finalize, ICA-CEPA’s conclusion in less than four years underscores the mutual commitment of both Indonesia and Canada to strengthen ties, particularly in trade and investment. 

While 2025 has been marked with repeated disruptions to global rules-based trade and new tariffs, our leaders stand out for their commitment to continuing trade advancement for the benefit of our people and markets. The ICA-CEPA will strengthen trade and investment ties between Indonesia and Canada that are already on a positive trajectory. According to Indonesia’s Ministry of Trade, two-way trade between Indonesia and Canada reached $3.5 billion in 2024, up 9.39 percent compared to 2020. This makes Indonesia Canada’s third-largest trading partner in  Southeast Asia and Canada’s largest export market in the region. Canadian direct investment in Indonesia has also grown, reaching $3.6 billion and placing  Indonesia as the third-largest recipient of Canadian investment in Southeast Asia. 

Once fully implemented, ICA-CEPA is expected to eliminate 90.5 percent of tariffs on  Indonesian goods entering Canada, while Indonesia will liberalize 85.8 percent of tariff lines for Canadian goods. The agreement also features comprehensive rules on investment and services, which are expected to boost business confidence, reduce non-tariff barriers, and enhance transparency, predictability, and cooperation. 

While trade liberalization is not always popular in Indonesia, ICA-CEPA offers tangible and strategic benefits. For example, the implementation of ICA CEPA is expected to boost Indonesian exports to Canada to reach $11.8 billion by 2030, adding 0.12 percent to national GDP and a 0.38 percent boost in investment. Beyond the headline numbers, the agreement creates opportunities in several critical areas: 

First, the lower tariffs after the implementation of ICA-CEPA will bring down the costs that will be passed on to consumers. This is especially important for Indonesia because Canada is currently one of the top suppliers of soybeans, the main ingredient for tempe and tahu, popular Indonesian staple foods, as well as wheat,  which is used to produce flour and instant noodles in Indonesia. The reduced tariff and non-tariff barriers will make Canadian agricultural goods more affordable while supporting Indonesia’s food security goals. 

Second, ICA-CEPA includes a chapter on bilateral dialogues on priority matters, particularly the bilateral dialogue on critical minerals cooperation. This is the first time  Indonesia has a critical mineral dialogue under a CEPA framework, and the inclusion of this topic is important to support Indonesia’s ambition to be the leader in the global EV supply chain. Indonesia is the largest producer of nickel globally, while Canada has one of the world’s largest reserves of lithium and has all the critical minerals needed to build electric vehicles (EVs) and EV batteries at scale. This cooperation will enable Indonesia to have a reliable source of critical minerals needed for building its  EV industry ecosystem. Moreover, the dialogue will promote bilateral trade and investment in mining and related services, with a strong focus on developing “green” solutions that will open new market opportunities and encourage innovation to support the transition toward a more sustainable and resilient resource industry. 

Third, the agreement includes commitments to support small and medium enterprises (SMEs), which make up over 99 percent of businesses in both countries. SMEs are often unable to access the benefits of free trade agreements or CEPA due to a lack of understanding about the procedures and benefits of tariff preferences, perceptions of high costs and complicated administration processes, and insufficient understanding of compliance requirements such as technical standards, certifications, and other necessary criteria. Therefore, the chapter ensures that SMEs are better positioned to benefit from ICA-CEPA’s provisions. Canada has already laid the groundwork through the Canada–Indonesia Trade and Private Sector Assistance (TPSA) project, which equipped many Indonesian SMEs with the know-how to export. ICA-CEPA now scales that support into a long-term framework, ensuring SMEs can compete and thrive on a larger stage. 

Equally important, ICA-CEPA has the backing of business leaders on both sides. In conjunction with the CEPA Signing, Anindya Bakrie, Chairman of Kadin, co-hosted a Canada–Indonesia Business Roundtable with the Canada-ASEAN Business Council in Ottawa, culminating in an MoU that sets a practical roadmap for cooperation. This business-to-business commitment ensures the agreement will not remain words on paper. It will be driven by real investment flows, knowledge-sharing, and the exchange of trade missions, with companies taking ownership of the opportunities it creates. In other words, ICA-CEPA is not only state-to-state, but also business-to-business and people-to-people, a foundation for durable and inclusive partnership and growth. 

As Indonesia deepens its integration into global value chains and Canada diversifies its partnerships in the Indo-Pacific, ICA-CEPA offers a timely and strategic framework for co-investment, innovation, and inclusive growth to bring mutual benefit for both countries. If implemented with purpose, ICA-CEPA can become a model of how like-minded leaders, grounded in mutual respect and pragmatic cooperation, can turn global uncertainty into an opportunity for their people, their businesses, and their economies.

Co-authors:

Wayne Farmer, President, Canada-ASEAN Business Council (CABC)

Rahma Anggraini, Advocacy Manager, Canada-ASEAN Business Council (CABC)

The op-ed was published at: https://jakartaglobe.id/opinion/indonesiacanada-cepa-prioritizing-pragmatic-partnerships-co-investment-growth