EU investment Indonesia targets EVs and green energy

Coordinating Minister for Economic Affairs Airlangga Hartarto named four sectors at a Jakarta press conference: new and renewable energy, digital industries, agriculture, and electric vehicle downstreaming. These sit alongside advanced manufacturing and pharmaceuticals as Indonesia courts higher value-added European capital.

Indonesia lines up priority sectors ahead of IEU-CEPA

Officials expect the Indonesia–EU Comprehensive Economic Partnership Agreement (IEU-CEPA) to be signed in the fourth quarter of 2026. It is set to enter into force around 1 January 2027, following ratification by the European Parliament and Indonesia’s House of Representatives. According to coordinating ministry statements, the agreement removes import duties on 98.5 per cent of tariff lines. Roughly 90 per cent of Indonesian goods will gain immediate zero-tariff access to the EU. The remainder phases down over time.

Bilateral trade between Indonesia and the EU reached US$31.9 billion in 2025, according to Antara News. Cumulative EU foreign direct investment over the past five years totalled US$13.6 billion. These figures remain modest relative to Indonesia’s economy and its net-zero ambitions. However, they give Hartarto a base on which to build a focused green-energy and EV project pipeline.

Meanwhile, Jakarta is already drawing global climate finance. Hartarto noted that Indonesia has secured US$21.4 billion in international funding commitments under the Just Energy Transition Partnership (JETP). IEU-CEPA gives Jakarta a framework to connect that funding with European corporate capital and technology transfer in specific sectors.

APINDO chairperson Shinta Widjaja Kamdani said fisheries, agriculture and healthcare also show strong potential. She noted that investors are moving beyond raw commodities toward value-added activities and services. Regulatory certainty, she stressed, remains the deciding factor. IEU-CEPA turns Europe from a tariff debate into a live green investment partner for Indonesia.

What does the deal mean for investors?

Under IEU-CEPA, European firms gain streamlined customs procedures and clearer market-access rules in Indonesia. Indonesian exporters, in turn, face less friction entering the EU. As a result, EVs, electronics and pharmaceuticals are expected to see stronger two-way capital flows.

Indonesia signals that EV incentives will link with foreign investment in batteries and downstream processing, not just final assembly. Renewable energy priorities now centre on solar, hydrogen and grid modernisation. These align with JETP commitments and with Germany’s more than €2.3 billion in energy-transition cooperation with Jakarta. This dynamic also connects to Indonesia’s broader EU trade engagement, which has already advanced on regulatory alignment in forestry and other sectors.

However, Shinta warned that licensing bottlenecks and overlapping regulations still deter investors. She argued that streamlining business permits is essential to convert IEU-CEPA’s promise into bankable projects. Her comments echo private-sector calls for a joint taskforce on treaty execution, aimed at moving quickly from text to shovel-ready deals.

For long-term investors, the signal is clear. Indonesia is tying trade liberalisation to a green industrial strategy and explicitly courting EU capital. Over the next 12 to 24 months, watch the IEU-CEPA signing timetable, the pace of domestic regulatory reform, and the number of concrete renewable and EV projects that move from pipeline to commitment.

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