Fact Sheet
EU-Indonesia Trade Relations
budget of approximately € 40 million,
the EU supports the upgrading of the quality
The Significance of EU-Indonesia Trade Relations
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The European Union (EU) and Indonesia
signed a Partnership Cooperation
Agreement (PCA) in 2009 as a first step
towards establishing closer economic
and political ties. The PCA with
Indonesia was the first of its kind signed
by EU in the region.
The EU is Indonesia’s second largest
trading partner. EU-Indonesia bilateral
trade amounts at more than €20 billion
(around Rp253 trillion) annually.
Indonesia exports almost €14 billion
(Rp177 trillion) to the EU, while the EU
export value stands at €6 billion (around
Rp75 trillion), resulting in a sizeable €7
billion (about Rp88 billion) trade
surplus, reflecting strong demand for
Indonesia’s products in the EU.
Indonesia’s Benefit from Trading with the EU
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The EU is 27 countries or 500 million
people. But it is also a single market,
that what makes the EU such a great
trading partner with one set of rules and
one border.
Indonesia benefits from the European
integration. Indonesia’s government has
one counterpart on trade, not 27
individual states.
Indonesian exporters to Europe meet one
EU standard, not 27 different standards
using one currency.
The EU is Indonesia’s second largest
investor. As many as 700 companies
have invested over €50 billion (some
Rp632 trillion) in Indonesia, providing
directly more than 500,000 jobs in
industries such as pharmaceuticals,
banking and manufacturing.
The EU supports the development of
Indonesia’s industry and trade. With a
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of Indonesian exports, the identification of
market opportunities in the EU market, and
the improvement of conditions to facilitate
investment in Indonesia.
A recent EU-Indonesia joint study showed
some key sectors where Indonesia could
expand exports substantially, including
furniture, cosmetics and processed foods.
Promising Future for EU-Indonesia Trade Relations
 The
Indonesian President Susilo
Bambang Yudhoyono met with the
European Commission President José
Manuel Barroso in December 2009 to
discuss ways of enhancing bilateral ties.
 The two Presidents agreed that trade
and investment is an area where the
bilateral relationship has great potential
to develop, and on the need to explore
ways to strengthen these ties.
 The two leaders decided to set up a
"Vision Group" that will examine how to
increase trade and investment between
Indonesia and the EU.
 In 2010, the EU-Indonesia jointly
launched the formation of Vision
Group”
composed
by
business,
government and academics.
 The "Vision Group" discusses the
opportunities and benefits of further
deepening EU and Indonesia trade
relations.
 EU is working closely with the
Indonesian Ministry of Trade and the
Indonesian Chamber of Commerce
(KADIN) to help Indonesian exporters
gain access to the EU market and supply
a growing demand for Indonesian
products
Fact Sheet
EU-Indonesia’s Timber Trade and Sustainability Forest Management
The Invaluable Indonesia’s Forest
 Indonesia’s more than 133 million
hectares of forest is home to some of the
most magnificent tropical forests in the
world with unique biodiversity.
 The country has the third largest
forested area behind Brazil and the
Democratic Republic of Congo.
 However, Indonesia today is losing
more than 1 million hectares of forest
every year, which illegal logging largely
contributes to.
Forestry is an important contributor to the
Indonesia’s economy
 Around 46 percent of the forest is
destined for production purposes.
 Indonesia exports a wide variety of
forest products, ranging from plywood,
pulp and a variety of paper products to
furniture and handicrafts.
 The value of this trade grew from
approximately US$7.3 billion (close to
Rp63 trillion) in 2005, to a value of
S$9.7 billion (some Rp84 trillion) in
2010.
EU-Indonesia’s Trade Timber
 The European Union (EU) is a key
market for Indonesian forest products
with the total average annual value of
timber and paper exports from Indonesia
stands at US$ 1.2 billion (around Rp10
trillion).
 Indonesia’s main timber products
destined for the EU are paper & paper
board, wooden furniture and plywood.
The
country
does
not
export
unprocessed products, such as logs and
rough sawn timber, to the EU.
 The main destination markets within the
EU are Germany, UK, the Netherlands,
Belgium, French, Spain and Italy.
What is FLEGT VPA?
 Forest Law Enforcement Governance
and
Trade
(FLEGT)
Voluntary
Partnership Agreements (VPA) are
bilateral agreements between the EU
and timber exporting countries.
 The agreement aims to improve forest
sector governance and ensure that the
timber and timber products imported
into the EU are produced in compliance
with the laws and regulations of
Indonesia.
 The agreement between the EU and
Indonesia is expected to facilitate the
access of Indonesia's timber products to
the EU to provide the legal certainty and
assurance that EU operators will need to
place products on the EU market.
The benefits of FLEGT VPA
 Indonesia’s forest sustainability will be
ensured through the compliance with the
environmental and social aspects of
harvesting.
 A better quality of oversight is
guaranteed,
through
Indonesia’s
innovative approach as follows: an
independent monitoring by civil society,
a comprehensive evaluation by all
stakeholders, a periodic evaluation with
a formal audit mechanism, and an
independent market monitoring.
 Information on timber legality assurance
will be provided transparently to all
parties through the EU’s websites,
official journals, and the Government of
Indonesia.
 FLEGT VPA and Reducing Emissions
from
Deforestation
and
Forest
Degradation
(REDD)
are
complementary policy instruments.
Implementing a FLEGT VPA can assist
forested countries in meeting REDD
policy goals.