Indonesia and Canada are utilizing the newly signed Comprehensive Economic Partnership Agreement (ICA-CEPA) to address an “underperforming” trade relationship that currently nears $7 billion annually. According to Canadian Ambassador to Indonesia Jess Dutton, the agreement aims to unlock growth in aerospace, energy, agriculture, and technology by reducing tariffs and increasing investor certainty.
ICA-CEPA Tariff Reductions and Market Access
The partnership focuses on removing trade barriers to stimulate economic activity. Under the agreement, Canada will remove duties on 90.5% of its tariff lines, while Indonesia will eliminate or reduce tariffs on 85.9% of its tariff lines for Canadian goods, according to Dutton.
Canada completed its ratification of the deal in May. Indonesia is expected to follow in the coming months via a presidential regulation, Dutton said.
Trade Imbalances and Sector Opportunities
Indonesia recorded roughly $4.4 billion in trade with Canada in 2025. Imports from Canada totaled nearly $2.7 billion, while Indonesian exports reached almost $1.7 billion, led primarily by electrical machinery and equipment, according to the Ambassador.
Dutton identified several sectors where Indonesian businesses can expand in Canada, including textiles, manufacturing, fabrics, sustainable forestry, and world-renowned furniture. For Canada, the primary opportunities lie in clean technologies, energy, and aerospace. Dutton described Indonesia as one of the world’s largest aerospace markets with substantial expected growth.
Investment Shifts in Energy and Mining
The two nations share similar profiles as major commodity and resource producers. This alignment has already led to Indonesian interest in Canadian potash mines, according to Dutton.
The Indonesian-linked resources group Royal Golden Eagle (RGE) has already invested in a liquefied natural gas project in British Columbia. Dutton noted that RGE is currently discussing an expansion of that project.
Future Economic Integration
Both countries may aim for substantially higher trade and investment figures over the next 10 years. Dutton suggested that emerging sectors like artificial intelligence and clean technology could deepen the economic integration between the two nations.
Increased investment flow is likely to be a primary goal as Indonesian companies utilize their expertise in key sectors to enter the Canadian market, which Dutton described as becoming “much more attractive.”
Frequently Asked Questions
What is the current state of trade between Indonesia and Canada?
Trade nears $7 billion annually, though Ambassador Jess Dutton described the relationship as underperforming and the numbers as not being where they should be.
Which sectors are prioritized for Canadian exports to Indonesia?
Canada is targeting the energy, clean technologies, and aerospace sectors, with Indonesia being noted as one of the world’s largest aerospace markets.
What are the specific tariff changes under ICA-CEPA?
Canada will remove duties on 90.5% of its tariff lines, and Indonesia will eliminate or reduce tariffs on 85.9% of its tariff lines for Canadian goods.
Do you believe strategic partnerships in clean technology will be the primary driver for future trade growth between these two resource-rich nations?