Indonesia

As a lower middle-income country with a per capita income of $4.580 (2022), Indonesia benefits from the Standard GSP. In 2022, total EU imports from Indonesia summed up to €22,8 billion, about 77% these imports are eligible for preferential tariffs granted under the Standard GSP.

What is the GSP?

The Standard GSP targets developing countries that are classified by the World Bank as lower or lower-middle income countries and which do not have equal preferential access to the EU market through any other arrangement. Standard GSP beneficiary countries can benefit from duty suspension for non-sensitive products as well as duty reductions for sensitive products across approximately 66% of all EU tariff lines.

Indonesia flag

At a glance: GSP beneficiaries' preferential imports to the EU

group

275,50 M

Population

account_balance
Presidential Republic

Government

trending_up

5%

GDP Growth

equalizer

2.50%

Inflation

money

$ 1,32 B

GDP

57 v

Freedomhouse index

5 -

ITUC Global Rights Index

28.2 v

Environmental Performance Index

Facts about Indonesia's economy

Social Development

Indonesia has the world's 4th largest population and managed to cut its poverty rate in half in the past 20 years, which reached an all-time low of 9.2 percent in September 2019.

Export Products

Indonesia's most important export products are coal and palm oil, followed by rubber, lignite, and gold.

Trade Partners

China accounts for the largest share of trade with 23 % and is both the most important source of imports and the most important export destination. Japan and the US are the second and third largest trade partners.

Economic Structure

Services (42%) and industry (41%) contribute the largest shares to Indonesia's GDP. Both the mining sector, coal, copper, gold, and tin, and the textiles and footwear industries are important pillars of the Indonesian economy. About one third of the labour force is employed in the agricultural sector, which supplies rubber, coffee, cocoa, and palm oil to the world market.

Usage of GSP Preferences

Thanks to consistent growth rates in the last decade, Indonesia is now the world's 16th largest economy (2022) and is headed towards a ranking in the top 10.

Trade with the EU

Total trade with the EU summed up to € 32,615 in 2022. With a share of 6.1% of Indonesia's total trade, the EU is the sixth most important trading partner.

Indonesia and the EU (2022)

Imports from Indonesia by product section

Imports from Indonesia over time (in € m)

INDONESIA AND THE EU’s GSP

Economic Impact

43%

Less than half of Indonesia's exports to the European market are eligible for reduced tariffs granted under the GSP.

77%

With a preference utilisation rate of 77%, Indonesia currently makes considerable use of GSP preferences.

Preference utilisation and export diversification

Indonesia's imports to the EU

Preference Utilisation vs. total eligible imports

Indonesia’s preference utilisation rate remained constantly above 70% until 2016. In 2017, the utilisation of preferences increased by about 10 percentage points, which corresponded with an increase of eligible imports of about 10%. Currently, most of the major product sections make considerable use of the preferential market access granted by the Standard GSP. However, especially exports of apparel and textiles as well as machinery and tobacco exports could make greater use of the granted preferences.

The largest product sections under the GSP

The graph indicates that imports from Indonesia under the GSP are relatively well-diversified. Together with India, Indonesia belongs to the GSP beneficiaries that trade the largest number of tariff lines under the GSP. Footwear continues to be the dominant product section but is closely followed by chemical products (S06b), apparel and textile articles as well as machinery and appliances. Four product sections graduated on 1 January 2020 due to their high level of competitiveness. These include live animals and animal products (S1a), animal and vegetable oils (S3), mineral products (S5), and wood and wooden articles (S9a).

SUSTAINABLE DEVELOPMENT

Indonesia maintains a high level of ratification, despite the preferential market access granted by the Standard GSP is not bound to the ratification of international conventions. Indonesia has ratified 14 out of 15 core international conventions on human rights and labour standards. In addition, Indonesia has ratified 8 international conventions on environmental protection and 4 conventions on good governance.

Core international conventions on human rights and labour standards

Ratified

  • International Convention on the Elimination of All Forms of Racial Discrimination (1969)
  • International Covenant on Civil and Political Rights (1976)
  • International Covenant on Economic Social and Cultural Rights (1976)
  • Convention on the Elimination of All Forms of Discrimination Against Women (1981)
  • Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1987)
  • Convention on the Rights of the Child (1990)
  • Convention concerning Forced or Compulsory Labour, No 29 (1930)
  • Convention concerning Freedom of Association and Protection of the Right to Organise, No 87 (1948)
  • Convention concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, No 98 (1949)
  • Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal Value, No 100 (1951)
  • Convention concerning the Abolition of Forced Labour, No 105 (1957)
  • Convention concerning Discrimination in Respect of Employment and Occupation, No 111 (1958)
  • Convention concerning Minimum Age for Admission to Employment, No 138 (1973)
  • Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, No 182 (1999)

Not Ratified

  • Convention on the Prevention and Punishment of the Crime of Genocide (1948)

Additional Conventions

  • Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973)
  • Montreal Protocol on Substances that Deplete the Ozone Layer (1987)
  • Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (1989)
  • Convention on Biological Diversity (1992)
  • The United Nations Framework Convention on Climate Change (1992)
  • Cartagena Protocol on Biosafety (2000)
  • Stockholm Convention on persistent Organic Pollutants (2001)
  • Kyoto Protocol to the United Nations Framework Convention on Climate Change (1998)
  • United Nations Single Convention on Narcotic Drugs (1961)
  • United Nations Convention on Psychotropic Substances (1971)
  • United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)
  • United Nations Convention against Corruption (2004)

EU-Indonesia Bilateral Development Assistance

DG INTPA

Access all info about EU-Indonesia relations on the International Partnerships website: https://international-partnerships.ec.europa.eu/countries/indonesia_en

Opportunities in Indonesia

  • Stable economic growth over the last decades with an annual average of above 5%
  • Increasing purchasing power of the large local population
  • Investment opportunities in expanding and diversifying the industrial base
  • The large, young workforce and low wages could build the basis for a further expansion of manufacturing industries

Contact points