Strategic Choices in the New Global Trade Order：Why Indonesia Is Becoming the Next Investment Hotspot

29 July 2025 – Indonesian President Prabowo Subianto and Malaysian Prime Minister Anwar Ibrahim held a high-level meeting that covered key issues ranging from the Regional Comprehensive Economic Partnership (RCEP) to bilateral ties. On the same day, Coordinating Ministry for Economic Affairs Secretary Susiwijono Mujiharto spelled out Jakarta’s precise policy roadmap:

“We are finalising free-trade agreements with multiple partners to curb import tariffs and widen export-market access.”

From the President’s diplomatic blueprint to line-ministry execution, Indonesia is signalling—cohesively and at speed—that a once-in-a-generation window is opening for global investors.

Multi-front diplomacy: building a global trade super-highway

Jakarta is weaving an unprecedented web of trade accords across major economies. Secretary Susiwijono singled out the freshly-negotiated Indonesia–EU Comprehensive Economic Partnership Agreement (IEU-CEPA) as a game-changer for Indonesian goods in Europe. Deals have also just been locked with the Eurasian Economic Union (EAEU), opening Eastern Europe and Central Asia, while Indonesia’s January 2025 entry into BRICS is followed by an active push to join the OECD and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The goal: turn Indonesia into a stable, efficient, cost-competitive node in global supply chains.

Regional anchoring: unlocking ASEAN’s 680-million-consumer market

While reaching outward, Indonesia also leverages its centrality in Southeast Asia. Foreign Minister Sugiono stresses that, amid global uncertainty, intra-ASEAN cooperation is vital: “With 680 million people, ASEAN itself is a vast producer and consumer base.” As a core RCEP member, Indonesia works hand-in-hand with Malaysia and others to cement its role as the region’s economic engine.

Turning friction into edge: the tariff-gap opportunity

Jakarta’s strategic reading of trade friction is astute. When Washington imposed a 19 % tariff on Indonesian goods, Luhut Binsar Pandjaitan, Chairman of the National Economic Council, framed it as opportunity. “Compared with Vietnam’s 20 % and Chinese Taipei’s 32 %, Indonesia’s rate gives us a clear comparative advantage.” Even a 1 % spread, he notes, sways investment decisions. The resulting relocation wave—already luring factories from Vietnam and Chinese Taipei—will dovetail with Indonesia’s sprawling FTA network, letting firms serve the U.S. optimally while using Indonesia as a hub for Europe, ASEAN and Eurasia.

Accelerated domestic reform: creating a world-class business climate

Outward strategy is matched by inward overhaul. Luhut insists reforms must be “top-down, fast and felt on the ground,” from slashing red tape to aligning with OECD standards. The message: Indonesia does not merely want capital; it wants capital to take root, scale and profit.

Seizing Indonesia’s strategic moment

With proactive global trade outreach, a firm regional core, tariff advantages and deep domestic reforms, Indonesia projects 7–8 % growth by 2029–2030. For firms seeking new growth poles and supply-chain resilience, Indonesia is no longer an option—it is the destination.

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