CEPA最終敲定的經濟影響：保險業的機會與挑戰

Liga Asuransi – Tuesday, September 23, 2025, marked a significant day in Indonesia’s economic relations with the European Union. The two sides formally reached substantive conclusions on the Comprehensive Economic Partnership Agreement (CEPA) between Indonesia and the EU. Under the agreement, approximately 80% of Indonesian exports to the EU will initially be duty-free, with the potential for up to 98% of these exemptions over the long term.

This agreement is the culmination of a lengthy negotiation process between Indonesia and the EU, which began with the launch of CEPA negotiations. Discussions on establishing a closer, more comprehensive trade cooperation began as early as 2009, when the EU established the Indonesia-EU Vision Group to advance a broader trade negotiation agenda beyond the Free Trade Agreement: encompassing services, investment, regulation, and capacity building. Formal negotiations only began around 2016, and after multiple rounds of intensive, multi-sectoral negotiations, they finally reached a stage of “substantive conclusion” nearly a decade later.

Why is Indonesia so ambitious in its pursuit of CEPA? The agreement is seen as a gateway for Indonesian high-quality products (such as palm oil, textiles, apparel, and fisheries) to enter the EU market, which is riddled with tariff and non-tariff barriers. Furthermore, investment access for European companies in strategic industries (such as technology and renewable energy) and regulatory harmonization will enhance Indonesia’s competitiveness on the global stage. 

Against the backdrop of the domestic insurance industry, the finalization of CEPA marks a new chapter that cannot be ignored. With increasing market access, growing investment flows, and increasingly complex cross-border protection needs, the Indonesian insurance industry needs to be prepared to seize opportunities and meet new challenges. This article will delve into how the finalization of CEPA will impact the Indonesian insurance industry—from opportunities for importing and exporting insurance products, competition with foreign insurers, to the regulatory adjustments and product innovations necessary to remain competitive amidst global integration.

Overview of EU-Indonesia CEPA

1. The Indonesia-EU Comprehensive Economic Partnership Agreement (CEPA) is more than just a free trade agreement. It covers areas such as trade in goods, trade in services, investment, intellectual property, environmental standards, and capacity building. Its main goal is to establish a more comprehensive framework to promote a balanced, sustainable, and competitive economic relationship.
   
2. Impact of Tariffs and Market Access The agreement will eliminate tariffs on approximately 80% of Indonesian products entering the EU market, and this proportion is expected to increase to 98% in the future. The main beneficiary industries include:
   

• Palm oil : While still facing sustainability issues, market access is becoming clearer.
• Textiles and apparel : As the EU is a high-end market, export potential is increasing rapidly.
• Fisheries and agricultural products : Low interest rates encourage competition.

3. The Comprehensive Economic Partnership Agreement ( CEPA ) also regulates investment protection. The EU is committed to providing legal protection for its investors in Indonesia, while Indonesia also gains access to technology and capital. Harmonizing standards, including those for the environment and sustainability, is a key issue and will require adjustments to domestic regulations.
   
4. Economic Significance : According to European Commission analysis, CEPA could increase Indonesia’s exports to the EU by billions of euros annually. For the EU, Indonesia’s large and vibrant market offers an opportunity to diversify its supply chains in Southeast Asia, particularly amidst intensifying global trade competition.
   
5. Impact on Other Sectors: Increased trade and investment are expected to drive the development of logistics, financial services, and insurance. As the new trade relationship becomes more complex, demand for cross-border transaction protection, investment guarantees, and environmental insurance will also increase.
   

The impact of the finalization of CEPA on the domestic economy

The finalization of the EU-Indonesia Closer Economic Partnership Arrangement (CEPA) will not only affect trade data or import and export balances, but will also impact Indonesia’s domestic economy and industrial competitiveness, and require Indonesia to prepare in terms of regulation and infrastructure. The following are some of the main impacts:

1. Boosting national export competitiveness: With tariffs on up to 98% of products eliminated, domestic industries will have significant opportunities to enter high-end European markets. High-quality products such as sustainable palm oil, coffee, spices, textiles, footwear, and fisheries will have greater access. This will encourage related industries to increase production capacity, invest in machinery and equipment, and enhance the quality of their workforce.
   
2. Less competitive industries face pressure . CEPA will not only liberalize exports but also imports. European manufacturing products, automotive products, and even pharmaceuticals will have easier access to Indonesia. Domestic industries unprepared for competition on quality and price face the risk of being cannibalized. The government and businesses must develop adaptive strategies that go beyond a purely market-oriented approach.
   
3. Legal certainty and more transparent regulations for foreign investment inflows will attract European investors to Indonesia. Renewable energy, environmentally friendly technologies, and value-added manufacturing are expected to be key targets. This provides opportunities for technology transfer and job creation, while also encouraging higher business standards.
   
4. The EU emphasizes environmental and sustainability issues in every trade agreement it enters. The finalized Comprehensive Economic Partnership Agreement (CEPA) will require Indonesia to raise environmental production standards in its agricultural, manufacturing, and mining sectors. For businesses, this means additional investment to meet international certification requirements.
   
5. Impact on the Domestic Services Industry: Increased trade activity will not only boost the real economy but also foster the development of domestic service sectors such as logistics, transportation, information technology, and finance. Goods distribution systems need to be more efficient, and financial services, including insurance, will play a key role in ensuring smooth cross-border transactions.
   
6. Challenges facing SMEs: SMEs have the potential to enter new markets, but they also face the challenges of higher quality standards and certification. The government needs to provide policy support, financing channels, and market education to enable SMEs to capitalize on the opportunities presented by CEPA.
   

Opportunities and Challenges of the National Insurance Industry

The insurance industry is one of the sectors that will be significantly impacted by the finalization of the EU-Indonesia Comprehensive Economic Partnership Agreement (CEPA). Demand for risk protection is expected to grow due to increased trade, investment, and the flow of goods and services. However, this significant opportunity also presents challenges, requiring insurance companies worldwide to be prepared.

1. Demand for trade insurance and export credit is growing. As exports to the EU continue to grow, businesses need to protect against credit risks and distribution disruptions. Products such as trade credit insurance and marine cargo insurance will become increasingly important. Domestic insurance must be able to provide competitive services, supported by global reinsurance capabilities.
   
2. With the EU’s emphasis on environmental standards, Indonesian companies exporting goods to the EU may face the risk of being sued for violating emission standards, polluting or engaging in unsustainable practices. This creates opportunities for environmental responsibility insurance and sustainability-related protection products.
   
3. The influx of foreign investment from Europe will create demand for insurance for infrastructure , energy, and manufacturing projects. Engineering and construction all-risk insurance (CAR), installation all-risk insurance (EAR), and political risk insurance are becoming important tools for securing long-term investments.
   
4. Competition with Global Insurers: CEPA provides European insurance and reinsurance companies with greater access to the Indonesian market. This means the domestic insurance industry will face intense competition in terms of products, technology, and services. To remain competitive, local companies must enhance underwriting capabilities, product innovation, and operational efficiency.
   
5. Opportunities for Collaboration and Technology Transfer On the other hand, the presence of multinational corporations also presents opportunities for collaboration. Reinsurance collaboration, risk data exchange, and the use of digital technology in underwriting and claims processing can accelerate the modernization of national insurance industries.
   
6. The Financial Services Authority (OJK) needs to strengthen its supervision to ensure healthy competition in domestic insurance products while protecting consumer interests. Furthermore, Indonesian businesses, especially small and medium-sized enterprises (SMEs), must improve their insurance awareness so that they can consider insurance protection as part of their export strategies.
   

National Insurance Industry Adaptation Strategy and the Key Role of Brokers

The finalization of the EU-Indonesia Comprehensive Economic Partnership Agreement (CEPA) presents significant opportunities and complex challenges for Indonesia’s domestic insurance industry. In this context, the role of insurance brokers has become crucial as they serve not only as connectors but also as strategic advisors, helping business players understand, manage, and protect themselves from new risks.

1. CEPA has introduced complex new trade, investment, and regulatory processes. Insurance brokers play the role of navigators, accurately mapping the specific risks across various industries, from commodity exports and energy investment to environmental sustainability. Without this role, many businesses might make mistakes when choosing insurance.
   
2. Designing targeted protection solutions. Every industry faces unique risks. Insurance brokers ensure that companies don’t purchase irrelevant standard coverage, but rather receive appropriate protection. Tailor-made insurance solutions meet specific needs. In the era of CEPA, this flexibility determines whether a business can operate safely in the global market.
   
3. Connecting Indonesia to Global Capacity : The entry of European companies has brought higher risk standards. Insurance brokers provide Indonesian companies with access to global reinsurance, international networks, and global best practices. This is key to Indonesia’s insurance industry remaining competitive on the global stage.
   
4. The irreplaceable role of education: Many small, medium, and micro-sized enterprises (SMEs) and domestic businesses remain unaware of the severity of international trade risks. Insurance brokers serve as market educators, raising awareness of risk protection and encouraging people to view insurance not just as a cost but as a value proposition. They are also strategic tools for maintaining business continuity .
   
5. The international claims process for aid in crisis situations is often complex. Brokers act as advocates, safeguarding clients’ rights and ensuring that claims are resolved fairly and efficiently. Without brokers, many companies could suffer significant time and financial losses.
   

In other words, in the CEPA era, insurance brokers are essential strategic partners who are at the forefront of ensuring that Indonesian businesses are prepared to respond to the opportunities and challenges of free trade with appropriate, strong and sustainable protection.

Conclusion

The final signing of the EU-Indonesia Comprehensive Economic Partnership Agreement (CEPA) marks a significant milestone in Indonesia’s trade history. It presents significant market opportunities, including broader export access, growing foreign investment inflows, and technology transfer from the EU. However, these opportunities also present significant challenges: stringent sustainability standards, competition from high-quality imported products, and increasingly complex cross-border trade and investment risks.

Insurance protection and the role of insurance brokers become crucial. Large corporations and small, medium, and micro-sized enterprises cannot rely solely on production and marketing strategies. They must also ensure appropriate risk coverage to protect their businesses from legal issues, international claims, or failed transactions.

Insurance brokers like L&G Insurance Brokers are more than just intermediaries; they are strategic partners who understand the business risks of the free trade era. Leveraging their extensive experience, global network, and deep understanding of domestic industries, L&G can help businesses design targeted, competitive protection solutions tailored to the specific needs of each industry.

📞Contact L&G Insurance Brokers at 0811-850-7773
for comprehensive risk consulting and insurance solutions to ensure your business is well-positioned to capitalize on the significant opportunities presented by CEPA while protecting against unforeseen global challenges.