This agreement serves as a strategic gateway for Indonesia to access the Latin American market, particularly the Pacific Alliance bloc comprising Mexico, Colombia, and Chile. It is also a response to the recent U.S. tariff hike, which imposed a 19% tariff on Indonesian products and a 10% tariff on Peruvian products. By negotiating this CEPA, Indonesia can mitigate some of these external challenges while strengthening its economic ties with Peru.

Key Benefits & Market Access

The agreement brings significant benefits to Indonesian businesses, particularly in terms of reduced tariffs and expanded market access.

• 90.68% of Peru’s tariffs on Indonesian products will be eliminated or reduced, easing access to the Peruvian market for a wide range of Indonesian goods.

• 87% of tariffs will be reduced to 0%, either immediately or gradually, significantly lowering the cost of Indonesian exports.

• 7,257 Indonesian tariff lines will enjoy duty-free access, covering a variety of goods from agriculture to electronics.

The potential export value of Indonesian products to Peru is projected to reach USD 46.52 billion, with a trade growth target of USD 5 billion—an ambitious goal to increase bilateral trade by 30% from 2024 levels.

Beneficiary Sectors for Indonesia

Indonesia stands to gain from several key sectors under this agreement:

1. Automotive & Components: With a projected export value of USD 157 million by 2024, this sector is poised for growth, thanks to duty-free access to Peru.

2. Biodiesel: Indonesia’s palm oil-based biodiesel (B40-B50) will be instrumental in meeting Peru’s renewable energy demands.

3. Textiles & Textile Products (TPT): Indonesian garments and fabrics are expected to see a boost in exports to Peru.

4. Agro-Industry Products: Products like palm oil, instant coffee, processed foods, and footwear will find favorable market conditions in Peru.

5. Electronics: Refrigerators and household appliances will benefit from this trade deal.

Opportunities from Peru’s Sectors

The agreement also presents opportunities for Indonesian companies to import products from Peru, especially in the following sectors:

1. Agricultural Products: Peru’s rich agricultural output, including blueberries, grapes, quinoa, chia, and cocoa, will diversify Indonesia’s import portfolio.

2. Mining Products: Peru’s vast reserves of copper, zinc, and fertilizers will be valuable to Indonesia, especially in meeting the growing demand for raw materials.

3. Complementary Trade: Indonesian and Peruvian products complement each other, enhancing the diversity of available goods rather than competing in the same sectors.

Logistics & Infrastructure Support

To facilitate smoother trade between the two countries, the agreement also includes logistics and infrastructure support:

• Reduced Transit Time: By streamlining customs procedures, perishable goods can reach their destination up to 20% faster, ensuring quality and freshness.

• Chancay Port: This port, built by China’s COSCO Shipping, will serve as a key logistics hub, improving access to Latin America for Indonesian exporters.

• Collaboration between Pelindo (Indonesia) and Grupo Logístico (Peru): This partnership will optimize shipping and logistics efficiency between the two nations.

Implementation and Ratification

The CEPA will undergo ratification within the next 12 months. Some products will immediately benefit from duty-free access, while others will see tariffs phased out gradually over the next 5 to 10 years.

This CEPA will have a significant impact on both Indonesia and Peru, fostering deeper economic cooperation and providing new opportunities for businesses in both countries. Through expanded market access, reduced tariffs, and stronger trade ties, the agreement sets the stage for a prosperous economic future for both nations.