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Indonesia and United Arab Emirates conclude trade agreement

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Indonesia and the United Arab Emirates (UAE) concluded a new free trade agreement in July 2022 under the UAE-Indonesia Comprehensive Economic Partnership Agreement (IUAE-CEPA).

Free trade agreements remove barriers to trade in various goods and services and aim to increase bilateral trade to $10 billion by 2030.


Indonesia and the United Arab Emirates (UAE) concluded a new free trade agreement in July 2022 under the UAE-Indonesia Comprehensive Economic Partnership Agreement (IUAE-CEPA). The signing ceremony was witnessed in Abu Dhabi by UAE President Sheikh Mohamed bin Zayed and Indonesian President Joko Widodo.

The free trade agreement removes barriers to trade in various goods and services and aims to increase bilateral trade from $4 billion in 2021 to $10 billion in 2030. The UAE’s exports to Indonesia totaled about $2.1 billion, with imports from the archipelago country worth $1.9 billion.

This is the third trade agreement signed by the UAE this year after CEPA with Israel and India. The Middle East’s financial and tourism hub is trying to diversify its economy away from hydrocarbons and deepen trade ties with fast-growing economies in Asia and Africa. The UAE wants to transform itself into a financial and business hub.

UAE Minister of State for External Trade Tani Zeyudi says trade deal with Indonesia will create 55,000 high-skilled jobs in the UAE by 2030.

Approved goals are made by end of 2022 in both countries.

What does IUAE-CEPA cover?

While awaiting approval of the full text of IUAE-CEPA, both governments have highlighted several industries that will benefit from the removal of trade tariffs. According to the agreement, more than 80% of UAE exports will receive duty-free access to Indonesia and Indonesia for palm oil, food, fashion, and other products and commodities that will benefit from reduced or eliminated tariffs.

The two countries are also expected to increase investment and cooperation in areas such as agriculture, energy, infrastructure, logistics, healthcare and tourism. In addition, Indonesia and the UAE will strengthen cooperation in emerging areas such as renewable energy, Islamic finance, digital economy and automation.

Current Indonesia-UAE trade

UAE exports more than $4 billion in total bilateral trade $1 billion The value of oil and its related products in 2021. This is followed by steel at over $200 million and aluminum at over $100 million.

The rest of the commodity exports came from gems, precious metals, sulphur, cement and pharmaceuticals.

Indonesia’s largest export to the UAE is palm oil and its related products, worth more than $290 million In 2021, Indonesia also exported more than US$200 million worth of gems, precious metals, and more than US$170 million in automobiles and accessories. The country’s exports of motors and equipment also exceed $150 million.

UAE investment in Indonesia

United Arab Emirates comfirmed Commitment to invest $10 billion new capital of indonesia Through the Urban Project of the Indonesian Investment Agency (INA). Part of the project will be used for new capital, while the rest will be used in other strategic sectors such as food security, infrastructure, logistics and digital infrastructure.

The ambitious project to relocate Indonesia’s new capital will cost more than $35 billion. As part of the steering committee for the new capital, President Joko Widodo has assembled a team of political and business heavyweights. These include Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan and former British Prime Minister Tony Blair.

Indonesia’s Halal Economic Potential

Indonesia’s huge domestic halal economy will be at the forefront of UAE investment. Indonesian Muslims spend more than $200 billion annually on halal products, representing the largest halal market in the world, or around 10% ($2 trillion) of global spending on halal products. In addition, the global Islamic economy is expected to be worth $3.2 trillion by 2024, with Indonesia at the forefront.


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