Window for the southern islands: the EAEU has agreed on trade with Indonesia
The Eurasian Economic Union (EAEU) and Indonesia have signed a free trade agreement. The document, signed in St. Petersburg at a meeting of the Supreme Eurasian Economic Council, provides for the abolition of duties on 94% of the commodity exports of the Union countries to Indonesia. According to the EEC Trade Minister Andrey Slepnev, the abolition of duties will affect about $3 billion in mutual trade. What will the new EAEU treaty provide, what benefits the expansion of cooperation with one of the largest economies in Southeast Asia, and which countries can sign similar documents with, is in the Izvestia article.
Tariffs are practically canceled
As a result of trade liberalization, the average duty rate applied by Indonesia to EAEU goods will decrease fivefold, from 10.2% to 2%. Key EAEU export products will receive preferential access to the Indonesian market: cereals, dairy products (including cheeses and milk powder), meat, fish, mineral waters, as well as metallurgical products, petroleum products, fertilizers, furniture and construction equipment. In turn, Indonesia will increase supplies of automotive components, consumer electronics, clothing and footwear to the Union countries.
For Russia, the agreement, according to the Ministry of Industry and Trade, means an increase in industrial exports to Indonesia by $200 million, and exports of agricultural products by $100 million. The agreement will cover 98% of Russian exports to this country. In addition to trade, the agreement includes provisions on cooperation in the fields of digital commerce, logistics, scientific research, energy efficiency and medical technologies. Indonesian Trade Minister Budi Santoso, in turn, expressed Jakarta's interest in industrial cooperation and invited partners from the EAEU to consider Indonesia as a production base, promising "efficient and transparent" business conditions.
Dmitry Kuznetsov, senior researcher at the International Laboratory for Foreign Trade Research at the Presidential Academy, noted that the free trade agreement between the EAEU and Indonesia provides Russia with preferential access to one of the fastest growing markets in the world.
"According to IMF estimates, Indonesia's economy will grow by an average of 4.7% per year until 2030, and if these rates are maintained, the country may well become one of the five largest economies in the world in terms of purchasing power parity by 2035," the expert points out.
He added that the conclusion of the free trade agreement creates conditions for increasing Russian exports, primarily of food, fertilizers, metal products, petrochemicals, energy equipment and machine—building products.
— A significant role is played by the reduction of Indonesian import duties, which are currently in the range of 5-15% for most commodity items: this significantly increases the competitiveness of Russian goods. It is also fundamentally important that the agreement is of a long—term nature, which means that its impact on trade is potentially more stable and significant than the effect of short-term currency fluctuations," the Izvestia interlocutor stated.
The largest in the southeast
Yaroslav Kabakov, Director of Strategy at Finam IC, in turn, notes that Indonesia is the largest economy in ASEAN with a population of more than 270 million people and a steady increase in domestic demand, so the removal or sharp reduction of customs duties makes EAEU products more competitive.
— For Russia and the EAEU as a whole, this is an important step in diversifying foreign trade, reducing dependence on traditional markets and building a more balanced geography of economic ties. In addition to trade, the agreement lays the foundation for investment and technological cooperation, the development of logistics, digital services and industrial cooperation, which increases its long-term value.
Vladimir Sedalishchev, an expert at the Economic Policy Foundation, says that the current economic benefits of the agreement will be relatively small due to the initially small volume of trade between the countries.
— The trade turnover in 2024 amounted to only about $4 billion, which is not much at all for such large countries in economic and demographic terms. Therefore, it is not worth expecting the next year or two to benefit from cooperation in terms of the growth of Russia's macro indicators by more than 0.1%. Meanwhile, the growth potential of bilateral trade can be huge," he concludes.
India is next in line.
The EAEU has been extremely active in its foreign economic activity in recent years. Apart from Indonesia, the FTA agreements covered six countries. The first partner was Vietnam, with which the relevant agreement was signed back in 2015. Later, partnerships were established with Singapore and Serbia. Already this year, three agreements came into force at once: with the UAE, Iran and Mongolia (in the latter case, the free trade zone was established as temporary — for three years, but with the possibility of extension).
Attention is drawn to the wide geography of agreements covering Europe, the Middle East, Northeast and Southeast Asia, as well as a range of economies: lower- and upper-middle-income, very rich, and so on. Finally, the specialization of the EAEU partners is also diverse — from the extraction of raw materials to financial services and high-tech manufacturing. After the transition period, as a result of the agreement, we can expect an increase of tens of percent in Russian exports to Indonesia for agricultural goods, mineral fertilizers, metallurgical products, energy equipment, vehicles and chemical industry products. This is a very strong impetus for strengthening further cooperation.
Indonesia is unlikely to be the last country with which free trade has been established. Yaroslav Kabakov says that from the point of view of further expansion of such practices, the most promising partners for the EAEU remain countries with large and growing markets and a pragmatic foreign economic policy.
— First of all, these are the states of ASEAN, the Middle East and South Asia, as well as individual countries in Africa and Latin America. Such agreements allow the EAEU to gradually form a network of trade partnerships beyond traditional areas and strengthen its role in global trade in a changing global economy.
Sedalishchev believes that the countries of Southeast Asia, the Middle East, South Asia and Africa remain the most promising for concluding similar agreements.
— For example, Egypt and India, in terms of GDP growth following the formation of the FTA, can give Russia up to 0.5 percentage points of growth.
Negotiations are currently underway or are planned with several potential partners at once. If the dialogue with Egypt began back in 2019 and has now stalled somewhat, then the process has begun with India — we are already talking about agreeing duties on key goods. The next round will be held in February 2026. A single trade zone with the fourth largest economy in the world will give a tremendous boost to the development of all the countries of the union.
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