Trade Agreements
Describes trade agreements this country is a party to. Includes resources where U.S. companies can get information on how to take advantage of these agreements.
Indonesia is a party to the region-wide Association of Southeast Asian Nations (ASEAN) Free Trade Area. ASEAN, and by extension Indonesia, also has preferential trade agreements with Australia, China, Hong Kong India, Japan, Korea, and New Zealand and concluded text-based negotiations of the Regional Comprehensive Economic Partnership in November 2019. Indonesia has signed bilateral free trade agreements (FTAs) with Australia, Chile, Mozambique, as well as with Iceland, Liechtenstein, Norway, and Switzerland under the European Free Trade Association, but as of the end of 2019, none of these FTAs are yet in force except with Chile. Indonesia recently concluded negotiations with Korea on a Comprehensive Economic Partnership Agreement. Indonesia is negotiating other FTAs with the European Union (EU), India, Tunisia, and Turkey as well as reviewing its trade agreements with Japan and Pakistan.
Business Customs
The best time for an initial business trip is September through June, as school holidays and vacation time in the summer months can impact the availability of many businesspeople. Visitors should check the local holiday schedule before traveling to Indonesia. Business appointments are often difficult to schedule during the Muslim fasting month of Ramadan and as well as during the two-week period after Ramadan when Indonesians typically travel to their hometowns to celebrate Idul Fitri with their extended families. The most common business attire is batik shirt, with short-sleeve considered informal and long-sleeve considered to be formal. A business suit or dress (formal) or a white shirt/blouse and slacks/skirt (informal) are also common attire.
Indonesia is a very diverse country, with more than 300 different ethnic groups. While some Indonesians are traditional, others may be considerably “Westernized.” Still, many Indonesians do not conduct business transactions or make decisions in the same direct, legalistic fashion that many Americans do. U.S. businesspeople should be prepared to spend a good deal of time with clients to build mutual understanding and trust before getting down to the business transaction.
Traditional Javanese culture emphasizes harmony and the word “no” is rarely used. This can make it difficult for a Westerner to ascertain exactly how a business proposal is being received. Because Indonesians often prefer to do business with people who they know well and trust, developing rapport is crucial. While quality and price are important, they are often secondary to the personal interaction of the business partners.
During business meetings, sweet tea or coffee is almost always served and should be accepted. It should not be consumed until the host invites you to do so, which may not occur until the end of the meeting. Generally speaking, it is best to use the right hand in receiving or eating. Although hand shaking is a common practice, avoid hearty handshakes and other physical contact. Do not show the soles of your shoes when seated.
The relation between the EU and Indonesia has deepened over recent years. Following successful exploratory discussions in April 2016 to further deepen EU-Indonesia trade and investment relations, negotiations for an EU-Indonesia free trade agreement launched on 18 July 2016. Nine full rounds have been held so far.
A Free Trade Agreement (FTA) will develop a key aspect of the overall relationship between the EU and Indonesia, which is framed by the Partnership and Cooperation Agrement. The agreement entered into force on 1 May 2014.
FRAMEWORK AGREEMENT
on comprehensive partnership and cooperation between the European Community and its
Member States, of the one part, and the Republic of Indonesia, of the other part
THE EUROPEAN COMMUNITY,
hereinafter referred to as ‘the Community’ and
THE KINGDOM OF BELGIUM,
THE REPUBLIC OF BULGARIA,
THE CZECH REPUBLIC,
THE KINGDOM OF DENMARK,
THE FEDERAL REPUBLIC OF GERMANY,
THE REPUBLIC OF ESTONIA,
IRELAND,
THE HELLENIC REPUBLIC,
THE KINGDOM OF SPAIN,
THE FRENCH REPUBLIC,
THE ITALIAN REPUBLIC,
THE REPUBLIC OF CYPRUS,
THE REPUBLIC OF LATVIA,
THE REPUBLIC OF LITHUANIA,
THE GRAND DUCHY OF LUXEMBURG,
THE REPUBLIC OF HUNGARY,
MALTA,
THE KINGDOM OF THE NETHERLANDS,
THE REPUBLIC OF AUSTRIA,
THE REPUBLIC OF POLAND,
THE PORTUGUESE REPUBLIC,
ROMANIA,
THE REPUBLIC OF SLOVENIA,
THE SLOVAK REPUBLIC,
THE REPUBLIC OF FINLAND,
THE KINGDOM OF SWEDEN,
THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND,