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Indonesia, explained.
Tanjung Priok Port in Jakarta, Indonesia (Dimas Ardian/Bloomberg via Getty Images)
If shipping goods is already cumbersome enough during peacetime, there is no guarantee that a conflict situation will make trade across borders any easier.
Making trade with Indonesia disruption-proofMaking trade with Indonesia disruption-proof
About the author
Arrizal Jaknanihan
Arrizal Jaknanihan is a research coordinator assistant at the Institute of International Studies, Department of International Relations, Gadjah Mada University, Indonesia.
Anticipating fluctuations in US tariff rates, Indonesia since last year has been fast-tracking the implementation trade deals for alternative markets, including the European Union and Canada, each through its own recently concluded Comprehensive Economic Partnership Agreement (CEPA).
But tariff elimination alone will not guarantee that these markets will remain open during times of external disruption. Indonesia must also pursue a binding mutual agreement that ensures trading partners keep their borders open, allowing goods to be transshipped even during supply chain disruptions.
The neighbouring nation Singapore has just set an example that policymakers in Jakarta can emulate.
On 17 July 2026, Singapore and New Zealand implemented the Agreement on Trade in Essential Supplies (AOTES (Opens in new window)). The agreement will ensure that the flow of essential goods, including food, energy, and medical supplies, between the two partners continues unimpeded.
A similar deal is in the works between Singapore and Australia after both parties signed the Protocol on Economic Resilience and Essential Supplies (Opens in new window) under the Singapore-Australia Free Trade Agreement on 27 July 2026.
If shipping goods is already cumbersome enough during peacetime, there is no guarantee that a conflict situation will make trade across borders any easier.
Singapore has demonstrated the agility of trade-dependent economies in Southeast Asia in navigating geoeconomic headwinds. The agreement came up timely as the new wave of the US tariff under Section 301 (Opens in new window) of the Trade Act of 1974 took into effect on 24 July 2026.
Article 8 of the AOTES imposes a legal obligation on both parties to cooperate, to the extent practicable, in keeping ports and terminals open for trade and streamlining customs processes in the event of a supply chain disruption.
Following Singapore’s steps is not an impossible task for Indonesia. Singapore’s AOTES did not emerge in a vacuum. The agreement came as an additional provision that layered the existing Singapore-New Zealand Comprehensive Economic Partnership, which had been in force since 2001. The agreement was then updated and bolstered by a joint declaration to maintain supply chain continuity during the Covid-19 pandemic in 2020.
With 25 active trade agreements in 2026, Indonesia does not lack the frameworks that can be elevated to a higher level. Indonesia already has high-quality trade agreements with partners that share a commitment to a free, open, and rules-based trade order, including the Indonesia-Australia CEPA, which entered into force in 2020, eliminating almost all tariffs on Indonesian goods exported to Australia.
Shouldering the commitment to keep cross-border trade open amid external disruption is not new for Indonesia either. In 2021, Indonesia adopted the ASEAN Plus Three Plan of Action (Opens in new window) on Mitigating the Economic Impact of the Covid-19 Pandemic, which required signatory parties to refrain from maintaining or introducing measures that unnecessarily impede the flow of essential goods. Indonesia had reiterated a similar commitment – although not legally binding – when it signed a Joint Statement (Opens in new window) on Supply Chain Resilience with Singapore on 6 July 2026. This arrangement could become a template for upgrading similar agreements with other partners.
Yet Indonesia still needs to address logistical challenges to bring the potential AOTES into shape. Unlike Singapore, inefficiency still plagues ports and other connectivity infrastructure that allow cargo to enter and be unloaded seamlessly. The Container Port Performance Index (CPPI (Opens in new window)), which measures the time vessels spend in ports, ranked Indonesia’s main commercial port, New Priok Port in Jakarta, at 121st globally with a meagre 15.7 points in 2025. Other major ports in the Indonesian cities of Surabaya, Semarang, and Palembang scored even lower.
These numbers pale in comparison to Singapore port, which tops the CPPI chart with the highest performance efficiency, scoring a perfect 100 index point.
On top of physical infrastructure, inefficient customs regulations also complicate the possible implementation of upgraded trade agreements. Indonesia’s customs have long had a reputation for complicated permit and certification processes, a lack of digitalisation and data integrity, and the politically charged implementation of restrictions and prohibitions on goods (Lartas).
Indonesia’s score in the World Bank’s Logistics Performance Index (LPI (Opens in new window)) in 2023 illustrated the hurdles that foreign partners must face to ship goods in and out of the country. Whereas Singapore ranked 1st in terms of efficiency, Indonesia ranked 63rd out of 139 nations, below Southeast Asian peers such as Thailand and Malaysia.
If shipping goods is already cumbersome enough during peacetime, there is no guarantee that a conflict situation will make trade across borders any easier.
The list of trade agreements that Indonesia has signed signals a commitment to free trade. However, inadequate physical and institutional infrastructure also signals to potential partners that Indonesia may not be able to reciprocate their commitment to facilitating the flow of goods across borders. Unless these concerns are addressed, external partners are unlikely to enter binding commitments with Indonesia.
Upgrading trade agreements to make them disruption-proof is only half the job. Unless Jakarta also fixes the ports and customs processes that slow every shipment down, the agreements it signs will be worth less than the paper they’re written on.
