The European Commission has proposed a Council Decision to sign an Investment Protection Agreement between the European Union and Indonesia, as published on 29 June 2026. The agreement aims to replace the existing bilateral investment treaties between EU member states and Indonesia with a unified EU-level framework, providing stronger protections for EU investors and ensuring a level playing field. It covers key areas such as fair and equitable treatment, protection against expropriation, and a modern dispute resolution mechanism.
The proposal, designated COM(2026)342, was submitted by the Commission's Directorate-General for Trade. It follows the conclusion of negotiations with Indonesia, which began after the Council authorised the opening of talks in 2016. The agreement is part of the EU's broader strategy to modernise its investment policy and enhance economic ties with Southeast Asia. Once signed, it will be submitted to the European Parliament for consent before ratification.
The agreement is expected to benefit EU companies investing in Indonesia, particularly in sectors such as manufacturing, services, and renewable energy, by providing legal certainty and reducing political risk. Indonesian authorities will gain access to a predictable investment framework that could attract more European capital. However, some civil society groups have raised concerns that investor protections could limit the Indonesian government's policy space in areas like environmental regulation and public health. The European Parliament's Committee on International Trade is expected to scrutinise the agreement in the coming months, with some MEPs likely to push for stronger sustainability commitments.