On 29 June 2026, the Council of the European Union adopted a decision authorising the signing of the Investment Protection Agreement (IPA) between the EU and Indonesia, subject to its conclusion at a later date. The IPA establishes a legal framework for protecting EU and Indonesian investors and their investments in each other's territories, while reaffirming both parties' right to regulate in the public interest, including on public morals, social protection, privacy, and sustainable development.
The agreement sets protection standards such as non-discrimination, protection against expropriation without compensation, fair and equitable treatment, physical security, compensation for losses from war or conflict, and free transfer of funds. It includes an investor-state mediation mechanism and a state-state dispute settlement (SSDS) mechanism. The EU and Indonesia also agree to restart negotiations on investor-state dispute settlement and interpretative guidance on taxation and expropriation no later than the IPA's entry into force.
A Committee will supervise implementation, and domestic advisory groups with civil society representatives will meet at least once a year. The IPA will have no financial impact on the EU budget.
Impact on stakeholders The IPA provides legal certainty for EU investors in Indonesia and Indonesian investors in the EU, reducing political risk. It preserves regulatory space for both parties, allowing them to pursue public policy objectives without fear of investor claims under outdated rules. The mediation and SSDS mechanisms offer alternative dispute resolution, potentially reducing litigation costs. However, the absence of a full investor-state dispute settlement (ISDS) mechanism until renegotiated may leave some investors seeking stronger enforcement options. Civil society groups gain a formal advisory role, enhancing transparency and accountability.
Institutional follow-up The decision authorises the signing of the IPA. The next step is the actual signing by the EU and Indonesia, followed by ratification procedures in both parties. The European Parliament will need to give its consent before the Council can conclude the agreement. The renegotiation of ISDS and interpretative guidance on taxation and expropriation is scheduled to begin no later than the IPA's entry into force.