The Council of the European Union has received a Commission proposal for a Council Decision to sign an Investment Protection Agreement between the EU and Indonesia, with the full text of the Agreement attached as Annex 1. The proposal, signed by Commission Director Martine Deprez on 29 June 2026, sets binding rules on investment treatment, expropriation, and compensation, with significant carve-outs for services, subsidies, and procurement.
The Agreement establishes protections for EU and Indonesian investments in each other's territories, covering investments owned or controlled by investors of one Party in the other Party's territory. Key protections include national treatment (Article 2.3), most-favoured-nation treatment (Article 2.4), fair and equitable treatment (Article 2.5), compensation for losses from war or conflict (Article 2.6), and expropriation rules (Article 2.7). The Agreement reaffirms Parties' right to regulate for public health, safety, environment, climate change, and other legitimate objectives (Article 2.2). Portfolio investments—those without control or lasting interest—are excluded from the definition of "investment" (Article 1.2).
Exclusions from national treatment and most-favoured-nation treatment (Articles 2.3 and 2.4) cover audio-visual services, national maritime cabotage, domestic/international air transport (except specific services), subsidies, and government procurement (Article 2.1). These carve-outs protect sensitive sectors from full liberalisation under the agreement.
The proposal now awaits Council deliberation. If adopted, the Council Decision would authorise the signing of the Agreement, after which it would be submitted to the European Parliament for consent before ratification. The Agreement is expected to benefit EU investors in Indonesia by providing legal certainty and protection against discriminatory treatment, while preserving regulatory space for both Parties. Indonesian investors in the EU would receive reciprocal protections. The exclusion of portfolio investments and sensitive sectors limits the scope of protections, potentially reducing benefits for financial investors and service providers in excluded areas.