Indonesia and Canada Forge Stronger Ties with Landmark Trade and Defence Pacts

Historic Agreements Signed in Ottawa

In a significant development for bilateral relations, Indonesian President Prabowo Subianto and Canadian Prime Minister Mark Carney formalized a comprehensive trade agreement and a defence pact during a meeting in Ottawa on September 24, 2025. The signing ceremony, held on Parliament Hill, marks a new chapter in cooperation between the two G20 nations.

President Subianto emphasized the strategic importance of these agreements, stating they are 'very important for us, very strategic economically.' Prime Minister Carney hailed the trade deal as a 'game-changing agreement' for Canadian businesses, designed to foster certainty and security for increased trade and investment.

Indonesia-Canada Comprehensive Economic Partnership Agreement (ICA-CEPA)

The centerpiece of the economic cooperation is the Indonesia-Canada Comprehensive Economic Partnership Agreement (ICA-CEPA). This landmark deal represents Canada's first-ever bilateral trade agreement with a member of the Association of Southeast Asian Nations (ASEAN).

Key provisions of the ICA-CEPA include:

• Tariff Elimination: Canada has committed to eliminating 90.5 percent of import tariffs on Indonesian goods.
• Tariff Liberalization: Indonesia will liberalize up to 85.8 percent of its tariffs for Canadian products.
• Economic Impact: The agreement is projected to boost Indonesia's exports to Canada by US$11.8 billion by 2030, and increase Indonesia's national GDP by 0.12 percent and investment by 0.38 percent.
• Sectoral Benefits: Canadian sectors such as agriculture, energy, telecom, aerospace, and defence are expected to gain preferential access to the Indonesian market.

Prime Minister Carney noted that the deal would clear the way for over 95 percent of Canada's existing exports to Indonesia to enter at reduced or zero tariffs once ratified. The agreement also aims to create a more transparent and predictable environment for trade and investment, opening new opportunities for workers and industries in both countries.

Deepening Defence Cooperation

Beyond trade, the leaders also signed a significant defence cooperation agreement. This pact builds on an earlier Memorandum of Understanding (MoU) and is set to deepen collaboration in several critical areas:

• Military Training and Education
• Maritime Security
• Cyber Defence
• Peacekeeping Operations

President Subianto, a retired army general, expressed his desire for more Indonesian youth to receive defence-related training in Canada, highlighting Indonesia's continued commitment to international peacekeeping. Prime Minister Carney underscored the importance of this agreement as a crucial component of Canada's Indo-Pacific strategy, signaling a joint commitment to regional and global peace and stability.

Broader Strategic Partnership

The visit also saw the signing of additional agreements aimed at fostering broader economic ties. An MoU was inked between Export Development Canada (EDC) and the Indonesia Investment Authority (INA), exploring cooperation in sectors like infrastructure, cleantech, renewable energy, and agri-food, with EDC making up to $825 million in debt financing available to INA. Furthermore, the Business Council of Canada and the Indonesian Chamber of Commerce and Industry (Kadin) signed an agreement to strengthen business-to-business connectivity.

President Subianto praised Canada as a 'very responsible, mature, leading power of the West, but with great empathy for the concerns of the developing nations.' These agreements are expected to significantly enhance the strategic partnership between Indonesia and Canada, fostering mutual economic growth and security cooperation.