On this page
- Aerospace opportunities in Indonesia
- Current tariff landscape and tariff outcomes under the CEPA
- Technical barriers to trade
- Customs procedures and trade facilitation
- Rules of origin and origin procedures
- Intellectual property
- Trade in services
- Temporary movement of natural persons
- Provincial and territorial interests
Aerospace opportunities in Indonesia
Indonesia’s aerospace sector demand is growing rapidly, driven by rising passenger travel, military modernization and increased investments in aviation infrastructure. The Indonesian government’s investment in domestic aircraft production creates opportunities for foreign suppliers and aerospace service providers. In 2024, Indonesia’s total aerospace imports were valued at approximately $1.0 billion, with Canada accounting for $3.8 million of these imports.
Canada, home to one of the world’s leading aerospace industries, is well positioned to capitalize on Indonesia’s growing demand for aircraft parts, advanced aviation technologies and aerospace services. In 2023, Canada’s aerospace sector contributed nearly $29 billion to the national GDP, with over 75% of that revenue resulting from exports.
Key areas of opportunity between our two nations include the export of turbo jet and propeller components, avionics systems, maintenance, repair, and overhaul (MRO) services, pilot training programs, and specialized aerospace manufacturing partnerships.
With the CEPA eliminating tariffs and streamlining trade facilitation measures, Canadian aerospace firms stand to benefit significantly from enhanced access to Indonesia’s aerospace market.
Current tariff landscape and tariff outcomes under the CEPA
Indonesia provides duty-free access on virtually all aerospace goods at the MFN (most-favoured nation) level. The CEPA will lock in the duty-free treatment for all goods, including airplanes, helicopters and their parts, ground flying trainers and simulators, which represent growing opportunities for Canadian enterprises.
The only dutiable product remaining at entry-into-force of the Agreement will be turbo propellers of a power exceeding 1,100 kW, for which Indonesia applies a 5% tariff. The CEPA will gradually phase-out the 5% tariff on turbo propellers over 10 years. Over time, this will provide Canada with an advantage to increase its import market share in Indonesia.
Technical barriers to trade
The CEPA’s Technical Barriers to Trade chapter builds upon WTO (World Trade Organization) agreements to enhance regulatory transparency and minimize unnecessary trade restrictions. This chapter encourages Indonesia to align technical regulations with international aerospace standards, which could reduce duplicative certification requirements. Canadian aerospace exporters will benefit from predictable regulatory frameworks that improve accessibility to Indonesia’s market.
Customs procedures and trade facilitation
With the WTO Agreement on Trade Facilitation as a foundation, the CEPA establishes commitments that promote greater predictability, consistency and transparency in customs matters.
Through provisions that include, among others, automated border processing, risk-based border inspections, and advance customs rulings for the tariff classification, customs valuation and origin of goods, Canadian exporters to Indonesia in the aerospace industry will benefit from customs processes that ensure their goods spend the least amount of time at the border.
Rules of origin and origin procedures
The CEPA’s Rules of Origin framework enables qualifying Canadian aerospace products to benefit from preferential tariff treatment by providing simple rules of origin and clear criteria for determining product origin.
The Agreement’s origin procedures streamline documentation and verification, reducing administrative burdens for aerospace exporters seeking preferential tariff treatment in Indonesia’s market.
Intellectual property
The Intellectual Property (IP) chapter bolsters administrative transparency for IP rights protections for Canadian aerospace firms operating in Indonesia. The chapter requires patents, trademarks, and proprietary technologies to be protected in accordance with minimum requirements set out in the agreement, as well as affirming international IP protection standards. The chapter also provides a framework of minimum standards for the enforcement of IP rights, providing more certainty for rightsholders. It also promotes cooperation between Canadian and Indonesian authorities to exchange information and share best practices on IP, allowing the federal government to maintain effective lines of communication with Indonesian government on developments in its IP regime that may affect Canadians operating in this sector.
Trade in services
The CEPA enhances predictability and regulatory transparency for Canadian aerospace-related industry providers. Canadian aerospace-related sectors will benefit from the CEPA in sectors such as engineering services, including aeronautical engineering, structural engineering, systems engineering and research and development.
Temporary movement of natural persons
The CEPA facilitates the movement of business professionals in the aerospace industry. This includes provisions to facilitate short-term business visits and stay for investors, alongside transparency elements to support intra-corporate transfers and professionals engaged in aerospace-related activities. These provisions promote business mobility and collaboration between Canadian and Indonesian firms.
Provincial and territorial interests
Quebec is Canada’s aerospace powerhouse. The province excels in aircraft assembly, flight simulation, engine manufacturing, and helicopter production. With CEPA locking in duty-free access and streamlining technical regulations, Quebec firms can expand exports of aircraft, simulators, and aviation systems to Indonesia’s growing aviation market.
Ontario’s aerospace exports also align with Indonesia’s import needs. CEPA’s tariff elimination will enhance Ontario’s competitiveness and support its aerospace supply chain.
British Columbia’s aerospace sector has strengths in MRO (maintenance, repair, and overhaul), aerial firefighting, and avionics. British Columbia’s proximity to Asia and its export-oriented industry make it a natural fit for increased trade with Indonesia.
Manitoba’s aerospace sector specializes in MRO, composite manufacturing, engine testing, and space systems. The sector contributes $1.6 billion to the Manitoba GDP and over 5300 jobs. With CEPA phasing out tariffs on turbo propellers and simplifying origin procedures, Manitoba’s aerospace manufacturers will have enhanced capability to expand exports to Indonesia.
Alberta is emerging as an innovation hub with expertise in Unmanned Aerial Vehicles (UAVs), geomatics, defence electronics, and MRO services. CEPA’s provisions on intellectual property, services, and temporary movement of professionals will support Alberta’s high-tech aerospace exports and facilitate collaboration with Indonesian aviation firms.
Prince Edward Island’s aerospace sector is emerging, with Prince Edward Island’s aerospace exporters identifying promise in the Indo-Pacific region.