On this page
- Manufactured goods and machinery 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
- Temporary movement of natural persons
- Provincial and territorial interests
Manufactured goods and machinery opportunities in Indonesia
Indonesia is Southeast Asia’s largest manufacturing economy, with the manufacturing sector contributing over $360 billion in 2024—around 20% of Indonesia’s GDP. Indonesia imports more than $89 billion in manufactured goods and machinery annually, with Canada contributing nearly $170 million, primarily in nuclear reactors, boilers, machinery and mechanical appliance, electrical machinery and equipment, optical/photographic instruments, and medical/surgical instruments and apparatus.
Indonesia’s rapid industrialization and investment in advanced manufacturing present strong export opportunities for Canadian manufacturers in high-tech machinery, medical instruments, optical products, and industrial automation equipment. The country’s demand for computers, electronics, and precision engineering tools has surged, making CEPA’s tariff eliminations and regulatory alignment critical for Canadian exporters.
Indonesian buyers value cost-efficient, high-performance machinery, creating opportunities for Canadian firms specializing in innovative industrial equipment, robotics, and precision instruments. Additionally, Indonesia’s expanding healthcare sector increases demand for medical measuring instruments and diagnostics equipment, areas where Canada excels.
Current tariff landscape and tariff outcomes under the CEPA
Before the CEPA, Canadian exports of industrial machinery faced tariffs averaging 5.3%. Under the CEPA, many Canadian manufactured goods and machinery exports will receive preferential tariff treatment, significantly reducing costs for Indonesian buyers and boosting Canada’s export potential:
- Copper or copper alloy water taps – 5% tariffs to be phased out over 10 years.
- Valves for inner tubes of copper or copper alloys – 5% tariffs to be phased out over 10 years.
- Copper brazed pipes and tubes – 15% tariffs to be phased out over 15 years.
- Tires – 15% tariffs reduced by a total of 75% over 10 equal annual cuts or phased out over 15 years.
- Medical equipment – tariffs up to 15% to be eliminated upon the entry into force or phased out over up to 15 years, depending on the specific product.
- Surveying instruments and appliances – 5% tariffs to be phased out over 10 years.
- Optical instruments and appliances – 5% tariffs to be phased out over 5 or 10 years, depending on the specific product.
Technical barriers to trade
The CEPA encourages Indonesia to use internationally recognized standards for manufactured goods and machinery, reducing duplicate certification requirements and compliance burdens for Canadian exporters.
Customs procedures and trade facilitation
With the World Trade Organization (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 machinery and equipment 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 establishes clear and simple origin criteria to enable Canadian manufacturers of qualifying goods to benefit from preferential tariff treatment when exporting to Indonesia. The agreement simplifies documentation requirements, helping to reduce administrative burdens and making trade processes more efficient. Also available are advance rulings on origin, providing certainty for exporters and reducing the risk of disputes at customs checkpoints. Additionally, the CEPA includes facilitative rules on accumulation of materials, further enhancing trade opportunities and market access.
Intellectual property
The CEPA’s Intellectual Property chapter bolsters protections for Canadian innovators and manufacturers by requiring enforcement mechanisms against pirated and counterfeit goods. It sets out minimum standards for the protection of patented inventions, industrial designs, technological protection measures, copyrighted software, and other intellectual assets of Canadian businesses. The chapter 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 the Indonesian government on developments in its IP regime that may affect Canadians operating in this sector.
Temporary movement of natural persons
The Temporary Movement of Natural Persons chapter facilitates entry for Canadian business professionals, including those in the manufactured goods and machinery sector. Exporters and investors can benefit from clearer pathways for intra-company transfers and short-term business visits, improving business operations and market engagement.
Provincial and territorial interests
Ontario is Canada’s manufacturing powerhouse. The province excels in automotive components, industrial machinery, medical devices, and precision instruments. CEPA’s tariff elimination on medical equipment, surveying instruments, and industrial machinery supports Ontario’s export strengths. The Agreement’s provisions on intellectual property protection and customs facilitation will help Ontario firms expand into Indonesia’s growing industrial and healthcare sectors.
Quebec’s manufacturing sector has strong capabilities in machinery, optical instruments, industrial automation, and medical technologies. CEPA’s phased tariff elimination on optical and medical instruments aligns with Quebec’s interest in liberalizing tariffs for machinery and precision goods.
Alberta’s and Saskatchewan’s manufacturing sector has strengths in fabricated metal products, machinery, and electrical equipment. CEPA’s tariff phase-outs on copper-based components and industrial valves support Alberta’s export potential in mining, energy, and construction machinery.
British Columbia’s manufacturing sector has strengths in machinery, electronic components, and medical equipment. CEPA’s tariff elimination on medical and optical instruments supports British Columbia’s export ambitions in healthcare and diagnostics.
CEPA’s tariff reduction on tires will benefit Nova Scotia’s tire exports, enhancing competitiveness in Indonesia’s automotive and industrial markets.