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South America as trade partners: Closing institutional gap and optimising trade agreements
Limited preferential trade agreement coverage and suboptimal utilization of existing agreements have prevented Indonesia from fully realizing its trade potential in South America. This situation risks sustaining dependence on traditional markets while limiting exporters’ competitiveness due to tariffs, regulatory barriers, and high logistics costs. This paper recommends a phased institutional deepening strategy through the implementation of IP-CEPA, optimization of IC-CEPA, strategic engagement with Chile, and the initiation of negotiations with MERCOSUR. These efforts should be supported by stronger embassy capacity, improved long-distance trade logistics, and enhanced export financing and guarantee facilities. The Ministry of Foreign Affairs is expected to coordinate interministerial economic diplomacy and strengthen trade promotion through Indonesian overseas missions. This strategy aims to expand market access, improve economic resilience, and reinforce Indonesia’s role as a Global South actor.
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