Indonesia and the European Union on Tuesday formally signed a Comprehensive Economic Partnership Agreement (CEPA) in Bali.

"From the first round of negotiations in Brussels in 2016, to today in Bali, this nine-year journey has brought us to a historic milestone that reflects our joint commitment to an open, fair, and sustainable economy through CEPA," said Indonesia's Coordinating Minister for Economic Affairs, Airlangga Hartarto, in a joint statement with European Commissioner for Trade and Economic Security Maros Sefcovic.

The agreement covers liberalization of trade in goods, services and investment. Around 98 percent of tariff lines will enjoy preferential treatment under the pact.

Key Indonesian exports, including palm oil, textiles, footwear and processed agricultural products, are expected to benefit. New opportunities will also emerge for electronics, high-tech goods and digital trade.

Sefcovic said the agreement would bolster investment into Indonesia by European companies and help diversify the supply chain, particularly for critical minerals, which Indonesia has in abundance.

In a separate statement, European Commission President Ursula von der Leyen said the agreement would help to provide "a stable and predictable supply of critical minerals, notably nickel and cobalt."

The trade between Indonesia and the EU is expected to double in the first five years of implementation, Indonesia said, Reuters reported on Tuesday.

In 2024, trade between the two parties was $30.1 billion, according to Indonesia's Economic Ministry.

Indonesia has become the third Southeast Asian country to conclude a CEPA with the EU, after Singapore and Vietnam, with the agreement expected to take effect in early 2027.

(With input from agencies)