The EU and Indonesia have announced a Comprehensive Economic Partnership Agreement (CEPA). The deal aims to eliminate over 98 % of tariffs, with key focus areas including cars, pharmaceuticals, electronics, and agri-food products. As too often, the benefits for EU fruit and vegetables exports remain uncertain and subject to unresolved SPS. Is the EU–Indonesia CEPA good news for Fruit and Vegetables?

The European fruit and vegetables sector export around 7.000.000 T of high quality, sustainable and nutritious fruit and vegetables to more than 150 destinations. This volume remains however well below its potential and demand given excessive SPS barriers imposed by third countries. The recent finalisation if the Comprehensive Economic Partnership Agreement (CEPA) with Indonesia could be an new opportunities for the EU fresh produce business and further market diversification in a buoyant South East Asian markets.

Despite being a distant market, Indonesia is a highly promising and strategically important market in the current geopolitical and trade context. With a population of 286 million, a growing middle class, and GDP growth consistently above 5 %, Indonesia offers significant opportunities for EU exporters. The EU assortment of temperate fruits and vegetables is complementary and not competing with the local Indonesian production.

However, access to this market is currently undermined by a series of trade barriers, administrative burdens, discriminatory measures and complex business environment that prevent unleashing the full potential from the EU supply given a unlevelled playing field with competitors, most notably from the Northern Hemisphere such China (prices competition) and the United States (enjoying more favourable market access conditions). As a result, European export is limited to around 20.000 T (< €15 Million). EU fresh produce only represents a small share of the Indonesian import assortment (1,5 %). Currently, EU shipments are limited to onions and kiwifruit and some exports in a sample mode with apples or blueberries. Beyond the market access irritants, the EU sector also needs to monitor and to cope with other important commercial aspects for a successful growth of business: negotiating direct, and costs effective reefer logistics, addressing detrimental exchange rate fluctuations, or converting EU sustainability achievements from a handicap into an asset within a global & competitive trade environment.

Upon signing the CEPA, European Trade Commissioner Šefčovič underlined that this is a strong signal for openness and partnership in a world facing rising protectionism and fragile supply chains. The deal aims to eliminate over 98 % of tariffs, with key focus areas including cars, pharmaceuticals, electronics, and agri-food products. Commissioner Hansen also highlighted a victory for high-quality EU foods and 200 Geographical Indications (GIs).

Philippe Binard , General Delegate of Freshfel Europe stated: “These are encouraging steps, but EU external trade should not be limited to cars! When it comes to fresh fruit and vegetables, there’s a critical issue that remains unresolved. Tariff elimination alone will not improve market access for EU exporters if non-tariff barriers, particularly SPS (Sanitary and Phytosanitary) measures, are not effectively addressed”. In Indonesia, these barriers are numerous and complex ranging from costly, lengthy, and fragmented PRA processes (product-by-product, member-state-by-member-state), to lack of EU-wide recognition for plant health standards. Limited laboratory accreditation and also opaque licensing and quota systems are failing to generate a business friendly model further excarcerbated by discriminatory port logistics practices.

Despite the EU having robust, common food and plant safety regulations, Indonesia does not recognised the EU as a signle entities and continues to impose applications process member state by member state and duplicate requirements and conditions treating each EU member state separately, while Indonesia enjoying seamless access to the EU’s 450 million consumers for their export.

Philippe Binard commented: “For CEPA with Indonesia to truly deliver its benefit for fresh fruit and vegetables, SPS provisions of the agreement must tackle these systemic issues head-on. Let’s see if the SPS provisions of CEPA provide the tools for eliminating these excessive and duplicating measures “ He added “Otherwise, CEPA tariff concessions on fruit and vegetables will be void and risk becoming an empty gesture, as seen with past FTAs with Mexico, Chile, Peru, South Korea, and Japan.Most of these countries take huge benefit of exporting to the EU markets by too often remain hermetically close in breach of basic reciprocity principles”

So the question remains: Will this time be different for fresh fruit and vegetables? Freshfel Europe is calling the European Commission to secure and deliver the expected market opening for fruit and vegetables trade based on the momentum of CEPA and a phasing out of all excessive protectionist barriers allowing safe trade for the benefit of both EU trade, Indonesian importers and retailers and Indonesian consumers.

The pollution of water and soil by waste is one of the biggest problems for our environment. Indonesia is the second-biggest contributor of plastic waste in the world, producing over 5 million tons of plastic waste per year with around 3 million tons disposed to the waters around the country. One of the main reasons is that many small islands have no waste collection and no municipal disposal system for household and other waste. Due to a lack of knowledge about the dangers involved, people dump their waste in landfills, burn it or dispose of it in the sea.

With the Recycle for Good program, SIG and the SIG Way Beyond Good Foundation want to change people’s behavior and promote a mindful use of natural resources. The program is designed to encourage the public to drop off recyclable waste such as beverage cartons, glass, plastic or cooking oil at a collection point and thus return it to the cycle. In return, they receive food vouchers or coupons for other goods and services that they can exchange at Recycle for Good partners. The materials are sorted on site and recycled by a recycling partner.

SIG Way Beyond Good Foundation envisions a future where good nutrition and clean water are available to everyone and natural habitats are preserved for the future generation.

With the experience of SO+MA, a Brazilian social startup that has been working with SIG since 2018 to promote the circular economy through a reward system, the foundation developed its global Recycle for Good program. Indonesia launched the program as the first country in Southeast Asia on March 3, 2023, at Cibubur Junction in East Jakarta, where a Recycle for Good drop point is located. Later, the program will be replicated.

The growing appeal of leading healthy lifestyles has made its way to consumers in Southeast Asia and it seems the cornerstone of maintaining this is by following a healthy diet and exercise regime.

Indeed, new research from global market intelligence agency Mintel reveals that as many as three in four (75 %) metro consumers in Indonesia and two in three (66 %) metro consumers in Thailand say they aim to have a healthier diet in 2017*. Additionally, 58 % of metro Indonesians and 62 % of metro Thais say that they will definitely exercise more in 2017.

One of the key ways in which consumers in Southeast Asia are looking to adopt a healthy and balanced diet is by consuming food and drink that is high in protein. Indeed, there has been an increased interest in protein offering across the region. Mintel research shows that 64 % of metro consumers in Indonesia and Thailand respectively say that as part of their daily diets, they prefer to get their protein from foods that are naturally high in protein. Reflecting a growth in interest in protein consumption in Southeast Asian consumers’ daily diets, this figure (64 %) is a rise from 37 % of metro Indonesians and 41 % of metro Thais who said the same last year**.

Brands and companies have taken notice of this trend, however, innovation in Asia Pacific is falling behind; data from Mintel Global New Products Database (GNPD) found that in the two years leading to July 2017***, there was a 26 % increase in the number of global food and drink launches carrying a ‘high/added protein’ claim. Comparatively, Asia Pacific saw a 5 % growth in the number of food and drink launches with a ‘high/added protein’ claim in the same time period.

Jane Barnett, Head of Insights, South APAC, at Mintel said:

“Improving health and fitness is now a key focus of consumers across Southeast Asia, particularly through their diets and exercise. Consumers in the region show continuous interest in proteins and are incorporating more of them into their daily diets and eating regimes. Much of this growth in demand is attributable to consumer belief that protein aids in the pursuit or maintenance of a healthy physique, and provides them with energy and satiety. While brands in Asia Pacific have taken notice of this interest, there is still more room for innovation within the region.”

According to Mintel research, 47 % of metro Thai consumers think that high protein food or drink assists with building muscle, while 37 % of metro Indonesians think that high protein offerings help in managing weight. Furthermore, just over two in five consumers in urban Indonesia (42 %) and Thailand (41 %) feel that high protein food or drink provides them with long-lasting energy, while four in 10 (40 %) metro Thais think that these offerings help them to feel fuller for longer.

Meanwhile, the aspiration to be healthy among consumers has also made its way into the beauty and personal care industry with launches that target niche sporting activities, giving rise to Mintel’s 2017 Global Beauty and Personal Care Trend, ‘Active Beauty’.

Mintel research finds that 58 % of metro Thais and 63 % of metro Indonesians believe that regular exercise is important for a healthy lifestyle. As consumers recognise the importance of staying active, beauty and personal care brands are formulating products to help them in their quest for health and fitness. According to Mintel GNPD, the number of global skincare products launched featuring the word “sweat” in the product description grew by 30 % between 2015 and 2016, while the number of these launches in the colour cosmetics category grew by a significant 81 % in the same time frame.

“The perception of Active Beauty within Asia first started out, and is still very much, centred on suncare. However, as sports and fitness activities move indoors, this segment will move beyond sun protection. While still a niche market in Asia and globally, there is definite growth opportunities for active beauty brands and products in Southeast Asia, especially as consumers continue to recognise the benefits of staying active.” Jane continues.

Aside from achieving a healthy body, it seems that it is also the mind that consumers in Southeast Asia are keen to look after. Over three in five (61 %) of metro Thai consumers believe that maintaining a positive mental state is an important factor to leading a healthy lifestyle.

“While there have been a couple of products across Southeast Asia’s sports, energy, and lifestyle beverage space that talk about the ‘mind and body’, there is definitely still space for brands and companies to expand into this area. Globally, we see a growing rate of products that aim to provide more of a holistic approach, incorporating a beneficial nutritional profile, as well as either enhancing a consumer’s mood or providing the elements needed to keep the mind sharp and focused.” Jane concludes.

*Polled in June 2017
**Polled in June 2016
***August 2014 to July 2017