Island interest: Indonesia aspires to the Russian market
Indonesian companies are increasingly eyeing the Russian market after signing a free trade agreement with the EAEU. The Russian Embassy in Jakarta told Izvestia that local businesses are interested in working conditions, finding partners and localizing production. In particular, the manufacturer of household appliances, Modena, is considering launching production in the Russian Federation, and plans to launch its smartphones on the market as early as 2026, Michael Dzizara, the company's executive vice president, told Izvestia. But the development of cooperation is hampered by sanctions risks and the dependence of the Indonesian financial system on Western banks, experts warn.
Indonesia wants to trade more with Russia
In December 2025, Russia and Indonesia reached a new stage in bilateral trade — the republic signed a Free trade Agreement with the EAEU. The agreement zeroed duties for 90% of goods, which helped bring mutual trade turnover to a record level of almost $5 billion. Russia already provides for the needs of the Indonesian agro-industrial complex and industry, supplying wheat, fertilizers, oil and metals for the automotive industry and construction. In return, Jakarta supplies vegetable oils, rubber for tire production, electronics, clothing, shoes, and products ranging from coffee and tea to exotic fruits.
Now the Indonesian business is even more eager to enter the Russian market, the Russian Embassy in the republic confirmed to Izvestia.
— After the signing of the Free Trade Agreement between the Eurasian Economic Union, its member states and Indonesia, we note the growing interest of the local business community in the opportunities of working in the Russian market. The embassy receives requests from domestic and Indonesian economic operators for information and consulting related to market entry conditions, partner search, logistics and current requirements for the products supplied," the diplomats noted.
According to them, business is most interested in agriculture, food and light industry, consumer goods, pharmaceuticals and technological cooperation. Manufacturers of electronics, household appliances, and telecommunications equipment are also exploring the Russian market.
The greatest potential is still seen in the supply of medical products: pharmacology, ophthalmology and X-ray equipment. Alexander Korolev, Deputy Director of the Central Research Institute of Higher School of Economics, highlighted the prospects of the Shvabe holding (part of Rostec State Corporation), which manufactures medical equipment. The free trade zone will definitely help strengthen the brand's position in the Indonesian market and boost exports.
There are already successes in this area. The diplomats recalled that in May 2026, at the 14th meeting of the Russian-Indonesian Joint Commission on Trade, Economic and Technical Cooperation, an important agreement was signed. The domestic Peptogen Research and Development Center has signed an agreement with the Indonesian pharmaceutical company PT Konimex for the supply of peptide preparations to the republic.
And the Indonesian business is actively eyeing the localization of production in the Russian Federation, for example, the technology company Modena.
— We have a joint venture with Atlant in Belarus. Do I plan to take a closer look at Russia? Sure. I think Russia is a very big market, and we are very interested in understanding how we can enter here not only for sales, but also for localization of production in the Russian Federation. So yes, we are very optimistic about the Russian market," Michael Cizara, Executive vice president of the corporation, told Izvestia.
Until 2022, Modena actively supplied household appliances and electronics through a local distributor, but he left the Russian Federation. The company is not going to leave and is now looking for partners. Already this year, Modena plans to launch its smartphones on the Russian market. To do this, the corporation cooperates with the Chinese Meizu (part of Geely holding).
Taking into account such demand, the Indonesian side even hopes to increase trade turnover with the Russian Federation by two or three times. Fortunately, the potential of both countries is huge.
— We are dealing with two large economies, because Indonesia is also among the top ten economies in the world in terms of GDP and purchasing power parity. A few years ago, it competed with the Russian one. There was a possibility that Indonesia would even outpace Russia, but this has not happened yet," Sergei Tolkachev, a professor at the Financial University under the Government of the Russian Federation, told Izvestia.
Such forecasts were actively discussed in 2020-2022. But the Russian economy has grown due to large-scale government investments, state defense orders and the restructuring of logistics for Asia. In 2023, Russia's GDP increased by 3.6% and continued to grow, making the country the fourth largest in the world.
What difficulties remain in trade between Russia and Indonesia
However, experts believe that there is still a long way to go before some kind of global breakthrough in all trade areas.
— These may be changes in the trade balance, an increase in exports and imports, but there is no need to talk about any global growth points here, — Alexander Korolev told Izvestia. — The Indonesian market is very competitive, and other companies have been there for a long time. It is necessary to go there with ready-made capital, with investments, to localize production.
According to the expert, many Russian companies are not ready to do this yet.
The main barrier to trade between the two countries is the harsh pressure of the United States and the EU on Indonesia's financial sector. The republic's economy is deeply dependent on the dollar and European banks, and Moscow is forced to conduct all business negotiations quietly.
"In the current geopolitical situation, taking into account the continuing sanctions pressure and attempts by a number of Western states to hinder the development of mutually beneficial relations between Russia and foreign partners, premature public disclosure of the details of commercial negotiations may create additional risks both for their participants and for the implementation of the projects themselves," the Russian Embassy stressed.
It is difficult to protect businesses from sanctions due to the low demand for rubles and rupees on the global market, Tolkachev noted. For example, if Indonesia sells palm oil to Russia and receives rubles, it will not be able to buy machine tools in Germany or electronics in China with them. The currency will either have to be spent in the Russian Federation, or saved in accounts. Domestic exporters face the same problem: rupees cannot be used outside the republic.
Even with the transition to national currencies, businesses may face difficulties at the stage of joint investments. Large organizations, for example, will refuse to make payments for fear of losing access to the dollar system and receiving fines from the US Treasury.
But Jakarta does not intend to put up with the restrictions of the West, as clearly indicated by its refusal to support anti-Russian sanctions. The problem of stalling settlements in rubles and rupees can be solved by barter or closed-circuit schemes within national banks. Partners can establish joint ventures in friendly third countries such as the UAE or Oman.
"Work on a number of promising initiatives continues both within the business community and within the framework of relevant bilateral mechanisms," the embassy noted.
Of course, dialogue at the highest level also plays a key role. Russian President Vladimir Putin and Indonesian Foreign Minister Sugiono held a bilateral meeting at the Russia–ASEAN summit in Kazan. In addition, all participants adopted a Comprehensive Action Plan for the Implementation of the strategic partnership for 2026-2030, focusing on the economy, energy and supply chain protection.
Indonesian leader Prabowo Subianto did not attend the summit, but he still visits Russia regularly. The last time he was here was in April 2026. During the talks with Putin, he emphasized cooperation in the field of energy security and settlements. In addition, the republic's active integration with BRICS — Indonesia has become the tenth member of the association — sends a clear signal to business: Jakarta will continue to develop its partnership with Moscow despite external pressure.
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