Indonesia Balances Diplomacy and Trade Amid Iran-Israel Escalating Conflict

TEMPO.CO, Jakarta - The ongoing conflict between Iran and Israel has attracted global concern, including from Indonesia. Most recently, the situation intensified after the United States intervened by launching airstrikes on nuclear facilities in Tehran.

Indonesia’s Coordinating Minister for Political, Legal, and Security Affairs, Budi Gunawan, responded to the escalating tensions following the U.S. involvement. He emphasized that Indonesia continues to promote a peaceful resolution to the conflict.

"The Indonesian government encourages all parties to return to the negotiating table to reach a permanent conflict resolution," Budi stated in a written message on Monday, June 23, 2025, as conveyed by the Ministry’s Public Relations team to Tempo.

According to indonesia.go.id, diplomatic relations between Indonesia and Iran have existed since 1950. However, historical ties between the two nations stretch back centuries through trade and the spread of Islam.

What Are the Economic Ties Between Indonesia and Iran?

As of February 2025, the Directorate of Bilateral Negotiations under the Ministry of Trade reported that Indonesia has signed nine bilateral trade agreements, including one with Iran. However, the Indonesia-Iran Preferential Trade Agreement (II PTA), signed on May 23, 2023, is still pending ratification.

"Eight agreements have been enforced, while the enforcement of the Indonesia-Iran PTA agreement is still awaiting ratification. In the trade of goods, these agreements provide tariff preferences for Indonesian business players in accessing the trading partner's market, which is expected to increase Indonesian exports," the Directorate posted on its Instagram account @ditbilateral on Wednesday, February 5, 2025.

The II PTA was formalized during a state visit by Iranian President Sayid Ebrahim Raisi to Indonesia on May 23-24, 2023. The agreement was signed by Indonesian Trade Minister Zulkifli Hasan and Iranian Foreign Minister Hossein Amirabdollahian in the presence of President Joko Widodo and President Raisi.

At the time, both governments pledged to enhance bilateral trade. Total trade between the two countries rose from US$141.6 million in 2019 to US$215.97 million in 2020—a 52 percent increase despite the challenges of the COVID-19 pandemic and global economic slowdown.

Indonesia and Iran have also explored further cooperation through business-to-business agreements, investment in the development of the Nusantara Capital City (IKN), and collaboration in the oil and gas sector.

Additionally, Indonesia continues to seek new export destinations to reduce reliance on traditional markets. As part of this effort, both countries are committed to building infrastructure and facilities that support broader bilateral cooperation.

In 2023, total trade between Indonesia and Iran reached US$206.9 million. Indonesian exports amounted to US$195.1 million, while imports from Iran were valued at US$11.7 million.

Daniel Ahmad Fajri contributed to the writing of this article.

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