"We're living in turbulent times and when economic uncertainty meets geopolitical volatility, partners like us must come closer together. So today we're taking a big step forward in this partnership," von der Leyen told journalists in Brussels.

"I am very pleased to report that we have just reached a political agreement on an ambitious Free Trade Agreement."

The 27-nation European bloc and Southeast Asia's largest economy have been negotiating since 2016 to agree a deal that is expected to increase trade and investment.

A European Commission statement called Sunday's agreement a "decisive milestone" towards striking the deal -- which is to be concluded in September by EU trade chief Maros Sefcovic and Indonesia's chief economic minister Airlangga Hartarto.

"There's a lot of untapped potential in our trade relationship. And therefore this agreement comes at the right time, because the new agreement will open new markets," von der Leyen said. 

"It will create more opportunities in key industries, in business activity and agriculture, in automotive and in services."

Brussels has stepped up efforts to improve ties with key potential partners around the world as Trump threatens a trade war with sweeping tariffs.

"This big and important political agreement on the free trade agreement with Indonesia is today a huge milestone forward, and shows that we're looking for new markets, open markets," von der Leyen said.

Prabowo called the announcement in Brussels a "breakthrough".

"After 10 years of negotiations, we have concluded the agreement to have a Comprehensive Economic Partnership Agreement, which basically is a free trade agreement," he said. 

The president said "we consider Europe still a very important factor, and we would like to see a very strong Europe."

But he insisted that "the United States will be always a very important leader in the world". 

The European Union is Indonesia's fifth-largest trading partner with bilateral trade between them reaching $30.1 billion last year. 

Ties had been frayed by a proposed EU import ban on products linked to deforestation that has angered Indonesia because it is a major palm oil exporter.

That legislation has been delayed to the end of this year. 

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