Indonesia, Australia pledge to boost economic relations

Their leaders laud conclusion of talks for pact that will remove tariffs, open up education sector

Indonesian President Joko Widodo with visiting Australian Prime Minister Scott Morrison at a welcome ceremony at the Bogor presidential palace in West Java yesterday.
Indonesian President Joko Widodo with visiting Australian Prime Minister Scott Morrison at a welcome ceremony at the Bogor presidential palace in West Java yesterday. PHOTO: EPA-EFE

Australia's new Prime Minister Scott Morrison and Indonesian President Joko Widodo welcomed yesterday the conclusion of all the main points of an economic partnership deal six years in the making.

Both said they were committed to a strategic partnership that would ensure smoother trade flows and closer people-to-people relations, defying a trend of rising protectionism in some parts of the world.

"We've committed today to take another big step to ensure that Australia and Indonesia do the heavy lifting that is needed to realise the real economic opportunity that exists," Mr Morrison said during a joint press conference with Mr Joko at the Bogor presidential palace in West Java, south of Jakarta.

Both countries have been in talks since 2012 to reach agreement on the Indonesia-Australia Comprehensive Economic Partnership Agreement (Cepa), which would eliminate tariffs on goods and services as well as relax rules on investments in various sectors. Quotas, however, would be applied.

The agreement, expected to be signed by the end of this year, would, among other things, free up Indonesia's university sector for Australian investors and relax import tariffs on Australian beef and cattle and other agricultural products. In return, Australia would relax tariffs on cars and garments shipped from Indonesia.

"We both stressed the importance of opening-up efforts to cement economic relations that are mutually beneficial. We welcome the conclusion of the substantive negotiations of the Indonesia-Australia Comprehensive Economic Partnership," Mr Joko said. "Australia is one of Indonesia's important trading partners in the region and Australia is also one of the important partners for Asia."

  • $11.6b

    Bilateral trade between Australia and Indonesia last year.

Last year, Australia was Indonesia's 14th-biggest trading destination country, while Indonesia was Australia's 10th-largest.

Bilateral trade between the neighbours was US$8.5 billion (S$11.6 billion) last year, with Indonesia incurring a deficit of US$3.5 billion.

Prior to the leaders' joint press conference, ministers from both sides signed memoranda of understanding on the creative economy, cyber security and the transport sector. Officials also signed a declaration on the conclusion of substantive negotiations on the economic partnership.

Commenting on the plan to open up Indonesia's education sector to Australia, Indonesian Trade Minister Enggartiasto Lukita told reporters: "We all know that tens of thousands of Indonesian students go to Australia to study. Imagine if they set up universities here, how much foreign exchange we can save."

Mr Enggartiasto expects that Cepa would be signed in November, a view shared by Australian Trade Minister Simon Birmingham, who said in a radio interview yesterday that negotiations had concluded and he hoped a "final agreement will be signed this year".

"From here, we then go on to settle all of the final text, but the contents of that text has now been agreed - we just have to get all of it in order for signature," Mr Birmingham told Australian Broadcasting Corporation radio from Jakarta.

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A version of this article appeared in the print edition of The Straits Times on September 01, 2018, with the headline Indonesia, Australia pledge to boost economic relations. Subscribe