Indonesia, Australia vow closer economic ties, agree main points of bilateral deal

Indonesian President Joko Widodo (right) listens to Australian Prime Minister Scott Morrison at a news conference at the presidential palace in Bogor, Indonesia, on Aug 31, 2018.
Indonesian President Joko Widodo (right) listens to Australian Prime Minister Scott Morrison at a news conference at the presidential palace in Bogor, Indonesia, on Aug 31, 2018.PHOTO: REUTERS

BOGOR, INDONESIA - Australia's new Prime Minister Scott Morrison and Indonesian President Joko Widodo welcomed on Friday (Aug 31) 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.

"It is our economic relationship where 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 on Friday in 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 an economic partnership deal called the Indonesia-Australia Comprehensive Economic Partnership Agreement (Cepa), which would eliminate tariffs on goods and services as well as relaxed 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 (in terms of economic relations) 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 partner in the region and Australia is also one of the important partners for Asia," Mr Joko added.


In 2017, 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 a incurring 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 the Cepa would be signed in November this year, a view shared by Australian Trade Minister Simon Birmingham, who said in a radio interview on Friday that negotiations had concluded and he hoped that 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," Birmingham told Australian Broadcasting Corporation radio from Jakarta.