Australia`s mutual trade with Indonesia amounted to $11.7 billion in 2018/19, making Indonesia our 14th largest trading partner. Agricultural resources and products are among Australia`s largest merchandise exports to Indonesia and are one of Australia`s largest markets for coal, crude oil, wheat and live animals. Australia has many opportunities to develop its trade, investment and economic cooperation relations with Indonesia. More than a third of Australia`s exports to Indonesia are agricultural products. Under the IA-CEPA, most goods – including 99% of agricultural exports – are entitled to duty-free access or significant preferential treatment. If tariffs on agricultural products remain in place, Indonesia will gradually increase tariff rate quotas and reduce out-of-quota tariff rates. The Australia Indonesia Business Council (AIBC) is a non-profit trade association dedicated to the promotion and facilitation of trade and investment between Australia and Indonesia. Indonesian lawmakers have ratified the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), and representatives of the Indonesian and Australian governments have held discussions on a 100-day implementation plan to complete the agreement`s entry into force. Reciprocal trade in services was estimated at $6.2 billion in 2018-2019. Education-related travel dominates Australian services exports to Indonesia. IA-CEPA aims globally to improve economic cooperation and develop bilateral trade and investment between Australia and Indonesia. THE AI-CEPA enhances the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) to further liberalize trade in goods, providing greater security for services, investment opportunities, mutual exchange of expertise and modern rules for e-commerce. During the first overseas visit of the new Australian Prime Minister Scott Morrison during his tenure in Jakarta, he and Jokowi announced an agreement on IA-CEPA on August 31, 2018.
[12] However, the signing was delayed due to a bilateral dispute over Australia`s recognition of West Jerusalem as Israel`s capital, which led to diplomatic protests from Indonesia. [13] [14] The agreement was finally signed in March 2019 by Lukita and Australian Trade Minister Simon Birmingham, subject to ratification by the Australian Parliament and the Indonesian People`s Representative Council. [15] [16] Indonesia is a party to the Association of Southeast Asian Nations (ASEAN) Regional Free Trade Area. ASEAN and thus Indonesia have also concluded preferential trade agreements with Australia, China, Hong Kong, India, Japan, Korea and New Zealand and concluded textual negotiations on the Regional Comprehensive Economic Partnership in November 2019. Indonesia has signed bilateral free trade agreements (FTAs) with Australia, Chile, Mozambique, Iceland, Liechtenstein, Norway and Switzerland under the European Free Trade Association, but none of these free trade agreements other than Chile are still in force until the end of 2019. Indonesia recently concluded negotiations with Korea on a Comprehensive Economic Partnership Agreement. Indonesia is negotiating new free trade agreements with the European Union (EU), India, Tunisia and Turkey and is reviewing its trade agreements with Japan and Pakistan. IA-CEPA includes clauses on bilateral free trade, investments, visas for professional training, investor arbitration, e-commerce and intellectual property protection. [1] Under the agreement, Indonesia will levy tariffs on almost all Australian products exported to Indonesia, while all Indonesian products exported to Australia will be duty-free. [2] Australian companies would be allowed to hold a majority stake in Indonesian telecommunications, transport, healthcare and energy companies. In addition, the number of working holiday visas issued to Indonesians each year would increase from 1,000 to 4,100 (later to 5,000[1] by 2026), and Australian universities would be allowed to open Indonesian campuses. [3] The Australian Trade and Investment Commission (Austrade) is the Australian government agency that helps Australian companies attract foreign companies to their products and services by reducing the time, costs and risks associated with the selection, entry and development of international markets.
Shortly after Indonesia ratified the agreement, Australia`s Monash University unveiled plans to open a campus in Indonesia, becoming the first foreign university to do so in Indonesia. [20] Indonesian economic observers noted that the free trade agreement could lead to an increase in imports of agricultural products, particularly Australian beef, which could replace the local beef industry. [21] The Australian Labor Party has also questioned the treaty`s clauses on investor-state disputes and Indonesian temporary work in Australia. [22] Australia and Indonesia are committed to deepening their economic, trade and investment relations. Indonesia is the largest economy in Southeast Asia and the 16th largest economy in the world. According to some estimates, Indonesia will be the fifth largest economy in the world by 2030. With a population of 264 million, Indonesia represents a significant opportunity for Australian businesses. Further information is available on the IA-CEPA website of the Department of Foreign Affairs and Trade and on the Austrade IA-CEPA website, including the full contract text, a guide on using IA-CEPA for exporting or importing goods.
Bilateral trade negotiations between the two countries began in November 2010, with the IA-CEPA itself announced in a joint statement under the chairmanship of Susilo Bambang Yudhoyono and the post of Prime Minister of Julia Gillard. [4] [5] After several conferences and meetings in 2011, following a meeting in Darwin on 3 July 2012, another joint communiqué was issued calling for negotiations on the agreement to begin before the end of the same year. [6] After that, however, relations between the two countries deteriorated (due to the 2013 Australian spying scandal and the Indonesian execution of Australian citizens in 2015), and in 2015, Indonesia introduced tariffs on Australian livestock imports. Finally, Indonesian Trade Minister Thomas Lembong and his Australian counterpart, Steven Ciobo, announced a resumption of negotiations in March 2016. [7] Four rounds of negotiations took place before the resumption of talks. [8] The Australian Parliament ratified the agreement on 26 November 2019 as part of the Customs Amendment Bill 2019 (alongside the PECE with Peru, Hong Kong and China) and the Act received Royal Assent on 3 December 2019. [17] The People`s Council ratified the agreement in plenary on February 6, 2020. [18] It came into force on July 5, 2020. [19] Under THE IA-CEPA, 99% of Australian goods will enter Indonesia duty-free (by value) or under significantly improved preferential agreements. IA-CEPA will also support stronger value chains between Australian and Indonesian companies and ensure that Australia is well positioned to deepen economic cooperation and participate in Indonesia`s growth.
It will also provide a significant boost in a number of services sectors, including education, training, tourism, finance, mining and energy, and provide new mechanisms to eliminate non-tariff barriers to trade. IA-CEPA builds on the benefits of the ASEAN-Australia-New Zealand Free Trade Area Agreement (AANZFTA), which continues to operate alongside IA-CEPA. Importers and exporters have the opportunity to choose the agreement that suits them best. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that acts as a coordinating body for a network of independent member firms. KPMG International does not provide audit or other client services. These services are provided exclusively by member firms in their respective geographical areas. KPMG International and its member firms are legally distinct and distinct entities. They are not, and nothing herein, should be construed as placing such entities in the relationship of parent companies, subsidiaries, agents, partners or joint ventures.
No member firm has the power (real, obvious, implied or otherwise) to bind kpmg International or any member firm in any way. The information contained herein is of a general nature and is not intended to respond to the situation of any particular person or entity. While we strive to provide accurate and timely information, there can be no assurance that such information will be accurate at the time of receipt or that it will continue to be accurate in the future. No one should act on the basis of such information without the advice of an appropriate professional after a thorough examination of the situation in question. For more information, contact KPMG`s Federal Tax Legislative and Regulatory Services Group at: +1 202 533 4366, 1801 K Street NW, Washington, DC 20006. Energy resources and products also account for about a third of Australia`s exports to Indonesia. .
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