Australian Premier Morrison to Seals Trade Agreeement with Indonesia

Australian Prime Minister Scott Morrison in a Cabinet Meeting on August 30 - Photo Privacy

JAKARTA (TheInsiderStories) – The new Australian Prime Minister Scott Morrison is scheduled to visit Indonesia and meet with President Joko Widodo on Friday (31/08). Free trade and closer economic cooperation between two leaders will be Morrison’s goal in Jakarta.

The both leaders its expecting will sign a comprehensive economic partnership and pacts on transport cooperation, creative economy efforts and cyber technology. There are few details that need to be agreed upon, but Indonesian officials show optimism that the document will be ready for signing on Friday.

The pact is expected to make Indonesia as a manufacturing base for Australian companies, though it remains unclear on whether Indonesia’s wish for greater labour access in Australia will be granted.

“Our close collaboration across economic, security and strategic domains makes both countries stronger, safer and more prosperous. I look forward to working with Indonesia’s President to lay the foundation for the next stage of our bilateral partnership,” Morrison said on Wednesday (29/08) in a written statement.

The Indonesia Australia Comprehensive Economic Partnership Agreement (CEPA) covers not just free trade pacts in goods, but also services and rules on investment as well as intellectual property. The deal, which has been discussed since 2012 and was initially due to be completed last year should be signed later in 2018.

Indonesian data shows two-way trade was worth US$8.5 billion in 2017, with a deficit of $3.5 billion on Indonesia’s side.

Indonesia is hoping to seal at least 13 Bilateral and Regional Trade Agreements, followed by CEPA with several countries. The move aims to improve and widen market access for Indonesia’s exports.

Minister of Trade Enggartiasto Lukita acknowledged that Indonesia lagged behind Vietnam and the Philippines in terms of market access. While enjoying a commodity boom, Indonesia neglected downstream industry while the other countries worked hard to attract investors and create free trade access.

“President warned us, our economy and inflation are stable, yet there is no significant progress (for exports) compared to peer countries because we are late to open up our regions,” he said.

To expand export markets, Indonesia will explore Africa, Asian, Nigeria, and Egypt as new markets outside existing partner countries e.g., China, Japan, United States of America and the European Union. In Latin America, Indonesia will speed up negotiations with Chile, through Indonesia-Chile CEPA). Last year, Indonesia booked $3.6 billion in transactions with African and Latin America trade missions.

In 2018, the government expects to continue six trade negotiations: Indonesia-Australia CEPA, Indonesia-European Free Trade Association, Indonesia-European Union CEPA, Indonesia-Iran Preferential Trade Agreement, Regional Comprehensive Economic Partnership, and Indonesia-Malaysia Border Trade Agreement.

Indonesia will also finalize a review on the Indonesia-Japan Economic Partnership Agreement, Indonesia-Pakistan PTA, Indonesia-Asean Economic Society, Asean-Australia-New Zealand FTA, and Asean-India FTA in 2018.

Early this year, the government started Trade in Goods (TIG) negotiations with Turkey, Nigeria, Sri Lanka, and Bangladesh.

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