Indonesia market snapshot
- GDP: US$894.9 billion (2012*)
- GDP per capita: US$3,660 (2012*)
- GDP growth: 6.0 per cent (2012*)
- Population: 244.5 million (2012*)
- Trade with Australia: A$14.6 billion (2012)
*IMF forecast subject to revision
About the IA-CEPA negotiations
Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) negotiations commenced in Jakarta in September 2012. IA-CEPA aims to strengthen and expand the trade, investment and economic cooperation relationship between Australia and Indonesia. It will help bring the region's two largest economies closer together and will form a key part of Australia's regional economic integration as part of the Asian Century.
Indonesia is a significant economic and regional partner for Australia. Two-way trade in goods and services reached $14.8 billion in 2011, making Indonesia our 12th largest trading partner and 11th largest export market. Australian investment in Indonesia was worth an estimated $5.4 billion in 2011. Austrade estimates that there are more than 400 Australian companies operating in Indonesia, in sectors including mining, agriculture, construction, infrastructure, finance, health care, food and beverage and transport.
The announcement of the commencement of IA-CEPA negotiations follows the release of the Joint Feasibility Study on an Indonesia-Australia Free Trade Agreement in April 2009 and the entry into force of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA). It is expected that the IA-CEPA will build on the outcomes of the AANZFTA.
Key interests and benefits
- The IA-CEPA could address impediments to bilateral trade, including those which impose additional costs on exporters and consumers, and impede economic competitiveness.
- A comprehensive agreement that addresses the impediments to increasing Australian investment in Indonesia and Indonesian investment in Australia would enhance the bilateral relationship in a number of important respects.
- IA-CEPA could explore ways to enhance economic cooperation in specific sectors identified as key drivers of economic growth.
Map of Indonesia - quick facts
Australians make up the bulk of visitors to Bali with more than 500,000 visiting in 2010.
The Port of Jakarta
The biggest seaport in Indonesia with annual capacity of around 45 million tonnes of cargo.
Joint Business Report Presented to Governments
A ground-breaking position paper from the Indonesia-Australia Business Partnership Group (IA-BPG) on the bilateral trade and investment relationship has been presented to the Australian and Indonesian Governments.
The paper puts forward a set of recommendations to improve trade, investment and economic cooperation for the governments of both countries to explore when negotiating the Indonesia-Australia Comprehensive Economic Partnership Agreement.
First Round of IA-CEPA Negotiations
The first round of IA-CEPA negotiations commenced on 26-27 September 2012 in Jakarta.
Business Partnership Group to consult on benefits of IA-CEPA for Australia and Indonesia
A core principle of the proposed Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) is that it is of mutual economic benefit. Identifying key barriers to trade for both Australian and Indonesian exporters as well as industry objectives and concerns is an important step in ensuring that a liberalising and beneficial agreement is achieved.
Representatives from the Australian Chamber of Commerce and Industry (ACCI), Indonesian Chamber of Commerce (KADIN), Australia-Indonesia Business Council (AIBC) and the Indonesia-Australia Business Council (IABC) have established a Business Partnership Group (BPG). The BPG will submit views to the Indonesian and Australian governments on what it considers to be the primary trade, investment and economic cooperation objectives of the IA-CEPA. The Business Partnership Group advice will be contained in a position paper which is expected to be submitted later in 2012.
The first Business Partnership Group meeting will be held in Sydney on 13 September, with subsequent meetings to be held in Jakarta and Eastern Indonesia.
BPG Media Release: Open Door to Business Feedback on Indonesia Partnership
Indonesia-Australia Annual Leaders Meeting – July 2012
Prime Minister Julia Gillard and President Susilo BambangYudhoyono met for the Second Annual Indonesia-Australia Leaders' Meeting in Darwin on 3 July 2012.Prime Minister Gillard and President Yudhoyono expressed their support, in the Joint Leaders Communique, for the launch of IA-CEPA negotiations before the end of 2012.
Trade Minister visits Indonesia - March 2012
Minister for Trade and Competitiveness, Dr Craig Emerson, held talks with his Indonesian counterpart, other Indonesian ministers, and business representatives in Jakarta on 21-22 March. His discussions, inter alia, explored how business and government could work together to develop the IA-CEPA.
- Media release: Jakarta visit to strengthen trade ties, 20 March 2012.
- Speech: Australia and Indonesia: working together in the Asian Century. Address to the Jakarta Foreign Correspondents' Club, 22 March 2012.
Trade Minister visits Indonesia for ASEAN Business Summit - November 2011
Dr Emerson met with senior Indonesian ministers and business people in Bali, Indonesia, on 18-20 November to discuss trade and IA-CEPA developments. In a speech delivered at the Indonesia-Australia Business Council annual conference he stressed the importance of ‘Partnership’ in the IA-CEPA. He said this theme should be maintained in our broader engagement on the IA-CEPA.
- Media release: Trade Minister visits Indonesia for ASEAN Business Summit, 18 November 2011.
- Speech: Keynote address to the Indonesia Australia Business Council Conference/Australian Business Asia Regional Business Forum, 19 November 2011.
IA-CEPA Pilot Project works towards increased cattle productivity in Indonesia
Agricultural cooperation is an important part of the Indonesia-Australia bilateral relationship. Through technical assistance and capacity building initiatives, this cooperation aims to increase agricultural productivity in key sectors and improve food security.
Improving the productivity of smallholder beef cattle production is a high priority for the Indonesian Government and is integral to strengthening rural livelihoods and increasing the supply of domestically-produced beef in Indonesia. As a result, in association with negotiation of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), Australia is supporting research aimed at improving the profitability of smallholder beef producers in Indonesia.
Under the project, the Australian Centre for International Agricultural Research (ACIAR) is working with farmers to improve Brahman cattle production systems in Indonesian villages, with the potential that these animals can be sold to Indonesian feedlots. Compared to local Indonesian breeds, such as Bali cattle, Brahmans have faster growth rates but only when fed higher quality diets.
More information is available at ACIAR - Improving beef cattle productivity in Indonesia.
Trade Minister visits Indonesia - April 2011
Dr Emerson's first visit to Indonesia as Trade Minister came as Australia and Indonesia prepared for negotiations on a Comprehensive Economic Partnership Agreement.
Media release: Trade Minister visits Indonesia, 17 April 2011.
Australia-Indonesia Business Council (AIBC) conference - 7 March 2011
The Australia-Indonesia Business Council (AIBC) held a conference in Sydney on 7 March 2011 titled “Deepening our Economic Partnership”. The IA-CEPA was a key theme of the conference, and Australia’s and Indonesia’s Lead Negotiators delivered presentations on the current state-of-play.
The presentations are available at the links provided below:
- Herry Soetanto, Head of the Agency for Trade Policy Analysis And Development, Ministry Of Trade, Republic Of Indonesia [PDF 50 KB] | [DOC 46 KB]
- Michael Mugliston, Special Negotiator, Free Trade Agreement Division, Department of Foreign Affairs and Trade [PDF 246 KB] | [PPT 623 KB]
The presentations were also recorded by the AIBC Conference organiser and the videos are also provided below:
Launch of negotiations - November 2010
- Media release: Trade Minister welcomes launch of Australia-Indonesia negotiations, 3 November 2010.
- Media release: Announcement to Negotiate an Indonesia-Australia Comprehensive Economic Partnership, 2 November 2010.
The Department of Foreign Affairs and Trade welcomes submissions from interested individuals and groups on the expected impacts of IA-CEPA. Submissions need not be lengthy, and may build on or refer to submissions made during the joint feasibility study on a bilateral FTA.
In particular, information is sought on specific interests and issues in relation to Australia’s trade, investment and economic cooperation with Indonesia, including barriers to trade and investment faced by Australian goods and services exporters and investors in Indonesia as well as experiences with economic cooperation activities.
Submissions will be made publicly available on the DFAT website unless the author specifies otherwise.
Public submissions concerning the Joint Feasibility Study on an Australia-Indonesia Free Trade Agreement
Submissions have been received concerning the desirability of an Australia-Indonesia FTA. Submitting parties represent a wide range of interested groups, including peak industry organisations, professional associations, companies, non-government organisations, individuals and state governments.
See the ist of contributors who have given permission to be identified, and/or have their submission(s) made public.
- Trade, aid and development in Indonesia - a discussion paper [DOC 4.47 MB]
- Trade, aid and development in Indonesia - annexes [DOC 1.35 MB]
Joint Feasibility Study
In August 2007, Australia and Indonesia commenced a joint feasibility study to examine the merits of a bilateral free trade agreement (FTA). That study was completed and publicly released in April 2009:
The feasibility study, which included an independent economic modelling component, examined the potential impact of an FTA on Australian and Indonesian economic growth, trade, investment, commercial linkages and competitiveness.
Estimating the impact of an Australia–Indonesia trade and investment agreement [PDF 1.12 MB] - Centre for International Economics, January 2009
The study found that a comprehensive FTA covering trade and investment would provide worthwhile economic benefits for both countries. It shows that the greatest gains would be achieved under an FTA that eliminated all tariff and non-tariff barriers to bilateral trade and investment. It also finds that an FTA would be an opportunity to accelerate and deepen the integration of the Australian and Indonesian economies — the two largest in the region.
The study further concludes that a bilateral FTA would complement and build on Australia's other links with Indonesia. These include: close security cooperation under the umbrella of the Lombok Treaty (2008); extensive people to people links which would naturally benefit from intensified economic engagement; and the dynamic Australia-Indonesia Development Partnership.
- Email: email@example.com
- Fax: (02) 6261 2187
Free Trade Agreement Division
Department of Foreign Affairs and Trade
RG Casey Building
John McEwen Crescent
BARTON ACT 0221
For media enquiries, please call DFAT's Media Liaison Section: (02) 6261 1555.