Indonesia country brief

Bilateral relations

Indonesia – the world’s third largest democracy with the world’s largest Muslim population – is one of Australia’s most important bilateral relationships. As strategic partners, we enjoy an extensive framework of cooperation spanning political, economic, security, development, education and people-to-people ties.

The bilateral relationship is underpinned by a series of regular high level meetings. These include the Indonesia-Australia Annual Leaders’ Meeting, the Foreign and Defence Ministers’ 2+2 Dialogue and the Trade Ministers’ Meeting.

Prime Minister Turnbull visited Indonesia on 12 November 2015 and met President Joko Widodo. Both leaders discussed infrastructure, trade and investment and our common interest in countering violent extremism before making one of President Widodo’s famous blusukan (impromptu) visits, to the Tanah Abang textile market in Jakarta.

Former Prime Minister Abbott made three official visits to Indonesia, including to attend President Widodo’s inauguration on 20 October 2014. President Widodo attended the G20 Leaders’ Summit in Brisbane on 15-16 November 2014.

Foreign Minister Bishop has visited Indonesia eight times since coming to office. Most recently, Ms Bishop visited Indonesia for the Australia-Indonesia Foreign and Defence Ministers 2+2 Dialogue and the Indian Ocean Rim Association (IORA) Council of Ministers Meeting 26¬–28 October 2016. She also met with President Widodo in Jakarta, as well as Ministers from his Cabinet.

The Australian and Indonesian Foreign and Defence Ministers held the fourth 2+2 Dialogue on 27 October 2016 in Bali. Ministers welcomed strong and growing defence, security and strategic ties and recommitted Australia and Indonesia to work more closely to address the threat of terrorism through sharing of intelligence and counter-messaging strategies. Joint Communiqué: Fourth Australia-Indonesia Foreign and Defence Ministers 2+2 Dialogue.

Trade, Tourism and Investment Minister Ciobo made a bilateral visit to Indonesia in August 2016 to build moment for negotiations on the Indonesia-Australia Comprehensive Economic Partnership.

Former Trade and Investment Minister, now Special Envoy for Trade Robb has visited Indonesia four times, including to lead a delegation of 355 Australian business representatives to the inaugural Indonesia Australia Business Week on 17-20 November 2015. Mr Robb made earlier visits to Indonesia in September 2013, December 2013 and September 2015.

Recent bilateral visits include:

  • Foreign Minister Julie Bishop (October 2016 and March 2016)
  • Attorney General George Brandis (August 2016)
  • Minister for Trade and Investment, then-Minister for International Development and the Pacific Steven Ciobo (February 2016).
  • Indonesia's then Minister for Energy and Mineral Resources Sudirman Said (January 2016)
  • Assistant Minister for Multicultural Affairs Concetta Fierravanti-Wells (now Minister for International Development and the Pacific) (December 2015).
  • Indonesia's then Coordinating Minister for Political, Legal and Security Affairs Luhut Panjaitan (November 2015)
  • Indonesia's then Cultural and Primary and Secondary Education Minister Anies Baswedan (November 2015)
  • Health Minister Sussan Ley (November 2015)
  • Minister for Tourism and International Education (retired) Richard Colbeck (November 2015)
  • Agriculture and Water Resources Minister Barnaby Joyce (October 2015)

Strategic and security cooperation

Cooperation between Australia and Indonesia on security matters is underpinned by the Lombok Treaty (2006), with a Defence Cooperation Arrangement signed in September 2012. Both countries reaffirmed their commitment to strengthening bilateral relations in August 2014 by signing a Joint Understanding on the implementation of the Lombok Treaty, which provides an agreed approach to enhancing intelligence cooperation.

Australia and Indonesia also work closely on a range of common strategic interests in regional and global fora. We are the only two members from the Southeast Asian region in the G20 and cooperate in the East Asia Summit, ASEAN Regional Forum, IORA and MIKTA.

Cooperation on counter-terrorism

Australian and Indonesian authorities have cooperated closely to detect and deter terrorist attacks in Indonesia since the 2002 Bali bombings. Our counter-terrorism cooperation now involves a wide range of partnerships in law enforcement, legal framework development, criminal justice, counter-terrorism financing, countering violent extremism, defence, transport and border security, intelligence, and the security of chemical, biological, radiological, nuclear and explosive (CBRNE) materials. A Memorandum of Understanding on Combatting International Terrorism signed at the 2+2 Dialogue in Sydney on 21 December 2015 will underpin counter-terrorism cooperation with Indonesia to 2018.

The Jakarta Centre for Law Enforcement Cooperation (JCLEC), a joint Australia-Indonesia initiative, has become an important regional centre for law enforcement training. More than 15,000 officials from 70 countries have completed over 650 training courses at JCLEC on addressing transnational crimes – such as people smuggling and money laundering – as well as terrorism.

Cooperation on combatting people smuggling

Australia and Indonesia work closely together to combat people smuggling and human trafficking, including by co-chairing the Bali Process on People Smuggling, Trafficking in Persons and Related Transnational Crime. We strongly support cooperative measures with Indonesia to improve border integrity and enforcement. We also continue to work with our regional partners to combat people smuggling and human trafficking, by strengthening legal frameworks and boosting the capabilities of criminal justice agencies and civil society organisations.

Trade and investment

There is considerable opportunity for Australia to expand its trade, investment and economic cooperation relationship with Indonesia, which is the largest economy in South-east Asia and 16th largest economy in the world.

Demand in Indonesia for consumer goods and services – particularly for premium food and beverages, education and healthcare, financial and ICT services and tourism – and its ambitious infrastructure investment agenda aligns well with Australian industry capabilities. Australian companies are among the leading investors in Indonesia’s resources and energy sector.

There are over 470 Australian businesses in Indonesia. Two-way investment between Australia and Indonesia was valued at $9.8 billion in 2015, with Australian in investment in Indonesia at $8.4 billion and Indonesia investment in Australia at $1.4 billion.

Australia’s two-way trade with Indonesia was worth $15 billion in 2015, making Indonesia our 12th largest trade partner. Agricultural products (such as wheat, live animals and sugar) are Australia’s key merchandise exports to Indonesia, valued at $2.3 billion in 2015, while crude petroleum ($1.4 billion) and manufactured goods are key imports ($0.7 billion).

Two-way trade in services was valued at $3.8 billion in 2015. Education is Australia’s key services export to Indonesia ($608 million) and tourism is our main services import from Indonesia (almost $2 billion).

On 17 November 2015, the then Trade and Investment Minister Robb announced our intention to reinvigorate negotiations towards the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), to boost two-way trade and investment flows and provide a framework for closer economic cooperation. Australian and Indonesian Trade Ministers met in March 2016 to reactivate the negotiation of IA-CEPA, launched by Leaders in 2010. Ministers called for a high quality agreement that was as comprehensive as possible.

Our existing trade agreement with Indonesia, the Association of Southeast Asian Nations-Australia-New Zealand Free Trade Area (AANZFTA), has reduced a wide range of tariffs on trade between Australia and Indonesia. We are both negotiating the Regional Comprehensive Economic Partnership (RCEP), which will build on the outcomes of AANZFTA to promote further growth in the region.

Australia also works closely with Indonesia in in multilateral, global and regional fora, including the World Trade Organization (WTO), APEC and the G20, to support global and regional trade liberalisation and economic growth.

Development cooperation

Australia works in an economic partnership with Indonesia, supporting its efforts to leverage its own resources to generate growth and distribute those benefits to a larger number of its people. Australia provides policy and technical advice that will improve the quality of Indonesia's investments in infrastructure, economic governance, human development and social policy.

The Australian Government will provide an estimated $365.7 million in total ODA to Indonesia in 2016-17, including an estimated $296 million in bilateral funding managed by DFAT.

Indonesia's National Medium-Term Development Plan 2015-19 (RPJMN) is part of the country's National Long-Term Plan 2005-2025 and sets out the Government's vision and priorities for the country. Priority areas include good governance, improved productivity and competitiveness, and human resource quality. It has a focus on eastern Indonesia to help address regional disparities in development, whilst maintaining growth momentum in other parts of the country.

Australia's Aid Investment Plan 2015/16-2018/19 aligns with RPJMN priorities. As outlined in our AIP, our development cooperation program in Indonesia is structured around three objectives, and a focus on women and girls is a cross-cutting theme of all of our programs.

Objective 1: Effective economic institutions and infrastructure

Improving economic institutions and infrastructure is essential to Indonesia’s ongoing development. Australia is supporting Indonesia to boost inclusive growth and productive jobs through its public policy and regulatory settings. We are also working to increase access to agricultural markets for poor farmers in Eastern Indonesia, driving economic growth and improving food security in the region.

Objective 2: Human development for a productive society

Indonesia needs to drive the development of human capital to create the conditions for higher growth. Our innovative education program works with schools to identify local challenges and opportunities to develop new approaches to tackle problems. We are also working with Indonesia to prevent, detect and control emerging infectious diseases, a threat to Indonesian and Australian security, and we continue to prepare for and provide support to Indonesia during times of humanitarian need.

Objective 3: An inclusive society through effective governance

We work with Indonesia to ensure that the poor and marginalised in society, including people with disabilities, benefit from economic growth, helping to meet Indonesia’s poverty reduction targets by improving basic services and employment opportunities. We are helping develop better quality economic and social protection policies based on research and analysis.

Education

Indonesia and Australia enjoy a strong relationship in education. Indonesia is the most popular destination for students under the Australian Government’s New Colombo Plan, an initiative to encourage young Australians to work and study in the region. The New Colombo Plan will have supported more than 3,000 Australian students to live, study and undertake work placements in Indonesia by the end of 2017, representing nearly one fifth of the total.

The Australia Awards program for Indonesia is the largest and longest running scholarship program of its kind offered by the Australian Government. The program focuses on areas of importance to the development of Indonesia’s human resource gaps, including those aimed at strengthening economic governance and the delivery of services in health and education.

The Building Relationships through Intercultural Dialogue and Growing Engagement (BRIDGE) Project, established in 2008 by the Australia-Indonesia Institute (AII), uses technology to build links between Australian and Indonesian teachers and students. The project has established 132 school partnerships, directly involving over 528 Australian and Indonesian teachers.

People-to-people links

People-to-people links are an important component of the bilateral relationship with Indonesia. Through cultural, sporting and educational engagement and tourism, Australian and Indonesian people and communities enhance their mutual understanding of each other.

Links between schools, exchanges, visits and scholarships provide an important foundation for engagement. Organisations including the Australia-Indonesia Institute, the Australia-Indonesia Centre, the Australia-Indonesia Youth Association and student associations play a key role in building these links.

Australia-Indonesia Institute

The Australia-Indonesia Institute (AII), established in 1989, promotes greater mutual understanding and contact between Australians and Indonesians. Its flagship programs include BRIDGE, the Australia Indonesia Youth Exchange Program (AIYEP), the Muslim Exchange Program (MEP) and BRIDGE. The AII also runs public grant rounds, which fund innovative programs in arts and culture, education, technology and innovation, civil society and media, and religion.

Indonesia-Australia Dialogue

The Indonesia-Australia Dialogue facilitates people-to-people links and discussion on a broad range of topics covering domestic, regional and global issues and opportunities for closer engagement in business, culture, education, science and technology.

The third Indonesia-Australia Dialogue was held in Yogjakarta on 28-30 August 2016 and explored new ways to deepen and expand people-to-people links. It drew together high-calibre delegations from both countries led by former Ambassador to Indonesia John McCarthy and former Indonesian Ambassador to Australia Hamzah Thayeb.

Last Updated: 4 November 2016