On 4 March 2019, Australia and Indonesia signed the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) in Jakarta. IA-CEPA will enter into force once both countries have ratified the Agreement.
IA-CEPA is the most comprehensive trade agreement Indonesia has ever concluded. Indonesia is the world’s third largest democracy and one of Australia’s most important bilateral relationships.
IA-CEPA is a high-quality, comprehensive trade agreement that has generated much support from industry on both sides. It contains commercially meaningful outcomes across goods, services and investment and creates new opportunities for Australia and Indonesia to work together to increase productive capacities and build export capabilities.
Under IA-CEPA, over 99 per cent of Australian goods exports by value to Indonesia will enter duty free or under significantly improved preferential arrangements by 2020. Agricultural products including red meat and live cattle, grains, dairy, horticultural products and sugar will enjoy improved market access opportunities and greater certainty. Australian manufacturers will have better access for products such as steel, plastics and copper cathodes.
Australian grains trade into Indonesia is already a success story, with Australian wheat milled into flour used to produce Indomie noodles which are sold in over 80 countries around the world.
Australian service providers also win from IA-CEPA, with the agreement boosting opportunities for companies offering vocational education (referred to as work training in Indonesia), mining services, hospitals and dental clinics, tourism, aged care and professional services.
IA-CEPA also highlights opportunities for Australian investors in Indonesia, including in priority sectors for Indonesia’s economic development, such as energy and infrastructure. Guaranteed levels of Australian ownership will make it easier for Australians to set up their own businesses and partner with Indonesian businesses. For example, Australian businesses are now guaranteed majority stakes in tourism infrastructure such as resorts and marinas.
Indonesia is the second most popular destination in the world for Australian tourists with over one million Australians visiting Bali each year.
To bring our countries closer together, as part of an overall skills package, Australia and Indonesia have agreed to a reciprocal Skills Exchange that allows professionals from both countries working in finance, insurance, mining, engineering and related technical services or ICT service to gain six months experience in the other’s market.
Read more about IA-CEPA.
|IA-CEPA goods market access – highlights
||Treatment at entry into force
||Longer term outcome
||Tariff cut to 2.5% (from 5%) and access for unlimited volume
||Elimination of tariff after 5 years
||Tariff cut to 2.5% (from 5%) and guaranteed access for unlimited volume
||Elimination of tariff after 5 years
||Duty free access for 500,000 tonnes in year one
||5% annual growth in volume thereafter
||Locked in 2017 “early outcome” of reduction of tariff to 5%
||Elimination or reduction of tariffs across a number of dairy lines
||Removal of all remaining tariffs on dairy lines
|IA-CEPA services and investment - highlights
||New level of binding for market access
||Australian ownership up to 67% for supplying certain technical and vocational training
||Automatically locks in future liberalisation for Australian universities setting up in Indonesia – Indonesia intends to open its higher education sector further in the future
|Mining and related services
||Australian ownership up to 67% of contract mining services and mine site preparation services
|Hospitals and in-hospital pathology, paramedic and specialist medical and dental clinics
||Australian ownership up to 67% of large hospitals and, within large hospitals, up to 67 per cent of pathology, paramedic and medical and dental specialist clinic services. No geographic limitations
|Aged care services
||Australian ownership up to 67% of aged care facilities