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. We enjoy an extensive framework of cooperation spanning political, economic, security, development, education and people-to-people ties. On 31 August Prime Minister Morrison and President Widodo elevated the bilateral relationship to a Comprehensive Strategic Partnership.

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 Meeting, the Trade Ministers' Meeting and the Ministerial Council on Law and Security.

The most recent Annual Leaders' Meeting between Prime Minister Scott Morrison and President Joko Widodo was on 31 August 2018 in Indonesia. In addition to elevating the relationship to a Comprehensive Strategic Partnership leaders discussed a range of bilateral, regional and global issues including expanding our trade, investment and economic cooperation, efforts to fight terrorism and defeat transnational crime and the importance of working together to bolster a rule-based international order. During the visit Australia and Indonesia also announced the successful conclusion of negotiations on the Indonesia-Australia Comprehensive Economic Partnership Agreement, as well as memoranda of understanding on cyber cooperation, transportation and the creative economy.

Former Prime Minister Turnbull travelled to Jakarta to attend the inaugural Indian Ocean Rim Association (IORA) Leaders' Summit on 7 March 2017 and President Widodo travelled to Australia for the ASEAN-Australia Special Summit on 16 March 2018.

President Widodo visited Australia for his first official state visit on 26 February 2017. Leaders acknowledged the deep historical ties between Australia and Indonesia as the foundation for a strong 21st century partnership. Leaders discussed investment and creating jobs, safeguarding our open sea lanes, cooperating to fight terrorism and deter transnational crime, and celebrating both countries diversity by building deeper community understanding of each other's societies, languages and cultures. Leaders witnessed the signing of a Joint Declaration on Maritime Cooperation [PDF 117 KB] and Declaration of Intent on Cooperation on Creative Economies [PDF 44 KB].

Former Prime Minister Turnbull previously visited Indonesia on 12 November 2015 where he met President Widodo to discuss 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 Foreign Minister Bishop visited Indonesia 10 times. Most recently from 4-7 August 2018 during which she officially opened the Consulate-General in Surabaya.

The Australian and Indonesian Foreign and Defence Ministers held the fifth 2+2 Meeting on 16 March 2018 in Sydney, preceding the ASEAN-Australia Special Summit. Ministers welcomed the opportunity to exchange frank views on the geo-strategic shifts underway in the Indo-Pacific, recognising our shared security and prosperity is affected by developments in both the Pacific and Indian Oceans. The meeting discussed the importance of effective maritime cooperation as a key part of Australia's joint response to the region's strategic challenges. It also considered how we can do more together in areas such as counter-terrorism and cyber security. Read the Joint Statement. Prior to the meeting Foreign Ministers witnessed the signing of the Maritime Cooperation Plan of Action [PDF 554 KB]. This represents the next step in boosting Australia-Indonesia maritime cooperation following the signing of the Joint Declaration in February 2017.

Former Trade, Tourism and Investment Minister Ciobo made several bilateral visits to Indonesia to engage with key Indonesian Government ministers on negotiations for the Indonesia-Australia Comprehensive Economic Partnership Agreement (see 'Trade and Investment', below).

Recent bilateral visits include:

  • Prime Minister Scott Morrision, accompanied by Trade Tourism and Investment Minister Simon Birmingham, visited Indonesia from 31 August 2018 to 1 September 2018 for the Annual Leaders' Meeting.
  • Then Foreign Minister Julie Bishop visited Surabaya and Bali from 4-7 August to officially open the Consulate-General in Surabaya and co-chair the Bali Process on People Smuggling, Trafficking in Persons and Related Transnational Crime.
  • Minister for Home Affairs Peter Dutton attended the fifth meeting of the Australia-Indonesia Ministerial Council on Law and Security in Lombok on 5 August 2018
  • President Widodo was joined by Coordinating Minister for Political, Legal and Security Affairs, Wiranto, Coordinating Minister for Economic Affairs, Darmin Nasution, Minister for Foreign Affairs, Retno Marsudi, Minister for Defence, Ryamizard Ryacudu, Minister for Trade, Enggartiasto Lukita, and Investment Chairman Thomas Lembong, for a bilateral meeting with former Prime Minister Turnbull and other Australian ministers as part of the ASEAN-Australia Special Summit on 17 March 2018
  • Then Assistant Minister for Trade, Tourism and Investment, Keith Pitt, visit to Surabaya to deliver the keynote address to the Indonesia-Australia Business Council Conference in November 2017
  • Indonesian Coordinating Minister for Political, Legal and Security Affairs, Wiranto and the Indonesian Minister of Law and Human Rights, Dr Laoly attended the fourth meeting of the Australia-Indonesia Ministerial Council on Law and Security, in Brisbane, November 2017
  • Indonesian Minister for National Development Planning, Bambang Brodjonegoro (September 2017, November 2016)
  • Foreign Minister Retno Marsudi joined then Foreign Minister Bishop to co-chair the Bali Process Government and Business Forum on Human Trafficking in Perth in August 2017
  • Then Attorney General George Brandis visited Manado for the Sub-Regional Meeting on Foreign Terrorist Fighters and Cross Border Terrorism July 2017
  • Then Attorney General George Brandis, Minister for Justice and Minister Assisting the Prime Minister on Counter Terrorism, Michael Keenan and then Minister Assisting the Prime Minister on Cyber Issues Dan Tehan visit Jakarta for the Third Australia-Indonesia Ministerial Council on Law and Security, February 2017
  • Then Minister for Trade, Tourism and Investment, Steven Ciobo (December and February 2016, March and September 2017)
  • Indonesian Minister for National Development Planning, Bambang Brodjonegoro (November 2016)
  • Then Foreign Minister Julie Bishop (October 2016 and March 2016)
  • Then Attorney General George Brandis (August 2016)
  • Indonesia's then Minister for Energy and Mineral Resources Sudirman Said (January 2016)
  • Then 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 Pandjaitan (November 2015)
  • Indonesia's then Cultural and Primary and Secondary Education Minister Anies Baswedan (November 2015)
  • Health Minister Sussan Ley (November 2015)
  • Then Minister for Tourism and International Education Richard Colbeck (November 2015)
  • Then 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.

Two-way investment between Australia and Indonesia was valued at $11.8 billion in 2017, with Australian in investment in Indonesia at $10.7 billion and Indonesia investment in Australia at $1.0 billion.

Australia's two-way trade with Indonesia was worth $16.5 billion in 2017, making Indonesia our 13th largest trade partner. Agricultural products are among Australia's key merchandise exports to Indonesia, while crude petroleum and manufactured goods are key imports. Indonesia was Australia's largest market for wheat ($1.4 billion) and live animals ($602 million) in 2017.

Two-way trade in services was valued at $5.3 billion in 2017. Indonesian students studying in Australia brought $833 million into the local economy in 2017, while Australian tourists travelling in Indonesia were worth $3.1 billion to the Indonesian economy.

On 31 August, Australia and Indonesia announced the successful conclusion of negotiations on the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). IA-CEPA will create the framework for a new era of closer economic engagement between Australia and Indonesia and open new markets and opportunities for businesses, primary producers, service providers and investors.

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 $356.9 million in total ODA to Indonesia in 2017-18, 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 September 2018