Indonesia country brief

Bilateral relations

Overview

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. With over one million Australians visiting Indonesia each year, it is the number two destination for all outbound Australian tourists. Australia's diplomatic network in Indonesia includes the embassy in Jakarta and consulates in Bali, Surabaya and Makassar.

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, and the Ministerial Council on Law and Security.

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 Southeast Asia in the G20 and cooperate in the East Asia Summit (EAS), ASEAN Regional Forum, Indian Ocean Rim Association (IORA) and Mexico, Indonesia, Republic of Korea, Turkey and Australia (MIKTA).

Since taking office in 2014, President Joko Widodo has visited Australia three times. He attended the G20 Summit in Brisbane in 2014, made his first state visit to Australia in 2017 and attended the ASEAN-Australia Special Summit in Sydney in March 2018.

Prime Minister Scott Morrison’s first overseas first in his capacity as Leader was to Indonesia in August/September 2018 where he and President Widodo elevated relations to a Comprehensive Strategic Partnership (CSP) and announced the conclusion of negotiations on the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA).

The CSP is the highest level of non-alliance relations between two countries. The Australia-Indonesia CSP coalesces bilateral cooperation around five broad pillars: enhanced economic and development partnership, connecting people, securing our and the region's shared interests, maritime cooperation and contributing to Indo-Pacific security and prosperity.

Trade Ministers signed IA-CEPA in Jakarta in March 2019. The agreement will create the framework for closer economic engagement between Australia and Indonesia and open new markets and opportunities for businesses, primary producers, service providers and investors.

High-level visits

Recent bilateral visits include:

  • Minister for Foreign Affairs Marise Payne attended the High-Level Dialogue on Indo-Pacific Cooperation in Jakarta on 20 March 2019 hosted by her counterpart, Minister for Foreign Affairs Retno Marsudi
  • Minister for Trade, Tourism and Investment Simon Birmingham met with his counterpart Trade Minister Lukita Enggartiasto to sign the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) in Jakarta on 4 March 2019
  • Minister for Foreign Affairs Marise Payne attended the eleventh Bali Democracy Forum (BDF) on 6 December 2018 hosted by her counterpart, Minister for Foreign Affairs Retno Marsudi
  • Minister for Trade, Tourism and Investment Simon Birmingham met with his counterpart Trade Minister Lukita Enggartiasto at the East Asia Summit (EAS) in Singapore on 13 November 2018
  • Prime Minister Scott Morrison, accompanied by Trade, Tourism and Investment Minister Simon Birmingham, visited Jakarta from 31 August - 1 September 2018 for the Annual Leaders' Meeting
  • Then Minister for Foreign Affairs Julie Bishop visited Surabaya and Bali from 4-7 August 2018 to officially open the Consulate-General in Surabaya and co-chair with Minister for Foreign Affairs Retno Marsudi the Bali Process on People Smuggling, Trafficking in Persons and Related Transnational Crime
  • Minister for Foreign Affairs Retno Marsudi and Minister for Defence Ryamizard Ryacudu attended the Fifth Foreign and Defence Ministers' 2+2 Meeting in Sydney on 16 March 2018, hosted by then Foreign Minister Julie Bishop and then Defence Minister Marise Payne

Strategic and security cooperation

Cooperation between Australia and Indonesia on security matters is underpinned by the Lombok Treaty (2006).  Both countries reaffirmed their commitment to strengthening bilateral relations in 2014 by signing a Joint Understanding on the implementation of the Lombok Treaty, which provides an agreed approach to enhancing intelligence cooperation. A Defence Cooperation Arrangement was signed in 2012 and an updated arrangement signed in February 2018 to enhance defence cooperation on shared security challenges.

Maritime cooperation

Australia and Indonesia share the world's longest maritime boundary and are natural maritime partners. Foreign Ministers signed a Joint Declaration on Maritime Cooperation [PDF 117 KB] in February 2017 to drive expansion of cooperation. A Maritime Cooperation Plan of Action [PDF 554 KB] to implement this declaration was signed in March 2018. The Plan's focus includes: strengthened maritime domain awareness and maritime border protection; improved information sharing to combat transnational crime; greater regional and coastal interconnectivity; improved reliability and efficiency of shipping in the region; and more sustainable management of marine resources.

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 renewed Memorandum of Understanding on Countering Terrorism and Violent Extremism was signed at the fifth Australia-Indonesia bilateral counter-terrorism consultations in Yogyakarta in December 2018 and will underpin counter-terrorism cooperation with Indonesia to 2021.

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 28,000 officials from 80 countries have completed training at JCLEC on addressing transnational crimes including terrorism, human trafficking and cybercrime.    

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 Southeast 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. Indonesia is among the largest export markets for the Australian Mining Equipment, Technology and Services (METS) 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 $16.8 billion in 2017-18, 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 ($950 million) and live animals ($575 million) in 2017-18.

Two-way trade in services was valued at $5.5 billion in 2017-18. Education-related travel dominates Australian services exports to Indonesia, while our services imports are driven primarily by tourism (much of this is Australian tourists travelling in Indonesia).

Minister for Trade, Tourism and Investment Simon Birmingham signed the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) with Indonesian Minister for Trade Enggartiasto Lukita in Jakarta on 4 March 2019. 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.

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, including in the area of law and justice.

The Australian Government will provide an estimated $298.5 million in total ODA to Indonesia in 2019-20, including an estimated $255.7 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 2015-19 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 study and undertake work-based experiences in the Indo-Pacific region. Since 2014, the New Colombo Plan has awarded over 7,500 scholarships and mobility grants for Australian undergraduates to undertake study and work-based experiences in Indonesia.

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.

Australia is also the most popular overseas destination for Indonesian students. In 2018 there were over 20,000 enrolments of Indonesian students in Australian tertiary and technical colleges.

The Building Relationships through Intercultural Dialogue and Growing Engagement (BRIDGE) Project, established in 2008 by the Australia-Indonesia Institute, uses technology to build links between Australian and Indonesian teachers and students. The project has established 189 school partnerships, directly involving over 750 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, 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) and the Muslim Exchange Program (MEP). 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 (IAD) is a second track activity that 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 fourth IAD was held in in Sydney in April 2018 and explored new ways to deepen and expand people-to-people links.  It drew together high-calibre delegations from both countries and was co-convened by the Honourable John Anderson AO and former Indonesian Ambassador to Australia Hamzah Thayeb. The next IAD will be hosted by Indonesia.

Last Updated: 2 July 2019