Trade partnership with Indonesia
Australian Trade Minister Simon Birmingham and Indonesian Trade Minister Enggartiasto Lukita shake hands at the Indonesia-Australia Comprehensive Economic Partnership Agreement signing ceremony in Jakarta, March 2019.
Australia and Indonesia are the region’s two largest economies and we are both G20 members.
Our trading relationship began over 300 years ago when intrepid sailors from the Makassar region in Indonesia regularly traded with Aboriginal people in the Marege’ area of Arnhem Land.
From those humble beginnings, Australia and Indonesia have grown our two-way trade to be worth $17.8 billion (around 165 trillion Rupiah) in 2018-19, making Indonesia one of Australia’s top 15 trading partners.
Over 1.3 million Australians visited Indonesia in 2018-19, pumping over $3.7 billion (or around 35 trillion Rupiah) into the Indonesian economy. Tourism is Indonesia’s top export to Australia, followed by petroleum. Indonesia is also a significant source of televisions, footwear, clothing and furniture for Australia.
Australia’s largest export to Indonesia is education services, worth over $935 million (or 90 trillion Rupiah) in 2018-19. This reflects the fact that Australia is the number one destination for Indonesians studying overseas. Agricultural products such as live cattle, wheat and sugar are among Australia’s key merchandise exports to Indonesia. These products are processed in Indonesia’s burgeoning food and beverage manufacturing sector for domestic consumption and export from Indonesia to third countries.
According to the Australian Bureau of Statistics, two-way investment between Australia and Indonesia was valued at $6.7 billion (around 65 trillion Rupiah) at the end of 2018, with Australian in investment in Indonesia at $5.6 billion (around 54 trillion Rupiah) and Indonesian investment in Australia at $1.1 billion (or 10 trillion Rupiah). There are significant investments in mining and mining-related services, financial services, health, manufacturing, telecommunications and, increasingly, information technology.
These bilateral trade and investment figures are impressive, but there is ample opportunity to expand our economic relationship. On 4 March 2019 the Australian and Indonesian ministers responsible for trade signed the landmark 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. The intent is to facilitate closer integration between Australian and Indonesian supply chains and encourage more job-creating investment in both countries.
IA-CEPA builds on the Association of Southeast Asian Nations-Australia-New Zealand Free Trade Area (AANZFTA), which has reduced a wide range of tariffs on trade between Australia and Indonesia. We are also both members of the Regional Comprehensive Economic Partnership (RCEP), which will create common rules for trade between ASEAN Member States, Australia, China, Japan, Korea and New Zealand to promote further growth in the region.