IA-CEPA negotiations conclude – ‘Ayo kita maju bersama’

It has been quite a remarkable week for the Australia-Indonesia relationship. Both governments are showing signed of strengthening their collaborations and we finally saw a big win for the future of business ties.

The Indonesia Australia Business Forum held at the Raffles Hotel, Jakarta on Saturday 1 September 2018 featured some very special guests including Vice President of Indonesia, Dr. H. Jusuf Kalla and the Prime Minister of Australia, the Hon Scott Morrison MP. The forum formally announced that negotiations for the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) had concluded. This announcement leaves the documents to undergo a legal process to ensure internal consistency, translation into Indonesian followed by an official signing and ratification by the end of the year.

Morrison made the trip to Jakarta just six days after being sworn in as Prime Minister which had been in the works for several months for former Prime Minister, Malcolm Turnbull. The Commonwealth Government made a decision not to cancel the trip citing that Morrison’s commitment to travel to Indonesia shows how important the bilateral relationship is and just how close both countries are.

Vice President Jusuf Kalla addressed the forum at Indonesia Australia Business Forum

Vice President Kalla addressed the forum as Indonesia’s President, Joko Widodo (Jokowi) had flown to disaster-stricken Lombok to oversee the relief efforts from the recent earthquakes. Kalla’s address to the audience of notable Australian and Indonesian government and business people stated that “this is not similar to other free trade agreements, this is beneficial to both countries and shows how close we are”. The agreement includes a commitment to work closer with one another in industries such as the services industry, particularly in tourism and education. Kalla emphasised the need for investment from Australia in energy, vocational and higher education, health and agriculture as Australia is a leader in these areas. For example, the IA-CEPA will permit Australian owned vocational and higher education institutions to operate in Indonesia in a special economic zone in order to meet the needs of Indonesian students who are increasingly seeking quality assured internationally recognised education.

A moment shared between Morrison  and Kalla in optimism for both countries bilateral relations

At the conclusion of Kalla’s address, Morrison took to the stage to thank him and spoke about his meeting with Jokowi the day before in Bogor, West Java. He openly praised the president saying, “Widodo is a good bloke…[he] is a sign of hope for every boy and girl in Indonesia” and went on to thank the president for taking the time to meet him noting that Indonesia was experiencing an unusually busy time with the Lombok disaster relief efforts and the conclusion of the 18th Asian Games. Morrison stated that “the prosperity, harmony and success of Indonesia is a must” and that is was a continuity of effort on both sides to achieve this by working together on issues such as ocean sustainability, the digital economy, transnational crime and people smuggling.

“We’re witnessing a global shift, new opportunities, rapid social and economic changes, we must know who we are, what we offer and what we’re about. I have three goals for Australia, a strong economy, a safe Australia and a together Australia. Australia’s foreign policy white paper created under former Foreign Minister, Julie Bishop, works to achieve those goals” he said. Also mentioned was Australia’s “steadfast alliance” with the United States, as well as with India and Japan, and the comprehensive strategic partnership with China in order to ensure regional stability meant that Australia was recognised as a “leading partner in security in ASEAN”.

Towards the end of his speech Morrison stated the recent bombings in Surabaya, East Java showed “the threat of self-radicalisation is real and serious” and that Australia must now, more than ever, work closely with its “dynamic and diverse neighbour to the north”. Adding to this he said that the “trade and investment relationship has been underdone” and “the IA-CEPA is not a transaction, it’s a partnership”.

Other notable highlights and key outcomes of the IA-CEPA include:

  • 99% of Australian goods will be able to enter Indonesia free of tariffs and taxes;
  • an elimination of all remaining tariffs on Indonesian goods entering Australia;
  • up to 67% Australian ownership of vocational and higher education institutions, aged care facilities, most construction-related work, accommodation, restaurants, tourism consultancy and telecommunications companies in Indonesia;
  • the implementation of a reciprocal Skills Exchange program for professionals to gain experience in the other country’s market; and
  • of incredible significance to young Indonesians, Australian working holiday visas for Indonesians will grow from 1,000 currently to 4,100 this year and 5,000 over the next six years.

Morrison concluded his speech by saying “Ayo Kita Maju Bersama!” let’s move forward together, in somewhat unconventional Indonesian pronunciation, causing a huge applause from the audience.

After almost a decade of negotiations, the IA-CEPA is almost upon us. The IA-CEPA will provide increased opportunities for young Australians and Indonesians to pursue business partnerships with one another.

Clarice Campbell, AIYA National Director of Operations and Reza Wardy, former AIYA Victoria General Committee Member

There will be several events hosted by Australia-Indonesia and foreign policy related organisations over the coming months to further dissect the implications of the IA-CEPA. Sign up as an AIYA Member to receive the weekly AIYA Links newsletter to keep informed about related news updated and upcoming events and opportunities.

  • Duncan Graham

    This is positive, but caution, please. More use of ‘may’ rather than ‘will’ in reporting developments as there are mountains ahead. These are passable given political determination to drive this MOU through a protectionist DPR to an international-standard legal document. However that energy may be lacking during an election campaign when deals which highlight Indonesia’s failure to achieve food self-sufficiency get drawn into the debate. Whatever colour the Australia politicians and public servants paint this arrangement, look beneath the top coats. After PM Morrison left Indonesia the RI government announced new taxes on imported goods. Purists will argue that ‘taxes’ are not ‘tariffs’, but the end result is that consumers will pay more, which will impact on overseas suppliers. Even though our wheat may be imported free of tariffs this is no open door. Manufacturers won’t buy if they can get cheaper from Black Sea shippers. VP Kalla’s call for more Australian investment won’t get much response until major assaults are launched against corruption and the rule of law strengthened. Indonesians currently don’t have access to the Working Holiday Visas enjoyed by Europeans, Japanese and Koreans but the Working Holiday Maker Visas which impose educational requirements, money and Indonesian government letters of approval. Till recently the quota of 1,000 places hadn’t been met.