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Indonesia-Australia free trade deal to be activated by July

Business Council of Australia chief executive Jennifer Westacott said by some estimates Indonesia is set to be the world’s fifth-largest economy by 2030.

“This agreement locks in bilateral trade and investment so that as Indonesia’s economy grows, Australia prospers,” she said.

Despite the coronavirus crisis, rebounding commodity prices and declining imports have seen Australia’s trade surplus surge to more than $10.6 billion, up from $6.7 billion in February. The jump puts Australia’s exporters in a relatively strong position as the government maps out a pandemic exit strategy.


Many sectors of the Indonesian economy remain heavily protected from competition by tariffs and quotas and the deal will guarantee more reliable access to the market of 270 million people for Australian exports.

Under the deal, wheat producers will have tariff free exports of up to 500,000 tonnes of wheat to Indonesia each year and tariffs on frozen beef and sheep meat will be cut in half. Steel producers will also get annual duty free access for 250,000 tonnes of rolled steel coil.

While much attention has focused on the greater opportunities for Australian farmers and other agricultural exports under the deal, universities could emerge as one of the big winners.

Melbourne’s Monash University, for example, has announced plans to open a campus in the country which would be the first majority-owned foreign university in the country – something the free trade deal has made possible.

For Indonesian President Joko Widodo, who has staked his political career and reputation on being an economic reformer, said the deal offers greater access to Australia’s market and a small rise in the number of visas available to working holiday makers.

Australia’s trade and investment relationship with Indonesia is smaller, in dollar terms, than those with Singapore, Malaysia, Thailand and New Zealand.

Members of the business and diplomatic community have long believed the free trade deal will act as a stabilising mechanism that will help smooth the at-times tempestuous relationship between the two countries.

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