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Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA)

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Overview

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) entered into force on 5 July 2020.

IA-CEPA creates a framework for Australia and Indonesia to unlock the potential of the bilateral economic partnership, fostering economic cooperation between businesses, communities and individuals.

Australia and Indonesia are committed to deepening our economic, trade and investment relationship. Indonesia is the largest economy in Southeast Asia and 16th largest economy in the world. By some estimates, Indonesia will be the world’s fifth-largest economy by 2030. With a population of 264 million, Indonesia presents a significant opportunity for Australian businesses.

Under IA-CEPA, 99% of Australian goods (by value) will enter Indonesia duty-free or under significantly improved preferential arrangements. IA-CEPA will also support stronger value-chains between Australian and Indonesian business, ensuring Australia is well-placed to deepen economic cooperation and share in Indonesia’s growth. It will also provide a major boost across a range of services sectors including education and training, tourism, financial, mining and energy, as well as providing new mechanisms to address non-tariff barriers.

IA-CEPA: key outcomes for Australia:

  • Goods: IA-CEPA will provide better and more certain access to the Indonesian market for Australian exporters. Over 99% of Australian goods exports by value to Indonesia will enter duty free or under significantly improved preferential arrangements, compared with 85% under AANZFTA. Indonesia will guarantee automatic issue of import permits for key products such as live cattle, frozen beef, sheep meat, feed grains, rolled steel coil, citrus products, carrots and potatoes.
  • Services: Market access outcomes on services and investment will provide increased certainty to Australian businesses and services suppliers in the Indonesian market, including guaranteed levels of Australian ownership. Indonesia’s commitments also remove limits to the level of Australian ownership, with limited exceptions. IA-CEPA also contains high-quality, modern rules governing the treatment of services and investment, and digital trade.
  • Skills: Australian vocational education and training providers can establish majority-owned training institutions anywhere in Indonesia, and offer all Australian and Indonesian Qualifications Framework levels 1-5 in subject matters including technical engineering, business administration, languages, tourism, management, information technology, art and agriculture. The skills package also includes reciprocal skills exchange program and workplace skills training program that will help build people-to-people links and increase the Indonesia literacy of Australian business.

Please visit the Department of Foreign Affairs and Trade website for comprehensive information on IA-CEPA.

Source: DFAT Indonesia-Australia Comprehensive Economic Partnership Agreement and DFAT Indonesia-Australia Comprehensive Economic Partnership Agreement: Outcomes

Source: Joint Statement between the Government of the Republic of Indonesia and the Government of Australia (10 February 2020).

Doing business in Indonesia

There is considerable opportunity for Australia to expand its trade, investment and economic cooperation relationship with Indonesia.

Australia’s two-way trade with Indonesia was worth 11.7 billion for 2018/19, making Indonesia our 14th largest trade partner. Resources, as well as agricultural products are among Australia’s key merchandise exports to Indonesia, being one of Australia’s largest markets for coal, crude petroleum, wheat and live animals. 

Two-way investment between Australia and Indonesia was valued at $6.7 billion in 2018, with Australian investment in Indonesia at $5.6 billion and Indonesian investment in Australia at $1.1 billion. 

Two-way trade in services was valued at $6.2 billion in 2018-19. Education-related travel dominates Australian services exports to Indonesia. 

About 2,500 Australian companies export to Indonesia (ABS), however the number of Australian businesses with a subsidiary in Indonesia is around 250. 

IA-CEPA builds on the benefits of the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA), which will continue to operate in parallel with IA-CEPA. Importers and exporters have the option of selecting which agreement is best suited to them.  

For general information on doing business in Indonesia under IA-CEPA, check out the following resources:

Recent insight from Australian businesses operating in Indonesia is available in the 2020 Australia-ASEAN Chamber of Commerce survey.

Opportunities

Austrade and a range of our partners have produced practical guidance for Australian business on key sectoral opportunities in Indonesia under IA-CEPA. Check back on this section from time to time to see the latest information.

Education

Services and the digital economy

Agribusiness and Food

Other Sectors

Source : https://www.austrade.gov.au/Australian/Export/Free-Trade-Agreements/iacepa

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