According to Airlangga Hartarto, Indonesia’s Coordinating Minister for Economic Affairs, a significant trade agreement with Australia has dramatically increased trade between the two countries by as much as 90%. The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), which kicked off in 2020, has played a crucial role in this surge.
Under this ambitious agreement, Australia wiped out tariffs on 6,474 items, offering zero percent import duties on a wide range of products from Indonesia. On the flip side, Indonesia slashed tariffs on 10,229 items, which accounts for 94.5% of its total tariff lines. This move has made it easier and cheaper for both countries to share goods, ranging from agricultural products to textiles and technology.
“Australia and Indonesia are not just neighbors but also committed partners in driving regional stability, economic growth, and resilience,” Hartarto remarked. The fruits of this partnership include a significant boost in trade and investments flowing between the two nations.
Australia’s confidence in Indonesia as a go-to investment destination is evidenced by its foreign direct investment (FDI) which grew by four percent in 2023, hitting $545.2 million, with project investments skyrocketing by over 200 percent.
To further cement economic ties, Indonesia has launched several strategic programs like Prospera, Katalis, and the Climate Infrastructure Partnership. These initiatives aim to connect businesses, spur innovation, and emphasize sustainability between the two countries.
Looking forward, Hartarto outlined Indonesia’s vision for economic transformation by 2045, hoping to see a per capita income of around $30,000 and a GDP nearing $9 trillion for its projected population of 320 million.
During a gala dinner celebrating 75 years of diplomatic relations with Australia, Hartarto praised Australia for backing Indonesia’s aspiration to join the Organisation for Economic Cooperation and Development (OECD). Moreover, he announced Indonesia’s plans to sign the Indo-Pacific Economic Framework (IPEF) soon, viewing it as a pivotal move in strengthening ties with Australia and asserting influence not only in the region but globally.
This overview captures the significant impacts and aspirations stemming from the IA-CEPA agreement on the trade relationship and economic collaboration between Indonesia and Australia, highlighting the strides made and the ambitious plans set for the future.
