In a historic act, Australian and Indonesian officials have signed the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA).
The IA-CEPA is expected to provide better and more certain access to the Indonesian market for Australian exporters.
With a population of 270 million and high levels of economic growth, Indonesia is on track to become one of the world’s largest economies. This makes the strengthening of the two countries’ ties both strategically and economically important.
The IA-CEPA means that 99 per cent of Australian goods (by value) will enter Indonesia duty-free or under significantly improved preferential arrangements by 2020.
Importantly, the IA-CEPA will establish better mechanisms for Australia to address technical market issues and non-tariff barriers, which are important for traders as traditional tariff barriers are progressively removed.
Indonesia has also committed to allowing Australian ownership of up to:
- 95 per cent of power plants (more than 10 megawatts)
- 75 per cent of oil and gas platform construction
- 67 per cent for electrical power construction, installation, operation and maintenance
- 55 per cent for electrical power installation constructions.
- 51 per cent of geothermal power plants (10 megawatts or less); geothermal surveying, drilling and operations; and offshore oil and gas drilling.
Minister for Trade, Senator the Hon Simon Birmingham said the IA-CEPA guarantees Australian-owned businesses can take advantage of the exciting investment opportunities available in Indonesia’s rapidly expanding economy.
“By reducing trade barriers, we can grow both of our economies and by encouraging trade and investment in areas of high potential for Indonesia, we can build greater capacity for its continued successful development,” he commented.
Minister Birmingham said the Federal Government is committed to fully ratifying IA-CEPA as soon as possible so Australian businesses can start to reap its benefits.