Bigger, better, and more aligned
One year into the implementation of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), both Indonesia and Australia have reiterated their commitment to support shared interest for a secure and prosperous region. At the heart of the IA-CEPA is a framework designed to unlock the vast potential of bilateral economic opportunities between the two largest economies in the region. To find out just how businesses from both countries can take advantage of the many opportunities for complementary development and growth, we talked to Katalis Market Access Technical Lead, Moekti Soejachmoen.
In what ways is the IA-CEPA designed to support increased two-way trade and investment between Indonesian and Australian businesses?
IA-CEPA is designed to increase two-way trade and investment between Indonesian and Australian businesses through a number of ways, such as trade liberalisation in the form of 100 percent tariff elimination for goods entering Australia and almost 99 percent tariff elimination for goods entering Indonesia), and the most liberal Rules of Origin for Indonesian electric motor vehicles of any Australian trade agreement. In the area of skills, the IA-CEPA is paving the way for exchange programs and initiatives to strengthen Indonesia’s labour force, and for more Australian investment in technical and vocational training services in Indonesia.
We’re also expecting better economic cooperation on complementary food products such as grain and red meat partnerships, and a food innovation centre. There will be progressive tariff-rate quota increases for major Australian exports to Indonesia, including agricultural and natural resources commodities, and Indonesian import permits are to be issued automatically and without seasonality for specific products committed under IA-CEPA. The agreement also ensures market access on services and investment that will provide increased certainty for Australian businesses and services suppliers in the Indonesian market, including guaranteed levels of Australian ownership.
How are the two countries working together in ensuring appropriate regulatory frameworks for effective implementation of the IA-CEPA?
Indonesia and Australia will use the IA-CEPA as a platform to improve economic relations through a wide range of consultation mechanisms to fine-tune trade and investment procedures over time. These make IA-CEPA a “living agreement”. It is based on a review on conformity of all current rules and regulations in Indonesia and Australia with IA-CEPA commitments. Although most of the rules and regulations are compliant with IA-CEPA commitments, there are several areas in trade in goods, trade in services and investment that are not.
How is Katalis working to support better alignment of the Indonesia-Australia trade and investment ecosystems?
Katalis supports the implementation of the IA-CEPA and helps businesses from both countries take advantage of the many opportunities for complementary development and growth. We work across agrifood, advanced manufacturing and services target sectors, covering everything from architecture and engineering to health and aged care. We identify and develop new market opportunities, and we inspire new business-to-business partnerships that will drive trade and investment between Southeast Asia’s two largest economies. Katalis also provides market insights, education, technical advice, policy reform and workplace skills exchange.
What are some industries that have been identified as priority sectors under the IA-CEPA?
Some industries that have been identified as priority sectors under IA-CEPA include Agriculture, Advanced Manufacturing and Services (skills). In agriculture, the Agrifood Innovation Partnerships are aiming for deeper industry engagement on grains for food (with a view to innovation in Indonesia and third markets) and feed (for a more efficient and productive farming sector in Indonesia, with enhanced animal health outcomes). Advanced manufacturing has an early focus on electric batteries and resource inputs to power Indonesia’s planned electric vehicle program. The IA-CEPA also supports closer economic partnership between Indonesian industry and Australian TVET providers in priority skills sectors through a proposed skills ‘clearinghouse’ mechanism. It starts with tourism, agriculture, and digital services, with later potential expansion into health, advanced manufacturing, construction, creative economy and social services subject to available resources and commercially viable training opportunities. A potential partnership to bolster the participation of women in TVET in Indonesia will also support female workforce participation.