Jokowi and Scott Morrison

New opportunity to boost Indonesia-Australia economic ties

President Joko “Jokowi” Widodo’s visit to Australia earlier this week, culminating in a speech to Australian Parliament, bodes well for Australia-Indonesia relations.

Over the past ten years, they have expanded their cooperation despite occasional diplomatic rows. However, there is one area that has been left behind in an otherwise improved friendship: their economic relations.

For two neighboring countries of the Group of 20 with complementary economies, one would expect higher levels of trade and investment.

In fact, Indonesia and Australia have the lowest trade volumes of any two G20 neighbors. In 2018, less than 1 percent of Australia’s foreign investment went to Indonesia. Two-way trade with Indonesia has stagnated at around 2 percent for the entire decade.

To remedy this problem, they have signed a long-awaited free trade agreement, the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA).

A decade in the making, the deal was approved by Indonesia’s House of Representatives last week, just in time for Jokowi’s arrival in Australia, and paving the way for its entry into force. Read More