Trade Minister Steven Ciobo is in Jakarta this week with his sights firmly set on securing a lucrative free trade agreement with Indonesia.
Mr Ciobo says while Indonesia is our largest neighbor and a fellow G20 member, Australia’s trade and economic relationship can and should be much stronger.
The government is seeking to build a stronger relationship through the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA).
Mr Ciobo says negotiations, relaunched earlier this year, are making good progress.
IA-CEPA will open new markets and opportunities for Australian businesses, primary producers and service providers.
Indonesia has a population of more than 255 million – including a middle class of more than 45 million. This is forecast to grow to 135 million by 2020.
Two-way trade between Indonesia and Australia was valued at $14.8 billion in 2014-15, making it the nation’s 12th-largest trading partner and 11th-largest export market. About 250 Australian companies operate there.
While in Jakarta Mr Ciobo will meet with Indonesia’s new Trade Minister Enggartiasto Lukita, new Chairman of the Indonesian Investment Coordinating Board (BKPM) Thomas Lembong and Minister of Industry Saleh Husin.
Mr Lukita replaced Mr Lembong, a strong supporter of free trade, as Indonesian Trade Minister in a Cabinet reshuffle last week.
Before leaving Australia Mr Ciobo said he was not concerned about the ministerial change.
“I'm very optimistic that Indonesia recognises the multitude of benefits that flow from free and liberalised trade,” he told ABC radio.
“At the end of the day, both Indonesia and Australia have, in many respects, complementary economies. And through closer economic integration, it'll be a win for Australia and a win for Indonesia and I'm very confident that that will appeal to Minister Lukita as well.”
Trade in Services agreement
Mr Ciobo said he hoped to secure a free-trade agreement with Indonesia and a plurilateral “trade in services agreement’’ (TiSA) covering more than 70 per cent of the world’s $US44 trillion ($58.5 trillion) services market.
“I would like to think that both of these can be concluded in this term ... I step into the role very keen to pursue additional agreements,” Mr Ciobo said.
“The one I’d probably nominate first and foremost is Indonesia.
“We want to secure these deals. We want to make it easier for people to look at investing into these markets and Indonesia will be a big part of that – a rapidly growing economy, a big population base and a strong middle class.”
The TiSA, led by Australia, the EU and the US, is a deal covering 71 per cent of the global services economy, 1.57 billion people and 66 per cent of global GDP, and includes 50 member countries.
Trans Pacific Partnership agreement
Meanwhile, Mr Ciobo admits time is running out to secure a landmark Pacific-wide free-trade pact covering 48 per cent of global GDP.
The US congress would need to sign the contentious Trans-Pacific Partnership by the end of the year if it was to have any chance of being enforced.
Mr Ciobo also sounded a warning to Senator Xenophon’s new political party, which has opposed entry into the TPP and pushed for existing trade deals to be reviewed.
“I look forward to engaging him,” Mr Ciobo said. “I want to hear what he’s got to say.
“I want to take the opportunity to reinforce that if we implement a pro-protectionist agenda in Australia, then all we can do is expect other countries to do the same in return.
“That will shut down opportunities for Australian exports. That will shut down opportunities for us to grow our economy.
“It will shut down opportunities for us to drive capital.”