Indonesian President, Joko Widodo’s visit to Australia was an opportunity for him and Australian Prime Minister, Anthony Albanese to discuss trade, regional security, and climate change with the goal of strengthening the Australia-Indonesia relationship.
Strengthening this relationship will ensure it is ready to meet the challenges and opportunities that may arise in the future.
A major outcome of these discussions was Prime Minister Albanese’s announcement of changes under the Indonesia-Australia Comprehensive Economic Partnership Agreement (IACEPA). The changes to the terms of the partnership will include improved access to Australia for Indonesian businesspeople and recognition of engineering qualifications between the two countries.
What is The Indonesia-Australia Comprehensive Economic Partnership Agreement (IACEPA)?
The Indonesia-Australia Comprehensive Economic Partnership Agreement (IACEPA) creates a framework for Australia and Indonesia to enable closer economic engagement between businesses, individuals, primary producers, service providers, and investors.
Indonesia is one of the fastest-growing economies in the Indo-Pacific and presents a significant opportunity for Australian businesses.
It is estimated that Indonesia will be the world’s fifth-largest economy by 2030.
Indonesia is a growing market for Australian goods and services exporters.
In 2021/22, two-way trade in goods and services between Australia and Indonesia was worth A$18.35 billion.
This makes Indonesia Australia’s 14th largest trading partner.
The IACEPA will not only provide Australian and Indonesian businesses with an opportunity to expand and diversify this economic partnership but will also ensure Australia is well placed to deepen economic cooperation and share in Indonesia’s growth.
The Indonesia-Australia Comprehensive Economic Partnership Agreement (IACEPA) will improve Australia’s access to Indonesia by eliminating or reducing tariffs on goods and through enhanced access for service providers and investors to the Indonesian market.
The IACEPA builds on existing multi-lateral and regional agreements including the ASEAN-Australia-New Zealand Fair Trade Agreement (AANZFTA).
Some of the Benefits of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IACEPA)
The IACEPA presents many outcomes that are beneficial to Australia and Indonesia. These include:
- Providing better and more certain access to each of these countries’ markets. Over 99% of Australian goods exports by value will enter Indonesia duty-free or under significantly improved preferential arrangements.
- Up-to-date rules that govern the treatment of services, investment, and digital trade.
- A reciprocal skills exchange between Australia and Indonesia will allow professionals from both countries to gain six months of work experience in the other’s market in the following sectors:
- Financial and insurance services
- Engineering and related technical services
- Information media and telecommunications services
- Skills development through a pilot program on workplace-based training. The pilot will allow up to 200 Indonesians per year to receive workplace skills training in Australia. Participants must be sponsored by an approved organisation in Australia and may undertake workplace-based training in Australia for up to six months in the following sectors:
- Infrastructure development
- Financial services
- information communication and technology
- A work visa and visitor visa outcome that expands the annual limit of working visas and visitor visas for Indonesians aged between 18 and 30 from 1,000 places to 4,100 places on entry into the force of IACEPA. Places will increase incrementally each year to 5,000 by the sixth year. The arrangement allows Indonesians to develop their skills through short-term work in Australia and gives Australian businesses and their employees the opportunity to work with young Indonesians and benefit from the perspectives they bring.
- The inclusion of a framework for trade and investment-related cooperation through a jointly funded work program. This program supports technical assistance and capacity-building activities across a range of trade-related areas to strengthen commercial links and help stimulate two-way investment.
What Changes Have Been Announced Under the Indonesia-Australia Comprehensive Economic Partnership Agreement (IACEPA)?
Recent talks between President Widodo and Prime Minister Albanese included new initiatives to enable more Australian and Indonesian professionals to work in each country.
These changes include improved visa offerings for Indonesian businesspeople and frequent travelers, mutual professional recognition for engineers, and new pathways to support skills exchange under the IACEPA.
It was also confirmed that visa rules will be relaxed for Indonesian business travelers. Business travelers will now have access to a five-year visa instead of three and E-passport holders will now be prioritised at Smart Gates.
“We will put arrangements in place also for Indonesians to access the frequent travelers’ visa.”  Prime Minister, Anthony Albanese.
Access to the frequent travelers’ visa will not only offer a 10-year visa validity but will also work towards removing bureaucratic impediments in the Indonesia-Australia relationship.
President Widodo confirmed during his visit to Sydney in early July that since the enactment of the IACEPA, the volume of trade between Indonesia and Australia has increased by 90%.
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