Indonesia-Australia FTA Feasibility Study
Overview
In August 2007, Australia and Indonesia commenced a joint feasibility study to examine the merits of a bilateral free trade agreement (FTA). That study has now been completed and is available below:
The feasibility study, which included an independent economic modelling component (pdf, 1.2 MB), examined the potential impact on Australia and Indonesia of an FTA, including implications for economic growth, trade, investment, commercial linkages and competitiveness.
The joint feasibility study finds that a comprehensive FTA covering trade and investment would provide worthwhile economic benefits for both countries. It shows that the greatest gains would be achieved under an FTA that would eliminate all tariff and non-tariff barriers to bilateral trade and investment. It also finds that an FTA would be an opportunity to accelerate and deepen the integration of the Australian and Indonesian economies - the two largest in the region.
The study further concludes that a bilateral FTA would complement and build upon Australia's other links with Indonesia.
These include: close security cooperation under the umbrella of the Lombok Treaty (2008); extensive people to people links which would naturally benefit from intensified economic engagement; and the dynamic Australia-Indonesia Development Partnership.
Following receipt of the study by the Minister for Trade, Mr Crean, and his Indonesian counterpart, Dr Pangestu, at the Australia-Indonesia Trade Ministers' Meeting held on 19 February, the Australian and Indonesian Governments are now considering the study's findings, with a view to possible commencement of negotiations toward an FTA.
Indonesia is a significant economic and regional partner for Australia. Two-way trade in goods and services reached $11.5 billion in 2008, making Indonesia our 13th largest trading partner. Indonesia is an important and growing export market for Australia, ranked 12th overall. Australian investment in Indonesia was worth an estimated $3.9 billion in 2008 and more than 400 Australian companies are operating in Indonesia in sectors including mining, construction, finance, food and beverage and transport.
Submissions
The Department of Foreign Affairs and Trade (DFAT) would like to thank all those who contributed submissions to the Australia-Indonesia Free Trade Agreement Joint Feasibility Study, published on 1 April on the DFAT website.
If the Governments of Australia and Indonesia decide to proceed to FTA negotiations, the Australian Government would welcome further information from Australian industry on the specific barriers they face in the Indonesian market. Further guidance on preparation of submissions will be provided in that event.
In the meantime, stakeholders may make inquiries or comments by contacting DFAT at indonesia.ftastudy@dfat.gov.au or by post at the following address:
Indonesia-Australia FTA Feasibility Study
Department of Foreign Affairs and Trade
RG Casey Building
John McEwen Crescent
Barton ACT 0221