‘Two neighbours, partners in prosperity’: What IA-CEPA means for Australia-Indonesia economic ties
A recent panel discussion looked at IA-CEPA as a platform to reinvigorate Australia and Indonesia’s economic relationship
“The problem is this: no two neighbouring G20 countries with complementary economies trade as little as Australia and Indonesia,” said senior analyst Kyle Springer of the Perth USAsia Centre. “IA-CEPA constitutes the first major effort to strengthen bilateral economic ties.”
In November 2019, in collaboration with the Perth USAsia Centre, the University of Western Australia’s Public Policy Institute and the Australia Indonesia Business Council, the Australia-Indonesia Centre hosted a discussion to explore the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) as a strategic tool to reinvigorate economic ties between Australia and Indonesia.
Moderated by AIC’s Digital Economy Fellow Helen Brown, the panel featured Kyle Springer; Brian Kraft – Southeast Asia Senior Business Consultant at Cardno; Tracey Monahan – Director, Connected & Sustainable Communities at KeyOptions; and Ricki Mulia – Chief Digital Strategist at Tapp Group.
IA-CEPA is more than a trade agreement, as it includes both economic and consultation mechanisms to enhance the broader strategic partnership. More than ten years in the making, it’s one of the most comprehensive agreements signed by Indonesia, and covers cooperation in vocational education training, higher education and the health sector. As Acting Consul General Zaenal Arifin affirmed, “Indonesia is now moving forward… when cooperation is realised [through IA-CEPA], Indonesia and Australia will be a joint economic powerhouse for the region.”
See our interviews with the panelists:
What lays ahead remains murky, but the panellists are optimistic. “I think that having an agreement like this opens up doors,” said Monahan, emphasising the ways in which the IA-CEPA offers a renewed sense of recognition to the economic potential of the bilateral relationship. In particular, the IA-CEPA secures Australia as Indonesia’s preferred agricultural provider, at a time when Indonesia’s middle class swells in size, creating higher demand for high-quality produce. Other sectors such as e-commerce, textiles, manufacturing, creative industry and tourism also offer enormous opportunity. It’s clear that once the IA-CEPA enters into force, Australia and Indonesia will need to work together to identify areas of economic complementarity if we are to truly deepen our relationship as economic and strategic partners.
The IA-CEPA may give rise to increased mobility between Australia and Indonesia, but without adequate infrastructure in place, a lot of that potential may be lost. “We can’t forget the infrastructure element – we need wires, we need roads, we need a postal service,” said Springer. “We really need to start being able to develop and break into other parts of the country (away from Java). Indonesia needs to improve its intra-island connectivity, and its inter-island connectivity in some ways.”
But this challenge goes both ways, as Springer continued: “The challenge when an Indonesian startup is looking to another market is that they’re looking at the market size, and Australia is a smaller market, a more spread out market… Australia’s got to be able to sell itself.”