IA-CEPA creates a framework for Australia and Indonesia to unlock the vast potential of the bilateral economic partnership, fostering economic cooperation between business, communities, and individuals.
Source : https://statik.tempo.co/data/2018/03/17/id_691572/691572_720.jpg
What is IA-CEPA?
The IA-CEPA was finally ratified on February 9, 2020. This agreement will later provide rates and non-rates facilities and opportunities for micro, small and medium enterprises (MSMEs) to trigger the sale of Indoensian products to Australia.
Head of the Investment Coordinating Board, Bahlil Lahadalia enthusiastically welcomed the IA-CEPA ratification. Therefore the government will have a clear legal law for the implementation of the agreement.
“This agreement is in line with investment targets in improving the export-oriented industrial sector. Now the market opportunity is expanded. This is our capital to ‘sell’ to investors who want to enter Indonesia,” Bahlil said in his written statement received in Jakarta, Sunday, February 9, 2020.
Based on the ratification of the IA-CEPA, Indonesia will gradually cut import duties by 94 percent for products from Australia. While Australia will remove 100 percent of import duties on products from Indonesia.
In total, there were 6,474 items of zero percent import duty rates that Australia provided to Indonesia. With this release, the government expects exports of automotive products, such as electric and hybrid cars to increase.
Then, export products will also increase, like wood, furniture, textiles and textile products, tires, communication equipment, medicines, machinery, and electronic equipment. On the other hand, neighboring countries also provide additional work and holiday visa quotas for Indonesian citizens from 1,000 to 4,100 visas in the first year of IA-CEPA implementation later.
In fact, the quota will increase by around five percent in the following years. Indonesia will also get various programs to improve the quality of human resources, such as internships in industry and vocational education.
Indonesia and Australia
Indonesia is a growing market for Australian goods and services exporters. In 2018-2019, total two-way trade in goods and services from Indonesia was worth $17.8 billion, making Indonesia the 13th largest trading partner with Australia.
As one of the fastest growing economies in Indo-Pacific, Indonesia presents a significant opportunity for Australian businesses. By some estimates, Indonesia will be the world’s fifth largest economy by 2030, and IA-CEPA ensures that Australia is well-placed to deepen economic cooperation and share in Indonesia’s growth.