Indonesia and Australia have agreed to relax their trade barriers, particularly on sugar, cattle and pesticides, as President Joko “Jokowi” Widodo wrapped his two-day visit to down under on Sunday
Indonesia and Australia have agreed to relax their trade barriers, particularly on sugar, cattle and pesticides, as President Joko “Jokowi” Widodo wrapped his two-day visit to down under on Sunday.
Jakarta will now lower its tariff on Australian sugar to 5 percent, which is the same rate set by other ASEAN members, and, in return, Canberra is set to eliminate tariffs on pesticides and herbicides from Indonesia.
The deals were reached in Sydney in a bilateral meeting between Jokowi and his counterpart Prime Minister Malcolm Turnbull, who deems the agreement as a mutual step that will benefit both Indonesian consumers and Australian sugar importers.
“Our goal is to have not only one import source [for sugar], which [makes us prone to high] dependency,” Indonesian Trade Minister Enggartiasto “Enggar” Lukita after the meeting.
“By having an alternative source with a similar standard, we expect the sugar price to lower.”
Indonesia’s household sugar consumption stands at between 3.2 million and 3.5 million tons a year, but local sugar production could only fulfill 2.1 million tons of the figure in 2016.
Data from the International Trade Center (ITC) shows that Australia is the second largest imported sugar and sugar confectionery source for Indonesia after Thailand.
On the other hand, Australia is listed in the top five list of destinations for Indonesian pesticides and herbicides exports, along with China, the Philippines, Thailand and Vietnam.
Jakarta and Canberra have also agreed to allow a wider range of feeder cattle to enter Indonesia by relaxing weight and age requirements, as Indonesia continues to experience persistently high beef prices.
“The new condition [that sets the maximum weight for an imported feeder cow to 440 kilograms from 350 kg] is expected to lower the meat price by A$1 [77 US cents, at the time the cow is ready to processed into meat] per kg,” Enggar said.
Turnbull said in a joint statement that the move would ensure “a win-win [situation] for Indonesian consumers and Australian exporters.”
Australia has so far been the main source of Indonesia’s beef imports, but the latter has recently opened the door for buffalo meat from India in an attempt to bring down meat prices.
Sunday’s bilateral meeting also resulted in a shared commitment to conclude the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), which Turnbull claimed as a “high-quality bilateral free trade agreement”, by the end of this year.
However, Enggar said the two sides had yet to reach a deal on goods and investment in IA-CEPA negotiations.
Meanwhile, claiming to be two passionate enthusiasts for all things digital, Turnbull said the two leaders had agreed to continue to enhance Jakarta-Canberra engagement in the digital and creative economy.
A day before in Sydney, Jokowi engaged in a small closed-door meeting with the CEOs of several Australian multinational companies, during which he assured them about Indonesia’s supportive investment climate despite global and domestic challenges.
Jokowi assured the top executives — such as those from mining private equity firm EMR Capital, Marina Industrial Development and livestock exporter Austrex — that Indonesia was currently “enjoying very good investor sentiment”, citing upgraded outlooks by international rating agencies, including Moody’s Investor Services.
He, however, also acknowledged that several issues related to regional elections posed a challenge to the economy, particularly when a massive rally occurred late last year in the run-up to the Jakarta gubernatorial election that forced Jokowi to postpone his visit to Australia initially scheduled for November.
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