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Australian investors want stability, PM Morrison says

Australian Prime Minister Scott Morrison has warned Indonesia that stability and certainty are very important for investors as the two countries look toward ratifying the Indonesia-Australia Comprehensive Partnership Agreement (IA-CEPA) amid concerns over deteriorating legal protections in Indonesia

Dian Septiari (The Jakarta Post)
Jakarta
Tue, October 22, 2019

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Australian investors want stability, PM Morrison says

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span>Australian Prime Minister Scott Morrison has warned Indonesia that stability and certainty are very important for investors as the two countries look toward ratifying the Indonesia-Australia Comprehensive Partnership Agreement (IA-CEPA) amid concerns over deteriorating legal protections in Indonesia.

Morrison met with President Joko “Jokowi” Widodo before his inauguration ceremony for his second term on Sunday.

He said they talked about many issues, including progress for the trade agreement’s ratification, and gave assurances that there were no obstacles that might prevent a deal from being reached. He also said Australia’s House of Representatives would be moving its own ratification process forward.

Australia was also working to ensure that the deal attracts investment, Morrison said.

“At the end of the day, if you want to see investment flow and trade, then you’ll obviously need stability and certainty for investors and that’s what they’re looking for and I believe that’s what IA-CEPA is all about,” the prime minister said on Sunday, according to an official transcript issued on Monday.

Indonesia is Australia's 14th-largest trading partner with A$17.58 billion (US$11.78 billion) booked in 2018, trailing Southeast Asian neighbors Singapore (A$32.24 billion), Thailand ($25.73 billion) and Malaysia ($24.18 billion), according to data from Australia's Department of Foreign Affairs and Trade (DFAT).

Canberra is greatly invested in the deal with Jakarta, with Morrison saying the administration had tremendous engagements with their Indonesian counterparts, so as to ensure that a greater amount of Australian investment enters Indonesia.

For Australian cattle and sheep farmers, the IA-CEPA promises to improve access to Indonesia's market of 260 million people, while access to Australia is expected to spur growth in Indonesia's automotive and textile industries and boost exports of timber, electronics and pharmaceuticals.

Former Australian prime minister Malcolm Turnbull, who led efforts to revive the deal after a decade of unsuccessful talks, said earlier this month that the CEPA would “establish high-quality modern rules, services, investment and digital trade that reduces transaction costs for businesses”.

However, critics fear that the path to this ambitious arrangement might be complicated by a recent spate of events in Indonesia that saw what some experts said was the defanging of the nation’s highly regarded antigraft body.

The amendment of the 2002 Corruption Eradication Commission (KPK) Law came into effect on Thursday, a month after lawmakers approved a revision that was given the green light by Jokowi himself.

Among the controversial points of the revision is the establishment of a supervisory body to oversee the KPK’s wiretapping and search and seizure activities, while the new law also turns the formerly ad hoc institution into a government arm, which critics fear would compromise its independence in investigations of government officials.

Previously, a group of economists penned an open letter addressed to Jokowi, urging him to issue a regulation in lieu of law (Perppu) to annul the latest revision to the KPK Law, arguing that weakening the antigraft agency would harm the economy.

Forty scholars from various universities at home and abroad have endorsed the letter, including University of Indonesia economist Faisal Basri, Center of Reform on Economics (CORE) Indonesia research director Piter Abdullah and Prof. Budy Resosudarmo of Australian National University.

“Our literature research shows that corruption hampers investment and disrupts ease of investing. Corruption worsens income inequality, weakens the government by weakening fiscal and legal capacities and corruption creates macroeconomic instability because foreign debts tend to be higher than foreign direct investment,” the letter, issued last week, said.

Presidential Chief of Staff Moeldoko raised eyebrows in September by suggesting that the existence of the KPK could hinder investment. He said the government and the House decided to approve the bill because “there are more people who support the revision of the KPK Law”, citing a survey released by Kompas.

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