Indonesia and Australia signed a landmark free trade agreement on Monday, ending nearly a decade of negotiations.
Indonesian Trade Minister Enggartiasto Lukita and his Australian counterpart Simon Birmingham signed the so-called Comprehensive Economic Partnership Agreement at a hotel in Jakarta.
Indonesian goods will be subjected to zero tariffs when entering Australia, while tariffs on 94 per cent of Australian goods imported to Indonesia will be eliminated gradually.
Enggartiasto described the agreement as ‘historic for both countries’ ‘This agreement is extremely beneficial for the two countries and is very comprehensive, not only in terms of trade in goods but also in terms of investment and services,’ he said at a joint press conference after the signing ceremony.
‘Trade between the two countries has been too small, so we hope that with this agreement it will increase greatly,’ he added.
Birmingham said the deal would allow 99 per cent of Australian goods to enter Indonesia duty free or under significantly better preferential arrangements.
He said it would take ties between Indonesia and Australia to a new level where ‘trade relations will be much deeper, stronger and richer.’
Major industrial sectors that will benefit from the deal include automotive, textile, footwear and agribusiness.
Under the deal, Australian universities will be able to operate in Indonesia and Australians will be able to have greater stakes in tourism and health and mining companies in the country.
The two countries are in the world's top 20 economies but are not each other's top 10 trading partners, despite being neighbours.
Total bilateral trade between Indonesia and Australia was worth 8.6 billion US dollars in 2018.
Negotiations for the pact started in 2010 and concluded in August. But the signing was delayed after Prime Minister Scott Morrison said Australia was considering moving its embassy in Israel from Tel Aviv to Jerusalem.
In December, Australia formally recognized West Jerusalem as Israel's capital, but said it would not move its embassy immediately.
Indonesia is home to 260 million people, with a growing middle class.
