Assessing Indonesia’s Readiness for IA-CEPA: How to Achieve its Potential Gains

By Dr Poppy Winanti

The landmark Indonesia Australia Comprehensive Economic Partnership Agreement recently entered into force, however Indonesia faces challenges to fully reap its benefits due to its position as a developing country and the COVID-19 pandemic.

While the Agreement offers zero tariffs on Indonesian products, some industries – such as the automotive industry – will benefit less due to incompatibility with Australian consumer demand.

Indonesia will need to implement changes to its domestic regulations to ensure producers comply with Mutual Recognition Agreements under IA-CEPA which ensure compliance with international technical and health standards.

The Indonesian Government should prioritise Australian FDI into agriculture, energy and infrastructure to address Indonesia’s food security concerns.

Australia and Indonesia can use IA-CEPA to exploit their competitive advantage and economic complementarity to become a collaborative economic powerhouse in the region.