Trade Minister Steve Ciobo to visit Jakarta to shore up free trade deal

Trade Minister Steve Ciobo's first post-election destination is Jakarta, but his counterpart there has changed.

Former trade minister Andrew Robb sits next to the Indonesian embassy's deputy chief of mission, Kusuma Habir, at the Indonesia Business Summit in Canberra last year. Photo: Alex Ellinghausen

Steve Ciobo: keen to get trade talks with Jakarta moving again. Photo: Alex Ellinghausen

Australian Prime Minister Malcolm Turnbull and Indonesian President Joko Widodo move to take off their ties during a visit to Tanah Abang Market in Jakarta in November last year. Standing between them in the blue shirt is Thomas Lembong, who lost his job as Indonesia's trade minister in a reshuffle last week. Photo: Pool via AP

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Jakarta: Trade Minister Steve Ciobo will travel to Jakarta this week in his first trade-related overseas trip since the election, underscoring the emphasis Australia is placing on finalising the free trade agreement with Indonesia.

The two countries announced in March they hoped to conclude long-running talks within 12 to 18 months and start work immediately on early outcomes in areas such as education, skills training, infrastructure, agriculture and financial services.

Former Indonesian trade minister Thomas Lembong even hinted that Indonesia might allow Australian universities to establish campuses in Indonesia - currently prohibited by law - in special economic zones.

However Mr Lembong was a surprise casualty of a ministerial reshuffle in Indonesia last week, and Mr Ciobo will now meet with his replacement, businessman Enggartiasto Lukita, widely regarded as a political appointment.

"Lembong's removal from this ministry and his replacement by a party politician means that the ministry can go back to becoming a protectionist, patronage-driven centre once again, something Lembong tried to reform during his short tenure as minister," Alexander Arifianto from Nanyang Technological University in Singapore wrote in Eurasia Review.

Mr Ciobo told Fairfax Media he was still hoping to hammer out a deal by next year.

"Certainly that is the goal we are working towards and I haven't been advised to the contrary by Indonesia," he said.

"The trade relationship is underweight - both Mr Lembong and I have acknowledged that - and officials have been working on building on the incredible potential.

"My focus is on driving a comprehensive agreement that removes obstacles and barriers. Certainly services and exports will be a key focus but also driving investment for both countries will be a key focus."

Mr Ciobo will also meet with Mr Lembong, who is now the head of the Indonesian Investment Coordinating Board (BKPM).

Despite its geographical proximity, Indonesia is only Australia's 12th-largest trading partner. About 250 Australian businesses are in Indonesia, down from about 450 a decade ago.

Indonesia is ranked 109 out of 189 countries in the World Bank's Ease of Doing Business index, compared to Singapore at number one and China at 84.

However it has a population of more than 255 million – including a middle class of more than 45 million  –  and Australia sees an opportunity to supply the growing needs of Indonesian consumers with Australian goods and services.

Negotiations on the Indonesia-Australia Comprehensive Economic Partnership Agreement started in Jakarta in 2012 but stalled amid diplomatic tensions between the countries, including the Bali nine executions and a climate of economic protectionism in Indonesia.

It was not until late last year that Mr Lembong - who supported a more open-door trade policy - and then trade minister Andrew Robb announced the two countries would restart talks.

Australia Indonesia Business Council president Debnath Guharoy said the two countries were not really global competitors but had complementary strengths and would do well to work together.

"Australian skills are needed in Indonesia and the Indonesian labour force is an asset that Australian exporters can use," he said.

Mr Guharoy said an existing example was the red meat and cattle partnership, which started in 2013 and focuses on how Indonesia and Australia can play a joint role in the global supply of beef and cattle.

Live cattle is shipped from Australia and then fattened and slaughtered in Indonesia feedlots.

Mr Guharoy said this could be replicated in areas such as tourism, where Australian expertise could assist Indonesia with President Joko Widodo's vision of building 10 Bali-like destinations in the next four years.

He said Indonesia and Australia had two different main concerns.

Indonesia worried that removing trade barriers would wipe out local farmers and Australia was seeking regulatory certainty in areas such as mining and investment.

"These will be the two primary concerns the two sides will need to negotiate their way through," he said.

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The story Trade Minister Steve Ciobo to visit Jakarta to shore up free trade deal first appeared on The Sydney Morning Herald.

Source: Trade Minister Steve Ciobo to visit Jakarta to shore up free trade deal