Australia and Indonesia have signed a free trade deal in Jakarta on Monday, in what could be one of the most significant trade-related developments in the world of trade this year. The agreement is set to undergo judgment by the federal parliament but analysts are optimistic of the latest progress.
Indonesian and Australian trade ministers signed the deal with Labor leader Bill Shorten pledging to review the details of the agreement, SBS Australia reported. Shorten noted that the Labor party is "positively disposed" towards the pact.
"We'll have to study the detail, as you always do - we want to make sure that Australian jobs are prioritized - but we're very positive from what we've seen so far," Shorten told media.
While the deal has yet to receive ratification from parliament after it is formally discussed with the treaties committee, most economic and political analysts believe that the agreement will pass parliament.
Australia has already signed similar pacts with other countries but this is the first of its type for Indonesia. Business Council Chief, Jennifer Westacott said the pact is very critical for Indonesia as it will help improve the country's exchange with other Asian countries.
According to the Associated Press, the deal seeks to eradicate many tariffs and will also allow for Australian-owned hospitals to be built in Indonesia. Australia, for its part, will ease up on work visas for young Indonesian talents with an increase of 6,000 per year in working holiday visas.
Furthermore, the agreement is set to enhance trade relations between the two Asian countries as Indonesia has been forecasted to become one of the world's leading economies by the year 2030. The country is considering the idea of allowing foreign-owned companies to invest in higher education programs as part of its efforts to improve the economy.
With the deal signed, 99 percent of Australian exports to Indonesia will be tariff-free, including live cattle. For some products that couldn't be exempted, Australia pledges to improve preferential access by next year. Likewise, Indonesian exports to Australia will have no tariffs.
Australian companies will have majority ownership of projects in various industries in Indonesia. These include but are not limited to energy, aged care, mining, health care, and telecommunications.
Annual trade of goods between the two countries is currently valued at $11.6 billion but these figures are expected to increase now that the deal has been signed. Simon Birmingham, Australian Minister of Trade said the agreement "will take Australian and Indonesian relations to a new plane" that will benefit both countries on a richer sense.
