Indonesia mulls free-trade deal 

Australian sugar exporters will now be able to compete on Asean terms.

Australia is pinning its hopes on sugar to boost exports to Indonesia, as it hopes to seal a free-trade agreement that has been discussed for nearly a decade.

With bilateral trade at its lowest level since 2009, Australian Trade Minister Steve Ciobo revealed an agreement to reduce sugar tariffs from 8 per cent to 5 per cent, the Asean rate. And now Australia hoped for a wider agreement “by the end of this year”, Ciobo said.

The higher tariffs had seen sugar exports to Indonesia drop to 300,000 tonnes a year from 1.25 million tonnes before Indonesia cut the tariff from Thailand in 2015, according to Warren Males of Canegrowers, Australia’s chief sugar lobby.

“The gains in terms of sugar, to have the Asean tariff rate extended to Australia, are important because Australia was losing market share in Indonesia, losing it to Thailand,” Ciobo said while visiting Jakarta.

“There’s always offensive and defensive interests in any negotiation, that’s completely understandable but there is a commitment to getting a deal done and that’s what were both focused on,” Ciobo added.

Indonesia remains in the top five most popular nations for Australian investment, according to a survey by Austrade. 

Most interest centres around mining and processing, the food and beverage industry, tourism, water supplies, hotel industry and infrastructure. 

BKPM said Australian investment in Indonesia in last year reached a meagre US$174 million, up 4 per cent from US$167 million in 2015.

Amid slumping global trade, Canberra and Jakarta are discussing a free-trade deal that was initially proposed in 2007 and reactivated last year after negotiations stalled over spying allegations and Indonesia’s execution of Australian drug smugglers.

Australia is Indonesia’s ninth-biggest trading partner with US$9.3 billion passing between them in 2015: down from US$12.26 billion in 2012.

In an effort to protect territorial claims, although not from an Australian threat, Indonesia has declared sovereignty over 111 outer islands. 

Maritime Affairs and Fisheries Minister Susi Pudjiastuti welcomed the new islands of Bintan and Berakit in the province of Riau and Nusa Penida in Bali. 

“The enactment of these islands is to prevent issues of occupation or claims of possession by other nations,” said Susi according to, in apparent reference to Beijing’s expansion into the South China Sea. 

Last year, Indonesia was involved in a standoff with China over fishing in waters near Natuna.

There have also been several disputes over peripheral islands with Malaysia and Singapore.

Susi said the authorities would prevent drug smuggling, human trafficking and illegal fishing on the 111 islands. 

Picture credit: Flickr