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IE-CEPA Officially Applies, Indonesia's Export to Australia is Duty Free

Monday, 06 July 2020

IE-CEPA Officially Applies, Indonesia's Export to Australia is Duty Free

JAKARTA. Indonesia-Australia Comperhensive Economic Partnership Agreement (IA-CEPA) officially applies. The certainty arises, after the government published three implementing rules for the agreement that both countries have made and each country has ratified into the Act.

The three implementing regulations include the Minister of Trade Regulation (Permendag) Number 63 year 2020, Minister of Finance Regulation (PMK) number 81 / PMK.10 / 2020, and PMK 82 / PMK.04 / 2020. With these technical regulations, the export of a number of products from Indonesia to the land of Kangaroo will be charged the customs tariff of 0%, a.k.a. free of import duty. 

The Ministry of Trade, in a written statement released on Sunday (5/7) stated, this agreement will provide economic benefits for both countries. By getting the 0% import duty rate, Indonesia's exports to Australia products are expected to increase. Some of Indonesia's export commodities to Australia include automotive, wood and its derivatives, fishery, textile and textile product, shoes, communication devicesand electronic equipment.

Read: Tariffs of Import Duty of Safeguard Measure on Imports of Fabric Go Up

Meanwhile, by exempting import duties on Australian products, the government expects to encourage economic activity in Indonesia in a number of business sectors, such as the restaurant industry, catering and the food and beverage industry. Because, the raw material for the industry in the sectors have been widely imported from Australia.

Long Awaited 

It needs to be known that the IA-CEPA agreement was not made in an instant. Both countries began to initiate it in April 2005, which was then continued with the discussion of the Joint Feasibility Study. The Joint Feasibility Study concluded that the agreement would benefit both countries.

Nevertheless, the negotiation were only conducted on 2 November 2010 between the President of the Republic of Indonesia at that time, Susilo Bambang Yudhoyono with Australian Prime Minister Julia Gillard. Then in 2012 and 2013 negotiations resumed, but after that it was stopped for three years.

Read: Criteria for VAT-Collecting Digital Companies Determined

In 2016 Indonesia and Australia agreed to resume the discussion. Then, after going through 12 rounds of negotiations and five negotiating chair-level meetings finally on August 31, 2018 the two countries issued a joint statement stating the negotiation process related to the substance was complete. Until finally, on 4 March, 2019 the two countries signed the IA-CEPA.

For information, Australia is one of the strategic trading partners for Indonesia. The total value of Indonesia's trade with Australia in 2019 was recorded at USD 7.8 billion.

Therefore, the cooperation agreement is considered as one of the ways to improve the relationship of both countries. 



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