Damon Mcknight
Australia and Indonesia have a complex relationship that involves billions of dollars in two-way trade and tourism, cooperation on counter-terrorism and people smuggling, and strong educational and cultural links. Australia is committed to promoting Indonesia's prosperity, stability, and resilience, and building strong institutional and people-to-people connections. Both countries are close neighbours, strategic partners, and friends, with Australia being Indonesia's twelfth-largest trading partner and Indonesia being a popular tourist destination for Australians. The two nations have a history of working together, such as during Indonesia's struggle for independence and in the aftermath of the 2004 tsunami, but their relationship has also been strained at times due to issues like territorial disputes, spying scandals, and disagreements over the treatment of cattle imports. Despite these challenges, Australia and Indonesia continue to cooperate in various sectors, including trade, security, development, and education.
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What You'll Learn
- Indonesia is Australia's twelfth-largest trading partner
- The two countries have a history of security cooperation
- Australia supports Indonesia's human development and service delivery efforts
- Indonesia is a popular destination for Australian tourists
- Australia and Indonesia have a tense but pragmatic relationship
Indonesia is Australia's twelfth-largest trading partner
Indonesia and Australia are close neighbours, strategic partners, and friends. They are the two largest economies in Southeast Asia and share a commitment to fostering a secure and prosperous region. Both countries are members of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), which was Australia's first multi-country free trade agreement. They are also currently negotiating a Regional Comprehensive Economic Partnership and the Trans-Pacific Partnership (TPP).
The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) negotiations commenced in 2012 and aim to free up impediments to bilateral trade and investment. IA-CEPA provides a framework for both countries to unlock the potential of their economic partnership, fostering economic cooperation between businesses, communities, and individuals. As one of the fastest-growing economies in the Indo-Pacific, Indonesia presents a significant opportunity for Australian businesses. By some estimates, Indonesia will be the world's fifth-largest economy by 2030, and IA-CEPA ensures Australia is well-positioned to benefit from this growth.
The Australia-Indonesia Development Partnership Plan 2024-2028 (DPP) outlines shared development priorities and objectives, including supporting Indonesia's economic transformation through investment in economic governance, trade, infrastructure, research, and innovation. Australia will also support Indonesia's transition to renewable energy through the Australia-Indonesia Climate and Infrastructure Partnership, KINETIK. This partnership will help Indonesia adapt its energy sector and build resilient and climate-smart infrastructure.
In addition to economic ties, there are strong cultural and community links between Indonesia and Australia. Indonesia is a popular destination for Australian tourists, and Australia is in Indonesia's top five sources of visitors. The two countries have established organisations such as the Australia-Indonesia Institute, the Australia-Indonesia Centre, and the Australia Indonesia Business Council to strengthen ties and promote trade and investment.
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The two countries have a history of security cooperation
Australia and Indonesia have a history of security cooperation, with both countries working together to address shared challenges and promote peace and stability in the Indo-Pacific region.
In recent years, Australia and Indonesia have collaborated on counter-terrorism efforts and the prevention of terrorist exploitation of the internet, particularly in the wake of the 2002 Bali bombings, which killed 88 Australians, and the 2004 bombing of the Australian embassy in Jakarta. Additionally, the two countries have worked together to combat people smuggling and address territorial disputes, with Australia admitting to entering Indonesian waters during people-smuggling operations and sending a formal apology to Indonesia.
The Agreement on the Framework for Security Cooperation, also known as the "Lombok Treaty", signed in 2006, established a framework for addressing traditional and non-traditional security challenges collaboratively. This agreement further solidified the security cooperation between the two nations.
Furthermore, Australia and Indonesia have a history of military collaboration, particularly during emergency relief efforts. Following the 2004 Indian Ocean tsunami, Australia provided over $1 billion in aid, and the Australian military worked alongside Indonesia's military in the relief effort.
Despite occasional tensions, such as the Australian cattle export suspension in 2011 and the execution of Australian citizens in Indonesia for drug trafficking, the two countries have maintained a pragmatic relationship, recognising the importance of their strategic partnership.
With Indonesia being Australia's nearest major neighbour and a key part of Australia's strategic partnership in the region, the two countries continue to work together to strengthen their security cooperation and address shared challenges.
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Australia supports Indonesia's human development and service delivery efforts
Australia and Indonesia are close neighbours, strategic partners, and friends. The Australia-Indonesia Comprehensive Strategic Partnership sets an ambitious agenda for deeper and broader cooperation. As a major economy in the region and globally, Australia sees Indonesia's success as pivotal to the success of the region.
Indonesia's National Medium-Term Development Plan 2015-19 (RPJMN) is part of the country's National Long-Term Plan 2005-2025. It has nine priority areas, including good governance, improved productivity and competitiveness, human resource quality, and self-sufficiency. The plan focuses on Eastern Indonesia to address regional disparities in development, while maintaining growth momentum in other parts.
Australia's Aid Investment Plan 2015/16-2018/19 aligns with the RPJMN priorities. Australia is committed to supporting Indonesia's development and its transition from a donor-recipient model to an economic partnership of equals. Australia will support Indonesia's efforts to distribute the benefits of growth to a larger number of its people.
Australia will support Indonesia's human development and service delivery efforts, promoting transparent and effective governance, and assisting Indonesia's ambition for vulnerable groups to access services safely and share in economic growth. Australia will work with Indonesia to strengthen governance across its decentralised system, delivering better services.
Australia's development cooperation program in Indonesia is structured around three objectives: improving economic institutions and infrastructure, catalysing change and building capacity for better quality health and education outcomes, and promoting an inclusive society through better service provision, social assistance, and poverty reduction.
Australia's programs will promote gender equality, with an emphasis on women's economic empowerment. Australia has provided technical assistance to advance gender equality and support the development of childcare policies. Australia's women's empowerment program supported the development of 950 local women's groups across Indonesia, helping their 17,409 female members to participate in policy-influencing activities.
Australia and Indonesia will also work together to prepare for climate-related disasters and threats to human and animal health. The Australia-Indonesia Climate and Infrastructure Partnership, KINETIK, will support Indonesia's energy transition and build climate-resilient infrastructure.
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Indonesia is a popular destination for Australian tourists
Bali's success as a tourist destination is partly due to the province's efforts to make travel simpler and easier for tourists. As Indonesia seeks to develop its tourism industry beyond Bali, ease of travel will be critical. In 2015, Indonesia saw a 19% boost in numbers from countries granted visa-free access. A similar boost in Australian numbers would mean an additional 214,421 tourists per year and an injection of 3.4 trillion rupiah ($342 million) into the Indonesian economy.
The Indonesian government has recognised the potential economic boost a strong tourism industry can deliver and has articulated a bright vision for the future, including the development of Indonesia's landmarks into new, world-class tourism parks. Indonesia is rich in culture, natural beauty, and warm hospitality.
However, Australians travelling to Indonesia should exercise a high degree of caution. Rabies is present throughout Indonesia, including at tourist destinations, and treatment may be limited. There have also been cases of Australians getting into trouble with local police after taking magic mushrooms, particularly in Bali. It is important to understand the risks, safety, laws, and customs before travelling to Indonesia.
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Australia and Indonesia have a tense but pragmatic relationship
Australia and Indonesia have a complex relationship that has been characterised as both tense and pragmatic. On the one hand, the two countries have a history of cooperation and collaboration, particularly in the economic sphere. On the other hand, there have been several incidents that have strained their relationship, including territorial disputes, executions of Australian citizens in Indonesia, and trade issues.
Historically, Australia and Indonesia have worked together on various initiatives. Australia supported Indonesia's independence after its proclamation in August 1945 and was the first foreign country to recognise the Indonesian Republic. The two countries also collaborated on trade, investment, and education ties during Indonesia's early struggles for independence in the 1940s. Australia was Indonesia's strongest supporter during this time. Additionally, Australia and Indonesia have worked together on regional initiatives such as APEC and the Cambodia peace settlement in the early 1990s. They are also members of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), which entered into force in 2010.
However, the relationship between Australia and Indonesia has also been marked by tension and disputes. In 2015, relations were strained when Indonesian President Joko Widodo ignored pleas from Australia to grant clemency to convicted drug traffickers Andrew Chan and Myuran Sukumaran, who were subsequently executed. This incident led to a temporary suspension of ministerial contact between the two countries. Territorial disputes have also caused friction, with Indonesia demanding that Australia cease naval incursions into its waters in 2014. Australia admitted to entering Indonesian waters and issued a formal apology. Additionally, there have been trade issues, such as Australia's brief suspension of live cattle exports to Indonesia in 2011 due to concerns about animal welfare abuses, which caused beef scarcity and price hikes in Indonesian markets.
Despite these tensions, the relationship between Australia and Indonesia remains pragmatic due to their close proximity, economic ties, and cooperation in other areas. Indonesia is Australia's twelfth-largest trading partner, with two-way trade worth A$11.2 billion in 2015-16. Australia's major export to Indonesia is wheat, while its biggest import is crude petroleum. There are also strong educational and cultural links between the two countries, with Indonesia being a popular destination for Australian tourists. Additionally, Australia and Indonesia have collaborated on counter-terrorism efforts and addressing people-smuggling issues.
Overall, while the relationship between Australia and Indonesia has had its challenges and tense moments, it remains pragmatic due to the mutual benefits and cooperation between the two countries.
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Frequently asked questions
Indonesia is Australia's nearest major neighbour with a population of 260 million people (compared to Australia's 24.3 million). It is also one of Australia's top trading partners, with two-way trade worth A$11.2 billion in 2015-16. Indonesia is also one of the most popular tourist destinations for Australians.
Australia supported Indonesia's struggle for independence from the Dutch after World War II. In 1945, Australia sent a diplomatic mission to meet President Sukarno to establish recognition of the Indonesian Republic. In the 1990s, Australia and Indonesia worked together to support the Cambodia peace settlement.
Indonesia and Australia are longstanding economic partners. They are both members of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) and are currently negotiating a Regional Comprehensive Economic Partnership and the Trans-Pacific Partnership (TPP). Indonesia imports beef and cattle from Australia, amounting to about $12 billion annually.
Australia and Indonesia have a history of cooperating on security and geopolitical issues. They have worked together on counter-terrorism, emergency relief efforts, and preventing terrorist exploitation of the internet. They also have a shared interest in the future of the South China Sea and are working together to tackle marine plastic debris.
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