Australia and Indonesia are finalising a trade agreement that will lower tariffs on selected exports, increase investment opportunities on certain industries and liberalise immigration policies for Indonesian workers.
Trade negotiations between the two countries began in 2012 but were stalled due to diplomatic tensions related to the live cattle export ban fiasco. Discussions resumed only in 2016.
According to chief negotiator Deddy Saleh, Indonesia is asking for the removal of tariffs on its textile exports so its producers can become competitive with Malaysia and China who were successful in getting free trade agreements with Australia.
On their part, Australia has eliminated tariffs on many agricultural products but those on textiles are not scheduled to be phased out until 2020.
Australia wants Indonesia to reduce tariffs on skim milk powder and cold rolled steel plus increased opportunities to invest in education, tourism and healthcare. Presently, Indonesia grants only 49% foreign ownership in businesses.
Mr. Deddy said Indonesia has not closed its doors on Australia’s request for majority ownership. However, they want to see a stronger commitment from Australia to invest in the country because private sector interests differ from those of the government.
The bigger issue in the trade agreement is the potential for greater influx of workers from Indonesia to Australia.
According to Mr. Deddy their study showed that Australia needs nurses, cooks and hotel staff. But Indonesian hospitality workers had their visas rejected despite meeting industry standards and qualifications on experience and expertise.
A 2016 poll by the Essential showed that 49% of Australians were in favour of banning Muslim immigration.
Indonesia is home to the world’s largest population of Muslims. Extremist groups have been operating in Indonesia since its independence from the Netherlands in 1949.
Under Suharto’s 32 year regime, militant extremist groups like Darul Islam were vanquished. But when Suharto was overthrown in 1998, extremists who had been on the battlefield with al-Qaeda in Afghanistan returned to Indonesia and set up new militant groups including the notorious Jemaah Islamiyah (JI).
In 2002, JI extremists took responsibility for the attacks at Bali. Indonesia commissioned the formation of Detachment 88, a U.S- trained counter-terrorism unit which eventually dismantled many al-Qaeda affiliated groups including JI.
Former JI members have since joined ranks with ISIS which is now the dominant terrorist group operating in Indonesia. Out of the 3,000 pro-ISIS social media sites operating in Southeast Asia, 70% are believed to be based in Indonesia.
A 2014 report on the origins of ISIS in Indonesia contends that more than 600 Indonesians have travelled to ISIS-held territories in the Middle East for training.
The province of Aceh is now under sharia law and the former Governor of Jakarta was found guilty earlier this year of blasphemy. Both developments demonstrate that the Indonesian government itself is being infiltrated by Islamic extremists.
In 2016, the Indonesia Australia Business Partnership Group proposed a relaxed visa policy that would allow Indonesian and Australian workers to have easy access across borders.
Historically, Indonesia is only Australia’s 14th largest trading partner while Australia is Indonesia’s 9th largest trading partner. Both countries have been looking for ways to increase and improving trading relations.
A report by Perth USAsia Centre shared its findings that both Australia and Indonesia are heavily dependent on natural resources.
Given the complexities of fine-tuning a trade agreement between countries that are more competitive than collaborative, the question that should be answered by Australia is whether easing immigration policies for a country known for breeding extremist Muslims is worth the price of reduced tariffs on powdered skim milk.