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Indonesia and Australia eliminate tariffs through FTA

Indonesia and Australia recently signed an FTA that eliminates many tariffs, allows Australian-owned hospitals to operate in the giant Southeast Asian country and increases work visas for young Indonesians.

The agreement is subject to ratification in both countries. Indonesia would complete ratification by the end of this year. It will allow Australian companies to have majority ownership of investments in various industries in Indonesia, including health care, telecommunications, energy, mining and aged care.

Nearly 99 per cent of Australia’s exports to Indonesia by value will be tariff-free or have improved preferential access by 2020, up from 85 percent under an existing trade agreement between Australia, New Zealand and 10 Southeast Asian countries. Indonesian exports to Australia will face no tariffs, but it already enjoys substantially tariff-free access to the Australian market under the Southeast Asia agreement.

Separately, Indonesia is planning to allow foreign companies to invest in higher education, where the country is lagging far behind international standards.

The agreement will increase Australia's live cattle exports. Its exports to Indonesia will increase to 4 per cent a year till reaching 700,000.

Australian working holiday visas for young Indonesians will be increased to 6,000 a year from the current 1,000 over six years.