Indonesia deal to absorb economy shocks: Scott Morrison

Scott Morrison has defined Indonesia as playing a pivotal role in the government’s push to diversify Australia’s economy.

Scott Morrison points the way as Joko Widodo and Governor General David Hurley go kangaroo spotting at Yarralumla. Picture: Supplied

Scott Morrison has defined Indonesia as playing a pivotal role in the government’s push to diversify Australia’s economy and broaden trade and strategic partners in the region to hedge against the heavy reliance on China and unexpected global shocks such as the coronavirus.

It comes as Treasurer Josh Frydenberg on Sunday issued a call for people to remain calm about the economic impacts of the virus, with several major shopping centres privately warning of a dramatic fall in the number of shoppers visiting malls over the past two weeks.

President Joko Widodo touched down in Canberra on Sunday as the first Indonesian leader to address a joint sitting of the Australian Parliament since Susilo Bambang Yudhoyono in 2010.

His visit comes just days after securing a victory in the Indonesian parliament to ratify the bilateral comprehensive trade deal with Australia.

The Prime Minister told The Australian the visit was emblematic of the role Indonesia would play in Australia’s economic and strategic thrust into the Indo-­Pacific region.

“This is about securing Australia’s economic future in the Indo-Pacific economies and hedging against other growing uncertainties,’’ Mr Morrison said.

The two leaders will announce a 100-day action plan to ­implement the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), which would fasttrack access for Australian farmers and businesses into the $1 trillion Indonesian economy.

The Australian understands that 50 government agencies will be involved in the 100-day action plan, which is to be based on five priority pillars, including ­enhanced economic and development partnership, maritime co-operation, and contributing to Indo-Pacific stability and prosperity.

A CEO roundtable will also be established in an Indonesian equivalent of the Gday USA ­diplomacy campaign but for corporate leaders.

In a sign of the close relationship the two leaders have built since meeting for the first time in 2018, Mr Morrison and Foreign Minister Marise Payne on Sunday held a rare and informal dinner, absent of any officials, with the President and his Foreign Minister, Retno Marsudi, at The Lodge.

Earlier the Prime Minister had thanked Mr Joko for a text the ­Indonesian leader had sent him following the death of Mr Morrison’s father.

Governor-General David Hurley, in command of a golf buggy, then whisked the ­Indonesian leader around the grounds of Yarralumla in search of kangaroos.

It is understood the Morrison government is “considering” Mr Joko’s proposal for Australia to relax visa restrictions for Indonesian visitors in line with the “visa on arrival” arrangements for Australians visiting Indonesia.

Mr Morrison said the trade deal was a key part of the government’s economic strategy of building ­resilience by diversifying the ­export markets for Australian businesses.

“(The trade deal) is emblematic of the approach we are taking to the economy,” Mr Morrison said.

“Indonesia will see significant growth over the next decade. Equally on the strategic side … we are spending a lot of time on the relationships in the region, with Indonesia, India and Japan. They are critical relationships … and they are in very good shape. This is where we are putting a lot of our focus.

“Resilience is the most important thing you can do in the economy with the economic and strategic situation as it is. Indonesia is a big partner.”

Mr Morrison said the coronavirus outbreak in China, which has claimed the lives of 813 people, more than the SARS outbreak, had shown the need for Australia to diversify its trade relations.

“Recent events have proven this … everyone assumed the risk (out of China) would be of a different nature … this is biological,” he said. Coronavirus now presents the greatest threat to the economy, ahead of the bushfires and drought. One shopping centre in Melbourne reported shopper numbers were down 50 per cent since the outbreak.

Mr Frydenberg said the economy was well placed to withstand the shocks. “Australians can be confident about the economic ­future and the economy’s ability to withstand the economic shocks that we face,” he said. “The fundamentals are strong … and we are as well prepared as any country for the challenges we face, including the economic impact the coronavirus is having.

“Our economic discipline over the last six years has given us the strength and flexibility to handle this very moment and pull through stronger on the other side.”

Mr Morrison said the ability to get the budget back into balance after a decade was critical to the government’s ability to respond financially to the economic threats but that tending to the issues of growth was more important.

Mr Morrison and Mr Joko, as expected, will also discuss the Indonesia-Australia Comprehensive Strategic Partnership, a pact that had been sealed under the Turnbull government and which covers trade, investment, defence, counter-terrorism and people-smuggling.

Terrorism and the threat to both countries of returning foreign terrorist fighters will also be high on the agenda.

Trade Minister Simon Birmingham said there was no doubt Australia’s economic relationship with Indonesia “has been underdone in the past”, and the new trade agreement would lift the partnership to a new level.

“Even though Indonesia is right on our doorstep, they are currently only our 13th largest trading partner,” he said.

“With more than 99 per cent of Australia’s goods exports set to enter Indonesia either duty free or under improved arrangements, we should have high ambition to see them jump up the list.

“Our trade deals with China, Japan and South Korea have seen exports boom and I am confident we will now see real growth with Indonesia.”

The government said that under the IA-CEPA, roughly 99 per cent of Australian goods ­exports would be traded into Indonesia without duties or with “improved preferential arrangements”.

Mr Morrison had invited Mr Joko to visit Australia when the Prime Minister travelled to Jakarta for the presidential inauguration last October.

Indonesia had contributed to the bushfire relief efforts in Australia by sending military engineers and medical staff.