August 31, 2018 / 6:32 AM / 8 months ago

Australia-Indonesia leaders meet in Jakarta to seal trade deal

SYDNEY (Reuters) - Australia’s prime minister called for greater investment and engagement with Indonesia on Friday, ahead of talks with his Indonesian counterpart on a free trade deal that could be signed later this year.

Indonesian President Joko Widodo welcomes Australian Prime Minister Scott Morrison at the presidential palace in Bogor, Indonesia August 31, 2018. Antara Foto/Hafidz Mubarak A / via REUTERS

The Asian neighbors have been in prolonged trade talks since 2010, with diplomatic tensions between the two sides occasionally stalling the negotiations.

“The economic relationship is where we’re underdone,” Prime Minister Scott Morrison told reporters in Jakarta before the meeting with Indonesian President Joko Widodo later on Friday.

“Its the economic relationship that needs more ballast, more grunt, more investment, more engagement and that is what we’re here to set off today with this new arrangement,” Morrison said.

Australian Trade Minister Simon Birmingham said in a radio interview that negotiations had concluded and he hoped that a “final agreement will be signed this year”.

“From here we then go on to settle all of the final text, but the contents of that text has now been agreed, we just have to get all of it in order for signature,” Birmingham told the Australian Broadcasting Corporation radio from Jakarta.

Although Indonesia is Southeast Asia’s largest economy and Australia the 13th largest in the world, their trading relationship is limited and neither count the other as a top partner.

Boosting exports, including by securing market access for Indonesian products through FTAs, is also a priority for Widodo's government as it tries to put a floor under the country's falling rupiah IDR= currency.

Australia was the 14th-biggest buyer of Indonesian exports in 2017, while Indonesia is Australia’s 13th-largest trading partner, with Australia putting two-way trade at A$16.4 billion ($12 billion) in 2016-2017.

Some 90 percent of Australian goods exported to Indonesia, by value, would enter duty free or “under significantly improved arrangements” under the deal, Birmingham said, adding that was up from 85 percent under previous deals.

Birmingham listed frozen meats, live cattle, feed grains, dairy, citrus and rolled steel as examples of Australian products destined for favorable treatment under the deal, without giving details.

The visit to Jakarta is the first for Morrison and Birmingham in their respective new roles as prime minister and trade minister, since Malcolm Turnbull was ousted in a party leadership battle last week.

($1 = 1.3765 Australian dollars)

Reporting by Tom Westbrook; Editing by Chris Reese and Darren Schuettler

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