Indonesia and Australia sign the Indonesia-Australia Comprehensive Economic Partnership Agreement

by Textile Quotient News Desk
11 Mar 2019

Indonesia and Australia have officially signed the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) free trade agreement after nine years of talks. The agreement will eliminate 100% tariff posts from Australia or Indonesian goods to Australia and 94% from Indonesian tariff posts or Australian goods to Indonesia. The abolition of the tariff covers several sectors including the textile sector.

Many textile players welcomed the move, as this shall boost their export volumes to Australia. Presently the exports to Australia are relatively small; however the Australian market has great potential to absorb exports from Indonesia. The textile and garment exports from Indonesia to Australia in 2018 was around 306.4 million and in 2019 it is expected to increase by 20% to 30% and with this FTA it is expected to grow consistently every year.

Indonesia which is among the top 10 textile producing nations in the world, is expected to grow at a CAGR of 5.09%, in terms of revenue, 2019-2023. The major factors driving the growth of the market are growing textile exports to United States, Middle East, and European Union. The country’s exports were relatively stagnant during the four year period of 2012-2016. The biggest increase in exports was witnessed in yarn and garments during 2011-2016. The exports to the United States and Japan fell by 2% each in 2017, while it fell by 3% to the European Union. The declines were offset by rising textile demand in Southeast Asia and the Middle East.

According to the Indonesian Textile Association (API), despite the global decline in the textile demand, the overall textile exports of the country rose by 5 % on a year-on-year basis in 2017. The US is the top market for Indonesian textiles, with around 36% of the country’s textile shipments’ followed by the Middle East (23%) and the EU (13%).

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