The Australian government’s Department of Foreign Affairs and Trade recently released a Blueprint for enhancing trade and investment of the country with its close neighbour, Indonesia.
Building on the 2020, Indonesia-Australia Comprehensive Economic Partnership Agreement, the document explores areas of convergence and opportunities for Australian businesses across a host of sectors, including TVET and higher education.
The Blueprint presents the background to the partnership between the two largest economies of the region and important strategic partners, and establishes linkages between the future prosperity of the two countries, through economic cooperation for the future.
“The past year has seen two key pieces of a new bilateral trading relationship fall into place with the signing of the 15-member Regional Comprehensive Economic Partnership Agreement and the entry-into-force of the Indonesia-Australia Comprehensive Economic Partnership Agreement. They complement from above and below the existing ASEAN-Australia-New Zealand Free Trade Agreement,” the document details, while highlighting the three-tiered partnership between the two countries.
Australia shares a rich and enduring relationship with the world’s third largest democracy and one among Asia’s largest economies. With a steadily growing middle-class and abundant demographic dividend, Indonesia presents a wealth of opportunities for Australia, which has much to offer to its valued Southeast Asian-neighbour, the document contends.
“IA-CEPA makes vocational education and training a priority in the partnership”
The countries have also enjoyed a significant partnership on the Higher Education front, with the Colombo Plan and The New Colombo Plan forming the backdrop of the relationship in this arena.
With an increasing need for “closing the skills gap” to leverage its demographic dividend, Indonesia can benefit immensely with a stronger partnership with Australian education and skills providers and vice-versa.
“IA-CEPA seeks to help Indonesia close its skills gap by facilitating training, catalysing TVET reform and strengthening higher education,” the Blueprint notes, while emphasising the need for partnerships between Australian providers and Indonesian students and institutions post-pandemic, by strengthening linkages at the national, sectoral, and sub-national levels.
Programs such as Making Indonesia 4.0 and the various provincial initiatives on TVET and higher ed “align not only Indonesia’s human capital development objectives and the goals of IA-CEPA, but also with Australia’s new International Education Strategy for 2021 to 2030.”
“Education and skills training are viewed as major areas of investment focus and opportunity under the Blueprint,” Michael Fay, director and head of Education Services at AFG Venture Group, told The PIE.
“There is now a legal framework in our trade partnership agreement that allows majority Australian ownership of investments in education and this is a positive.”
The Blueprint mentions that the three priority sectors for opportunities in vocational education and training could be Food and Agribusiness, Healthcare, and Digital Services. On the higher education front, opportunities exist in STEM courses, in particular, among others.
“IA-CEPA makes vocational education and training a priority in the partnership, allowing majority Australian ownership anywhere in Indonesia,” it says. And that the agreement “assures Australian investors that they would not be subject to any potential future restrictions on equity holdings in Indonesia.”
By softening entry barriers and facilitating access for Australian providers, Indonesia under the IA-CEPA offers a great opportunity for Australian institutions.
Further, “the passage of [Indonesia’s] Ministerial Regulation 53 of 2018 on Foreign Institutions opened the way for tertiary institutions recognised as among the top 200 in the world to establish stand-alone campuses in Indonesia and in Special Economic Zones.”
In 2019, The PIE reported that, while a free trade agreement between Australia and Indonesia “stopped short” of many issues the Group of Eight had hoped to see included, it was a significant step, according to chief executive Vicki Thomson.
Fay, who also convenes the ASEAN-Australia Education Dialogue, noted that Monash University and Central Queensland University have invested in campus developments in Jakarta.
“Other Australian universities are considering how they respond with other locations outside Jakarta now also under the microscope,” he explained.
“There has always been a demand for Australian and internationally linked education services but legal constraints have previously been considered too difficult to address. While this situation has improved, ongoing challenges remain around partner selection, the capacity to pay, language of program delivery and ongoing quality assurance,” he continued.
“Covid-19 has added further complexity as Indonesia grapples with continuing infection. Travel to Indonesia is considered dangerous and there is falling aviation connectivity.”
The need now is for the linkages to be further strengthened and formalised through either strategic partnerships, joint ventures, or through forming consortiums, the Blueprint concludes.
Although there are still some challenges for Australian providers, many are already on the way of forging stronger ties with Indonesia and its vast education landscape.
“The Blueprint can be helpful in building on the existing regional city, state and territory agreements”
The Blueprint is a call to action for Australian businesses to tap into the vast potential of doing business with Indonesia, towards enhancing shared prosperity across a multitude of areas of convergence between the two neighbours.
“The Blueprint can be helpful in building on the existing regional city, state and territory agreements between New South Wales and Jakarta, West Australia and East Java, Victoria and West Java, Queensland and Central Java and the sister city agreement between Darwin and Ambon, the capital of Maluku Province in Eastern Indonesia,” Fay added.
“Australian universities operating TNE campuses in Malaysia are also well placed to develop education and skills training partnerships with the alluringly close Indonesian provinces of North Sumatra and Aceh. They are less than an hour’s flight from the key education hubs of Penang and Kuala Lumpur with a history of educational, trade and cultural interaction.”
