Tensions between Indonesia and Australia eased by trade deal

But analysts caution that the breakthrough will not prevent further diplomatic rows between the neighbouring nations

Australian Trade Minister Simon Birmingham, left, and Indonesian Trade Minister Enggartiasto Lukita attend a signing ceremony in Jakarta, Indonesia, Monday, March 4, 2019. AP Photo

A landmark multi-billion dollar free trade agreement between Indonesia and Australia is a “rare bit of good news” for the troubled diplomatic relationship, as the neighbouring countries prepare for elections in the next three months.

But analysts cautioned that the breakthrough, which took nine years of painstaking negotiations, would not necessarily prevent further mishaps between the nations, which are regularly at odds over foreign and domestic policy decisions.

The agreement signed on Monday, which still has to be ratified by each country’s parliament, was delayed last year after Australian Prime Minister Scott Morrison said he was considering moving Australia’s embassy in Israel to Jerusalem, angering the world’s most populous Muslim-majority nation. Canberra later backed down on the plan, but pressed ahead with recognising West Jerusalem as Israel’s capital.

Indonesian Trade Minister Enggartiasto Lukita and Australian counterpart Simon Birmingham touted the deal as indicative of deepening ties between the two countries, with the latter saying it marked a “new chapter of cooperation” between the neighbours.

Ben Bland, Director of the Southeast Asia Project at the Lowy Institute in Sydney, told The National that it was a "rare bit of good news in the sometimes troubled relationship", but there was always nuance and there would likely be more "hiccups" ahead.

Indonesian President Joko Widodo and Prime Minister Morrison, who are both campaigning for elections in April and May, respectively, were conspicuously absent from proceedings, leaving it to their trade ministers to officiate.

“Both sides want to claim it as a win but don’t necessarily want the top man to be associated with it right now,” Mr Bland said.

Indonesia Institute President Ross Taylor said both leaders were focused on their elections and were also conscious of disquiet within their respective parliaments and parties over free-trade agreements, “therefore it was best to keep this signing low-key”.

Bilateral trade was worth $11.7 billion (Dh34bn) in 2017, but Indonesia is only Australia's 13th-largest trading partner and the economic relationship has fallen short of its full potential.

Some experts blame this on poor social and cultural ties between the countries, with Australians in particular showing high levels of distrust and a lack of understanding towards Indonesia, apart from the holiday island of Bali, which is held in high regard.

“We still adopt a very arrogant and ignorant approach to Indonesia,” Mr Taylor said. “This must change”.

Hangga Fathana, director of partnership and international affairs at Universitas Islam Indonesia, agreed.

“Government-to-government relations is on track, however in the level of people-to-people, stereotypes prevail,” he said. “To help overcoming this issue, stronger promotion of mutual understanding from each country is very important.”