Australia May Provide Grants to Indonesia: A History of Trade Between the Two Countries

Australian Prime Minister (PM) Anthony Albanese met with President Jokowi at the Bogor Palace, West Java, on Sunday (5/6/2022).

The meeting discussed plans to strengthen cooperation between the Australian and Indonesian governments in various fields, ranging from trade and bilateral investment to food security, climate, and energy.

Australia announced a A$200 million grant for climate resilience and billions of dollars in investment for renewable energy.

"I welcome PM Albanese's initiative regarding the Indonesia-Australia infrastructure and climate resilience partnership with an initial grant of AUD 200 million," Jokowi said in his press release on Monday (6/6/2022).

"I also welcome the commitment of Fortescue Metals Group to invest USD 10 billion in hydropower and geothermal energy, and Sun Cable's USD 1.5 billion investment in the energy sector," Jokowi continued.

Over the past few years, Indonesia and Australia have had a strong bilateral relationship through the Indonesia-Australia Comprehensive Economic Partnership Agreement (CEPA), which came into effect in 2020.

In 2020, Indonesia recorded annual growth in goods exports to Australia amid the Covid-19 pandemic. However, imports of goods from Australia contracted.

Indonesia's exports to Australia grew by 7.63% (yoy) to US$2.51 billion in 2020, according to United Nations (UN) data.

On the other hand, Indonesia's imports from Australia fell by 15.75% (yoy) to US$4.65 billion in 2020. Imports from Australia have been declining since the early 2010s.

The annual contraction in imports of goods from Australia followed an overall downward trend in imports, in line with the slowdown in factory activity during the Covid-19 pandemic.

As a result, Indonesia's goods trade deficit with Australia narrowed to $2.14 billion, continuing a shrinking trend since 2018.