Australia and Indonesia’s new customs agreement: Key benefits for trusted traders
Australia and Indonesia’s new customs agreement: Key benefits for trusted traders
On 7 August 2024, Australia and Indonesia formalised a landmark Mutual Recognition Agreement (MRA), enhancing trade efficiency by recognising each other's accredited businesses under the Authorised Economic Operator (AEO) model. This significant development will benefit Australian Trusted Trader businesses by extending their trusted status to Indonesia, and vice versa.
What does this mean for Australian international traders?
By signing the AEO MRA, both countries agree to treat each other's accredited businesses as low-risk and grant them preferential treatment at the border.
This means Australian exporters that are Australian Trusted Traders will enjoy benefits such as:
- Reduced border inspections: fewer routine checks and prioritized processing if selected for inspection
- Priority clearance: faster customs clearance processes
- Simplified documentation: less complex customs paperwork.
These benefits are crucial for businesses dealing with time-sensitive or perishable goods, such as food and pharmaceutical products. Simplification of Indonesia’s complex customs regime is a significant advantage for Australian businesses looking to expand their exports to Indonesia.
The COVID-19 pandemic underscored the importance of resilient supply chains, as global disruptions caused substantial delays and backlogs. The priority clearance provision under the MRA will be a valuable asset for Australian exporters navigating these challenges.
The MRA with Indonesia is the 11th agreement Australia has entered into under its Australian Trusted Trader program, joining key regional partners such as China, Japan, Singapore, Thailand and India. This agreement, in conjunction with the Indonesia-Australia Comprehensive Economic Partnership Agreement, ratified in 2020, underscores the strong existing and future trade opportunities with this close and rapidly growing neighbour.
Why is this important?
- Economic opportunities: Indonesia is Australia's 13th largest trading partner and 9th largest export market, with a total trade value of $26.2 billion in 2022-23. Indonesia is also a fast-growing economy with a growing population of over 280 million people and a rising middle class, offering huge opportunities for Australian businesses.
- Growth potential: the Lowy Institutes Asia Power Index 2023 forecasts that by 2030 Indonesia will have the 5th largest GDP at purchasing power parity in the world. For Australian companies, this represents a golden opportunity.
How do I take advantage of this MRA?
Your business will need to be an accredited Australian Trusted Trader or it’s Indonesian equivalent. If you’re not yet accredited, upon application, you will need to demonstrate to Australian Border Force that you have:
- A secure and compliant supply chain
- A strong record of tax and customs compliance and
- A sound financial position.
How can BDO assist?
BDO’s International Trade experts can support your business with:
- Australian Trusted Trader application and accreditation process: take advantage of this and other MRA’s under the AEO model
- Supply chain review: be sure your business is taking advantage of current free trade agreements and customs concessions to reduce customs duty liabilities
- Qualifying goods under IACEPA: ensure those goods obtain preferential customs duty rates when being imported into Indonesia, or Australia.
Partner with BDO to streamline your international trade operations and take full advantage of this new agreement. Contact us today to learn more about how we can assist your business in capitalising on these opportunities.