Optimizing Benefit of Bilateral CEPA: Indonesia with Australia and Republic of Korea

In the era of the 2000s, Indonesia follows a positive spillover effect from growing bilateral economic agreements between a member state of ASEAN and a non-member state. Starting with Singapore, followed by Thailand and Malaysia, Indonesia established its first bilateral economic agreement with Japan, named IJEPA (Indonesia Japan Economic Partnership Agreement), in 2008. Then Indonesia had PTA (Preferential Trade Arrangement) with Pakistan in 2012. Afterward, until 2023, Indonesia has had more than five bilateral economic agreements. Chapter 4, this book explains the macroeconomic index, which describes the pattern of international economic cooperation of trade and long-run investment (FDI) between Indonesia and its major economic partners. This pattern can show the strength of bilateral economic cooperation and its direction either Indonesia becomes the production base of the partner or the opposite. This chapter explains which products Indonesia and its economic partners will have win-win cooperation in trade or long-investment. The latter shows which product Indonesia benefited from, putting its long-run investment (FDI Outflows) in its economic partner and the opposite, receiving FDI Inflows. This chapter selects Republic of Korea and Australia as its observation economic partners. The first primary reason is that these two countries have had a bilateral CEPA (Comprehensive Economic Partnership Agreement) with Indonesia. This fact means these two countries had preferential cooperation not only in trade but also in long-run investment. The second primary reason is that these two countries, including Indonesia, are classified as middle-power countries in Asia and the Indo-Pacific context; therefore, this book attempts to understand the economic connection between these three countries. This chapter reveals potential products Indonesia can have with Republic of Korea and Australia.