Analysis of the Driving Factors behind Indonesia Ratifying the IA-CEPA

Abstract

This research aims to understand what factors drove the Indonesian government's decision to ratify the IA-CEPA with Australia as a new trade agreement. To support the analysis of Indonesia's decision to ratify the IA-CEPA, this research uses Graham Allison's decision-making theory. In this study, the author sees that the bilateral relationship between Indonesia and Australia tends to be dynamic, but there is an imbalance in export performance between the two countries, where Australia dominates the value of exports to Indonesia compared to Indonesia's exports to Australia. Therefore, the Indonesian government ratified the IA-CEPA based on various potential benefits that could fulfill its national interests. These potential benefits included increased exports of Indonesian commodities to Australia due to the elimination of export barriers, the potential for foreign investment to enter Indonesia, and the improvement of the quality of human resources through job training in Australia. In addition, Indonesia could also fulfill domestic needs with the entry of commodities from Australia. It can be seen that all these considerations were based on rational choices by the Indonesian government.