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INSIGHTS

Bigger, better, and more aligned

INSIGHTS

One year into the implementation of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), both Indonesia and Australia have reiterated their commitment to support shared interest for a secure and prosperous region. At the heart of the IA-CEPA is a framework designed to unlock the vast potential of bilateral economic opportunities between the two largest economies in the region. To find out just how businesses from both countries can take advantage of the many opportunities for complementary development and growth, we talked to Katalis Market Access Technical Lead, Moekti Soejachmoen.

 

In what ways is the IA-CEPA designed to support increased two-way trade and investment between Indonesian and Australian businesses?

IA-CEPA is designed to increase two-way trade and investment between Indonesian and Australian businesses through a number of ways, such as trade liberalisation in the form of 100 percent tariff elimination for goods entering Australia and almost 99 percent tariff elimination for goods entering Indonesia), and the most liberal Rules of Origin for Indonesian electric motor vehicles of any Australian trade agreement. In the area of skills, the IA-CEPA is paving the way for exchange programs and initiatives to strengthen Indonesia’s labour force, and for more Australian investment in technical and vocational training services in Indonesia.

 

We’re also expecting better economic cooperation on complementary food products such as grain and red meat partnerships, and a food innovation centre. There will be progressive tariff-rate quota increases for major Australian exports to Indonesia, including agricultural and natural resources commodities, and Indonesian import permits are to be issued automatically and without seasonality for specific products committed under IA-CEPA. The agreement also ensures market access on services and investment that will provide increased certainty for Australian businesses and services suppliers in the Indonesian market, including guaranteed levels of Australian ownership.

 

How are the two countries working together in ensuring appropriate regulatory frameworks for effective implementation of the IA-CEPA?

Indonesia and Australia will use the IA-CEPA as a platform to improve economic relations through a wide range of consultation mechanisms to fine-tune trade and investment procedures over time. These make IA-CEPA a “living agreement”. It is based on a review on conformity of all current rules and regulations in Indonesia and Australia with IA-CEPA commitments. Although most of the rules and regulations are compliant with IA-CEPA commitments, there are several areas in trade in goods, trade in services and investment that are not.

 

How is Katalis working to support better alignment of the Indonesia-Australia trade and investment ecosystems?

Katalis supports the implementation of the IA-CEPA and helps businesses from both countries take advantage of the many opportunities for complementary development and growth. We work across agrifood, advanced manufacturing and services target sectors, covering everything from architecture and engineering to health and aged care. We identify and develop new market opportunities, and we inspire new business-to-business partnerships that will drive trade and investment between Southeast Asia’s two largest economies. Katalis also provides market insights, education, technical advice, policy reform and workplace skills exchange.

 

What are some industries that have been identified as priority sectors under the IA-CEPA?

Some industries that have been identified as priority sectors under IA-CEPA include Agriculture, Advanced Manufacturing and Services (skills). In agriculture, the Agrifood Innovation Partnerships are aiming for deeper industry engagement on grains for food (with a view to innovation in Indonesia and third markets) and feed (for a more efficient and productive farming sector in Indonesia, with enhanced animal health outcomes). Advanced manufacturing has an early focus on electric batteries and resource inputs to power Indonesia’s planned electric vehicle program. The IA-CEPA also supports closer economic partnership between Indonesian industry and Australian TVET providers  in priority skills sectors through a proposed skills ‘clearinghouse’ mechanism. It starts with tourism, agriculture, and digital services, with later potential expansion into health, advanced manufacturing, construction, creative economy and social services subject to available resources and commercially viable training opportunities. A potential partnership to bolster the participation of women in TVET in Indonesia will also support female workforce participation.

INSIGHTS

Gender equality and social inclusion as a smart investment

INSIGHTS

By shifting from an economy driven by resources, cheap labour and capital to growth based on high productivity and innovation, Indonesia is making steady progress towards its 2045 vision to become a high-income nation. In pursuing its development goals within the Growth Pillar of Human Resource Development, Science, and Technology Advancement, the Government of Indonesia is envisioning labour market reforms that include increased female labour participation from 49 percent in 2015 to 65 percent by 2045. Katalis is committed to doing its part to support progress to not only a higher skilled and more adaptive labour market, but also for inclusive economic growth and development as envisioned in the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). Throughout the program, gender equality and social inclusion (GESI) is being mainstreamed as a means to provide wider access and opportunities for everyone. Katalis’s GESI Adviser Yulia Immajati shares her thoughts on how Katalis is doing just that and how businesses can do their part.

 

Why is the issue of gender equality and social inclusion very important?

Gender equality and social inclusion is highly important for two essential reasons. First, it is the right thing to do because participating in and enjoying benefits from development and the economy is a fundamental right for all people, regardless of socio-cultural, socio-economic and socio-political backgrounds. This is well outlined in international covenants such as the Universal Declaration on Human Rights and Convention on the Elimination of All Forms of Discrimination, both of which Indonesia and Australia actively support. Everybody counts despite their gender, education, socio-economic status, race, ethnicity and cultural identify, political as well as religious affiliation.

 

Second, addressing gender equality and social inclusion is a smart investment. Analytical work has identified the high pay-off of integrating gender equality and social inclusion into business and the economy. The more gender equal and socially inclusive, the better the economy. For example, McKinsey & Company analysed more than 1,000 companies worldwide and found that greater diversity among executive teams tends to lead to higher profits and longer-term value.   Similarly, another conducted in Queensland in 2016 found that greater representation of women on boards offered tangible benefits to corporate, government, and not-for-profit organisations. More and more businesses willingly embrace GESI in their corporate policies and practices for this very reason.

 

How does Katalis apply the GESI lens in its work?

Katalis moves beyond simply applying a GESI lens.  Katalis puts GESI at the centre of everything we do. Enhanced participation, access, and opportunities for women and those from disadvantaged backgrounds, especially but not limited to those with different abilities, is mainstreamed into all our trade investment and skills activities. In this regard, Katalis, in line with the policy and legal frameworks of Indonesia and Australia, adopts the twin track approaches of GESI mainstreaming and targeting. A mandatory Gender Equality and Social Inclusion, Child Protection and Safeguards Policy and Action Strategy is instituted. A GESI team provides technical support to Task Team Leaders and other staff. GESI is not an “add on” but is rather fully integrated and mainstreamed.

 

From a gender equality and social inclusion perspective, what are some important issues to keep in mind for businesses looking to apply for support for their activity ideas?

Interested businesses need to, and in fact businesses are starting to, realise that providing equal access and opportunities for women and those with disadvantaged backgrounds, such as those with different abilities, are not a waste of resources but a smart investment. These groups are untapped resources that, with proper policies and practices, offer sustainable benefits to companies. This is not hypothetical but is based on well-tested research, as mentioned above. Should businesses wish to apply for support from Katalis, they need to identify as to how their proposed business idea will contribute to GESI outcomes. How will the proposed business ensure equal participation, access, and opportunities for women and disadvantaged groups, such as those with different abilities? How will women and those disadvantaged groups benefit from the proposed idea? Businesses need to bear in mind that GESI is one of Katalis’s investment criteria that they need to comply with.

 

Change begins at home. Can you share some practical ways for businesses and other organisations to be mindful of issues around inequality and social exclusion within their own environments?

It is indeed true that change begins at home. It is also a reality that domestic chores largely remain the domain of women across the globe. More and more businesses realise this and have started to adopt friendly policies and practices such as flexi hours and day-care centres, as well as support for domestic violence survivors. Businesses may also need to adopt a rounded view of labour unions – a view that sees them as supporting partners rather than obstacles, with unions potentially utilised as peer groups to enhance skills and capacities, including for women and people with disability, and as such, productivity. Such approaches serve to foster employee loyalty and reduce staff turnover, as well as create a harmonious, inclusive working environment.

PRESS RELEASE

Indonesian-Australian Partnership through IA-CEPA Supports Post-Pandemic Economic Recovery

PRESS RELEASE

JAKARTA – Katalis, the economic cooperation program under the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), the Indonesian Ministry of National Development Planning/National Development Planning Agency and the Australian Embassy co-hosted a virtual dialogue that centred on the theme of ‘Supporting Economic Recovery Through Partnership’ on Tuesday, 21 September 2021. In place since 5 July 2020, the IA-CEPA delivers opportunities for the two neighbours to boost trade, investment and skills development, at a critical time.

To optimize the implementation of the IA-CEPA, on 6 July 2021 the governments of Indonesia and Australia launched Katalis, a program that connects businesses and the government from both countries. Katalis also holds an important role in promoting bilateral collaboration including promoting integrated value chains to expand exports to third countries.

“Katalis is expected to bring both countries greater market access, more integrated markets, and enhanced skills particularly in the areas of food manufacturing and the services sector. We strongly encourage all relevant parties including the government, private sector and academia, to take up the opportunities provided by Katalis, to access their trusted advice, networks, market insights and skills to promote trade and investment. Indonesia welcomes this milestone for a promising future of Indonesia-Australia’s deeper economic partnership. It is also an outstanding platform for Indonesia-Australia to pursue reciprocal economic growth and prosperity,” said Indonesian Minister of National Development Planning/Head of Bappenas Suharso Monoarfa.

“The program is the first of its kind in a bilateral free trade agreement, and it demonstrates Australia’s commitment to maximising the benefits of our agreement. Katalis will support deeper partnerships to boost our bilateral trade and investment,” said Australian Trade, Tourism and Investment Minister Dan Tehan.

Panelists in the dialogue, which featured prominent stakeholders across the government and private sector, agreed that the pandemic has underlined the imperative of close international cooperation, especially between neighbours. Among the panel speakers were Bappenas Deputy for Economic Affairs Amalia Adininggar Widyasanti; Acting Minister Counsellor (Economic, Investment and Infrastructure) of the Australian Embassy in Jakarta Todd Dias; Senior Vice Chancellor of Monash University Professor Andrew MacIntyre; CEO of Indonesia Battery Corporation Toto Nugroho Pranatyasto; Vice President Public Policy, Government Relations and CSR Traveloka Rr. Widyasari Listyowulan; and CEO of Ironbark Citrus Susan Jenkin.

Katalis supports IA-CEPA implementation in agrifood, advanced manufacturing/services and skills. In delivering its activities, the program works closely with the business community in both Indonesia and Australia to catalyse new bilateral commercial partnerships, address trade regulations, and invest in upskilling workforces and companies. “The challenge is to build resilience and facilitate the business-to-business partnerships that will restore and then surpass the promising bilateral trade and investment relationships that existed pre-COVID-19,” said Katalis Director Paul Bartlett.

BLOG

After COVID: Indonesia-Australia catalysing recovery

BLOG

Paul Bartlett, Katalis Director

Hello and welcome to IA-CEPA ECP Katalis (Katalis). We’re proud and excited to launch this unique bilateral program that helps realise the vast opportunities within IA-CEPA for Indonesian and Australian businesses. We set out on our mission at a time of great global challenge. COVID-19 has done immense economic damage to all economies. The IMF estimates that the global economy shrank by 3.5% in 2020—the sharpest drop in output for more than 70 years. The Australian and Indonesian economies both fell into recession for the first time in many years as restrictions to slow the spread of the virus caused businesses to scale back operations or shut down altogether. The volume of world trade in goods and services declined by around 10.4% in 2020.

Yet the pandemic has also underlined the imperative of close international cooperation, between neighbours especially. Just as it proved impossible for individual countries to control the virus on their own, so cooperation has been the surest way to secure recovery and support inclusive growth. Which speaks to the unique role and timing of Katalis – a joint investment of the governments of Indonesia and Australia to strengthen economic partnership.

IA-CEPA presents exciting trade and investment opportunities for enterprising Australian and Indonesian businesses ready to develop existing partnerships, create new ones and support economic recovery. Indeed, although bilateral trade dropped off steeply between both countries with the onset of the pandemic, we have seen pockets of resilience and growth. Exports of wood products from Indonesia to Australia actually increased over 2020 and the decline in Indonesians studying in Australia was partially offset by a more than 100% increase in Indonesian registrations for Australian online education. As vaccines are rolled out in both countries, the challenge now is to build resilience and facilitate the business-to-business partnerships that will restore, and then surpass the promising bilateral trade and investment relationships that existed pre-COVID-19.

Strategically situated in the world economy’s fastest-growing region, Australia and Indonesia are well placed for new and developing partnerships. With its young population and fast-developing economy of over US$1 trillion, Indonesia is a country of tremendous opportunity. Australia is a developed high-income economy with world-class services and skills. There are countless commercial complementarities across Katalis’s target sectors: agriculture/agribusiness, advanced manufacturing and professional services, and we look forward to working with businesses and governments in both countries to realise these opportunities.

Governments can only prop up economies for so long, as both governments did admirably through the pandemic. The business community —from the smallest enterprises to largest corporations—will have to power a more enduring recovery. As COVID-19 is steadily brought under control and the flow of goods, services, capital and people starts to resume, the Australia-Indonesia partnership has a pivotal part to play.

And that is the offering of Katalis. To work with the business community in both Indonesia and Australia, and be a catalyst for new bilateral commercial partnerships, addressing trade regulations, investing in upskilling workforces and companies and the people of Indonesia and Australia together.

Paul Barlett is Director of IA-CEPA ECP Katalis and has over 20 years’ experience advising on private sector development, trade, investment and competitiveness in Indonesia, Asia Pacific, Africa, the Middle East and Europe.

Media release

Indonesia-Australia Economic, Trade and Investment Ministers’ Meeting

Australian Minister for Trade, Tourism and Investment, Hon Dan Tehan MP

Joint media release with:

  • The Hon Josh Frydenberg MP, Treasurer, Government of Australia
07 July 2021

On 6 July 2021, the Australian Treasurer, the Hon. Josh Frydenberg MP, and the Australian Trade, Tourism and Investment Minister the Hon. Dan Tehan MP met virtually with the Indonesian Coordinating Minister for Economic Affairs, H.E Airlangga Hartarto, Indonesian Minister of Finance, H.E. Sri Mulyani Indrawati, Indonesian Minister for Trade, H.E Muhammad Lutfi, Indonesian Minister of National Development Planning, H.E. Suharso Monoarfa, and Indonesian Deputy Minister for Investment Cooperation, Dr Riyatno, for the inaugural Indonesia-Australia Economic, Trade and Investment Ministers’ Meeting.

  1. Ministers determined to enhance efforts to address the unprecedented economic challenges posed by the COVID-19 pandemic. Ministers acknowledged that equitable access to safe and effective vaccines was critical to rebuilding economies across the Indo-Pacific. Ministers agreed uneven vaccine access and new virus variants risked delaying recovery.
  2. Ministers discussed the importance of inclusiveness in COVID-19 policy responses and recovery, including supporting those most affected by COVID-19 like the poor and vulnerable, including youth and women, who are most at risk of falling behind on education, employment, mental health and disposable income.
  3. Ministers recognised high levels of public debt loom large for many countries around the world, particularly for emerging and developing countries. They agreed that early withdrawal of government support and premature fiscal consolidation risked weakening recovery efforts.
  4. Ministers underlined the importance of deepening collaboration in regional and global economic forums and looked forward to Indonesia’s G20 Presidency in 2022. Therefore, Ministers appreciated the Indonesia-Australia G20 Cooperation Kick-off Workshop organised in March 2021. Ministers discussed the important role of quality infrastructure investment in driving a sustainable and inclusive economic recovery. This topic would be further discussed in Indonesia’s G20 Presidency.
  5. Ministers reaffirmed their commitment to an open, rules-based multilateral trading system centred on the World Trade Organization (WTO) and agreed to support reforms that served the interests of all WTO Members. Ministers reaffirmed their commitment to ratifying the Regional Comprehensive Economic Partnership Agreement (RCEP), the world’s largest free trade agreement, and looked forward to its entry into force. Ministers also confirmed their commitment to upgrade the Agreement on the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA).
  6. Ministers agreed to redouble efforts to further strengthen economic ties, recognising that the entry into force of the Indonesia-Australia Comprehensive Economic Partnership Agreement one year ago had enhanced trade and investment opportunities for Australian and Indonesian businesses. Ministers agreed that deepening trade and investment was important to support mutual economic recovery.
  7. Ministers noted the ongoing significant impact of the pandemic on international travel and committed to remaining closely engaged on opportunities to support the important people-to- people links between the two countries and to recommence travel for tourism and education when circumstances permitted.
  8. Ministers acknowledged the value of ongoing dialogue between the two strategic partners in pursuing an open, inclusive and prosperous Indo-Pacific Region. They reaffirmed their commitment to holding the Economic, Trade and Investment Ministers’ Meeting on an annual basis in line with the Indonesia-Australia 2020 Joint Leaders Statement.
  9. Ministers launched the Economic Cooperation Program of the Indonesia-Australia Comprehensive Economic Partnership Agreement, branded as IA-CEPA ECP “Katalis”, or “Katalis”, noting the subsidiary arrangement of the program was signed on June 25th 2021. The ministers urge all related parties to participate in the program and contribute to the inclusive, sustainable and green economic growth, two-way trade, investment, and sustainable development of both countries.

Source: Link

Media enquiries

INSIGHTS

GESI: an inclusion-led recovery

INSIGHTS

Women have been disproportionately impacted by COVID-19. In response, Katalis is putting gender and social inclusion at the centre of everything we do.

Around the world, a common impediment to growth is the failure to achieve equal participation, equal senior representation and equal pay for women in the workplace. In Indonesia, only 54 per cent of women are in the formal workforce compared with 84 per cent of men, a figure that has remained largely unchanged for almost two decades [1]. When they manage to work, Indonesian women earn 23 per cent less than men do on average [2]. In Australia, the workforce participation rate for women is 61.2 per cent, compared to 71.2 per cent for men. Australian women earn on average 13.4 per cent less than men [3].

This gender disparity has significant implications for women, who miss out on a source of livelihood and independence; for businesses and industry, who miss out on the benefits of diversity and skills; and for national economies, which fail to fully utilise a critical source of growth – human capital. The gaps in gender participation, representation at senior levels, and wages are particularly apparent in highly traded industries between Indonesian and Australia, such as agriculture, manufacturing and education. The World Economic Forum says the business case for gender diversity is “overwhelming” [4]. Numerous studies have confirmed that gender diversity equates to improved organisational performance, shifts in cultural norms and greater inclusion [5], and improved behaviour and levels of motivation [6]. There is also evidence that more diverse workplaces and women in leadership improves profitability and longer-term value creation [7].

Reflecting this evidence, Katalis places gender equality and social inclusion (GESI) at the centre of everything we do. Our goal is to bring GESI considerations to the forefront of all commercial decisions and investments. Using internationally recognised GESI tools, we are identifying the parts of the value chainfor women and other disadvantaged groups to engage and benefit in the trade and investment activities enabled by IA-CEPA. Katalis is also prioritising industries with high female participation and those that allow for disabled workers to participate (such as the digital economy and health sector) for skills and training investments, and we will require, as a minimum, that 50 per cent of participants in activities, training, dialogues and other events are women.

Our GESI focus promotes greater inclusion, trade and investment amongst small to medium enterprises (SMEs), younger entrepreneurs and sub-national businesses. We encourage diverse participants and businesses in Katalis activities and investments, inviting proposals from all stakeholders, and ensuring broad representation in events, skills and training opportunities, and capacity building activities.

Businesses and industries seeking Katalis support should consider how their proposal impacts and advances gender equity and social inclusion, as a key to greater inclusion and commercial success.  

References: 

  1. https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0005/2938388/wp2018n11.pdf
  2. https://www.ilo.org/jakarta/whatwedo/publications/WCMS_755543/lang–en/index.htm
  3. https://www.wgea.gov.au/publications/gender-workplace-statistics-at-a-glance-2020
  4. https://www.weforum.org/agenda/2019/04/business-case-for-diversity-in-the-workplace/
  5. https://www.researchgate.net/publication/304180173_Women’s_Leadership_Matters_The_impact_of_women’s_leadership_in_the_Canadian_federal_public_service
  6. Dezso, Cristian L. and Ross, David Gaddis, Does Female Representation in Top Management Improve Firm Performance? A Panel Data Investigation (March 9, 2011). Robert H. Smith School Research Paper No. RHS 06-104. Available at SSRN: https://ssrn.com/abstract=1088182
  7. McKinsey & Company, Delivering through Diversity, January 2018Boston Consulting Group,  How diverse leadership teams boost innovation, 2018

INSIGHTS

Powerhouse potential

INSIGHTS

Indonesia and Australia offer each other areas of untapped mutual interest growth.

Trade and investment ties between Australia and Indonesia are strong. But they could be stronger still. The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) creates new and exciting opportunities for businesses in both countries to build on bilateral ties and expand markets. Katalis is established under the Agreement to support and develop businesses to take advantage of these opportunities. Here’s a snapshot of just some of the areas for powerhouse partnership and growth.

INDONESIA

With a population of more than 270 million, Indonesia is the fourth-largest country in the world and the largest economy in Southeast Asia. It is a young country: half of its people are aged under 30. Its annual GDP of more than US$1 trillion is twice the size of Thailand, three times the size of Malaysia, and four times the size of Vietnam. Despite the impact of COVID-19, Indonesia is widely expected to become one of the world’s 10 largest economies by 2030.

Prior to COVID-19, Indonesia’s economy was growing at a steady pace of 5% a year. During the past decade income per person has doubled in US dollar terms and today the country is home to a large aspirational middle-income population with money to spend on international goods and services. In fact, Indonesian consumers spend the equivalent of US$650 billion a year. Many Indonesians travel abroad for holidays and higher education, with Australia the number one destination for tertiary education.

Historically, Indonesia’s economy centred around its plentiful natural resources, including oil, gas, coal and palm oil. But that is slowly changing. Recent years have seen the growth of a new generation of Indonesian technology companies, each valued at more than US$1 billion. The automotive sector, for example, is expanding rapidly and pushing into the fast-growing market for electric vehicles. Government is eager to attract investment, announcing some 245 “priority sectors”, covering everything from agriculture to electronics and pharmaceuticals.

COVID-19 has dented Indonesia’s development ambitions. But the economic shock has also spurred the government towards pro-market reforms intended to secure a speedy recovery. Legislation last year abolished the “negative investment list” (DNI), which has limited foreigner investment in large parts of the economy since it was introduced in 1987. Foreign investors are now free to enter many more sectors of the economy. There were also significant changes to licensing and labour laws to make it simpler to start and operate a business. Further reforms are planned.

AUSTRALIA

Australia is an advanced high-income economy. Prior to COVID-19, it had avoided recession for almost 30 years and its growth rate has been more stable than that of the G7 countries. Since the last recession in 1991, the Australian economy has expanded three times more than Germany’s.

Services dominate the Australian economy, accounting for around 80% of gross domestic product. Australia is a world leader in higher education and its schools, colleges and universities attracted almost 1 million overseas students mostly from China and India in 2019. Seven Australian universities make it into the top 100 global rankings. Financial services are strong, too. Australia manages the world’s fourth-largest pool of pension funds—an example of the country performing well above its population size.

Australia is a leading producer of agricultural products and exports large volumes of cattle and wheat. Australia is also an important exporter of resources, notably coal and iron ore. In the domestic market, investment in clean renewable energy such as solar and wind is soaring.