JAKARTA (Antara): Indonesia and Australia will decide in 2008 whether they will conclude a free trade agreement (FTA) after conducting a joint feasibility study starting in August 2007.

On Friday, President Susilo Bambang Yudhoyono and Australian Prime Minister John Howard during a meeting in Bali have agreed to conduct a joint feasibility study to evaluate free trade agreement between Indonesia, ASEAN and New Zealand.

The study is expected to serve as a valuable reference and produce recommendations the two countries may need in deciding their moves before the middle of 2008.

"Furthermore, the feasibility study will also evaluate how a bilateral agreement can be implemented consistently under the multilateral system of World Trade Organization (WTO)," said Trade Minister Mari Elka Pangestu.

A preliminary study on the FTA between the two countries reached a conclusion that Indonesia's exports of wood and pulp, electronic goods, chemicals and agricultural products to Australia would be very competitive.

Under a bilateral FTA, it is expected there would be a diversification of Indonesia's export commodities to Australia and an increase in Australian investment in Indonesia, especially in other sectors than the mining area.

The total value of Indonesian trade with Australia in the past five years has been increasing by an average of 14.12 percent.

In the January-March 2007 period, Indonesia's exports to Australia reached US$912.2 million, which is a 60.53 percent higher than last year's US$582.06 million. (**)