Cormann concedes Indonesia trade deal may be delayed

The government was hoping to sign off on the final wording at the ASEAN conference in Singapore this week, but the Indonesian side may seek a commitment from Australia first.

File: Prime Minister Scott Morrison in Indonesia, shortly after he became PM. Source: AAP

Finance minister Mathias Cormann has conceded a long-anticipated trade deal with Indonesia may not be finalised before the end of the year as previously expected. 

But Mr Cormann insists it will go ahead, despite Indonesia's anger over Australia considering moving its Israel embassy.  

The government had expected to sign the document on the sidelines of the ASEAN summit in Singapore this week, but those plans are on hold. 

“We are keen for that to happen by the end of the year but if not, then it will be soon thereafter,” Senator Cormann said on Wednesday.

Senator Mathias Cormann insists Australia's free trade deal with Indonesia will be finalised early next year. Source: AAP

In October, the prime minister said he was “open” to moving Australia’s embassy in Israel from Tel Aviv to the city of Jerusalem, and formally recognising the city as Israel’s capital.

The move would be deeply unpopular in Muslim-majority Indonesia, where analysts have warned Islamic groups would turn the matter into a domestic political ‘flashpoint’.

Australian diplomats have previously expressed concern that the Indonesian may delay the agreement over the issue. 

Embassy issue not raised

The move also prompted warnings from senior ministers in the Indonesian leadership, who said the move could jeopardise a peaceful solution to the Israel-Palestine conflict.

Senator Cormann spent five days in Indonesia last week, and insists no one from the Indonesian government ever raised the Israel matter.

“As I indicated last Friday, that has not been put to me,” he said.

Malcolm Turnbull met with Indonesia President Joko Widodo and warned against moving Australia's Israel's embassy. Source: AAP

Opposition leader Bill Shorten said he wished Scott Morrison well on his overseas trip, but said his “one foreign policy request” was that the government “stop this discussion” about moving the embassy.

“For goodness sakes, stop this discussion about moving the embassy from Tel Aviv to Jerusalem,” Mr Shorten said.  

“Only Guatemala and the United States have proposed moving the embassy, it's an issue which has caused a lot of upset in the region.”

“If Mr Morrison doesn't intend to move the embassy he should just say so. Our lives are too short to be imitating a thought bubble.”

Mr Morrison arrives in Singapore Tuesday evening, kicking off a string of international summits.