Australian unis setting up in Indonesia a sticking point in trade talks

The Turnbull government hopes a free trade deal with Indonesia will be sealed on the sidelines of a summit of Southeast Asian leaders.

A free trade deal with Indonesia has hit a stumbling block over Australian universities setting up campuses in Indonesia. Source: AAP

The potential for Australian universities to set up campuses in Indonesia is proving one of the remaining sticking points to finalising free trade negotiations.

Prime Minister Malcolm Turnbull hopes to sign an agreement with Indonesian President Joko Widodo on the sidelines of a special Australia and Association of South East Asian Nations leaders summit in Sydney in mid-March.

Indonesia and Australia failed to meet a deadline late last year on sealing a free trade agreement.

AAP understands 95 per cent of the deal has been finalised.

The remaining sticking points relate to services and include whether Australian universities can set up campuses in Indonesia.

Discussions are also continuing around Indonesian workers such as nurses being granted visas to fill skills shortages in Australia.

Australian and Indonesian trade negotiators are expected to have another round of talks in late February.

Trade Minister Steve Ciobo maintains good progress is being made.

"I'm not going to sacrifice the quality of the agreement for speed. If it takes a little bit longer, so be it," Mr Ciobo told AAP.

The two countries have previously announced, under the free trade pact, Australian exporters will have sugar tariffs in Indonesia reduced to five per cent.

In return, Canberra has agreed to eliminate tariffs on pesticides and herbicides for Indonesian exporters.

Australian cattle producers will also benefit from changes to Indonesian regulations.

Import permits will change from four months to one year and weight and age limits will also increase.

Trade ties between the two countries have historically been underdone.

Indonesia is Australia's 13th largest trade partner, with two-way trade worth $16.4 billion in 2016-17.

As well as trade and investment, the Australia-ASEAN summit will also focus on counter-terrorism co-operation and combating the threat of foreign fighters returning to Southeast Asia from the Middle East.