Australia and Indonesia have engaged in cooperation on asylum policy since the late 1990s, bilaterally on immigration detention and people-smuggling agreements, and multilaterally through the Bali Process. Seen from a global perspective, this form of cooperation is one of many such bilateral and multilateral agreements that stymie the ability of asylum-seekers to gain effective and durable protection. This article argues that policy transfer theory can explain how these agreements are achieved, their political implications, and their outcome for the refugee regime and the asylum-seekers reliant on the regime for protection. In the case study of Australia and Indonesia, the authors argue that the cooperation is best understood as a form of ‘incentivised policy transfer’, whereby Australia has provided substantial financial and diplomatic incentives to Indonesia to adopt policies consistent with Australia's own. The implications for asylum-seekers in the Asia-Pacific region are substantial, and include an increase in the use of immigration detention in Indonesia and the introduction of border security measures that restrict the ability of asylum-seekers to reach territory where they may claim protection under the Convention Relating to the Status of Refugees.