We're missing the boat on agricultural ties

('The Australian' Newspaper-Weds 1st May 2013; Business Section)

As Australian cattle farmers continue to suffer from the fallout following the dreadful handling of the live cattle ban placed upon Indonesia by federal agriculture minister Joe Ludwig, the huge opportunity for both Australia and Indonesia to develop major agriculture partnerships goes untapped.

Despite Indonesia’s goal of becoming self-sufficient in cattle and meat supplies, the reality that most cattle producers in Australia and Indonesia know is that it doesn’t make sense for Indonesia to ‘go it alone’. In fact the existing supply-chain arrangement between Australia and Indonesia is ‘made in heaven’ for both countries.

It makes perfect sense for cattle to be breed in the north of Australia where there is abundant and suitable land; then be exported to Indonesia for fattening and eventual slaughter. Australia’s long dry season prohibits this process being undertaken here. Meanwhile, in Indonesia it makes no sense to allocate some of the world’s richest and most fertile agricultural land, that is perfect for the growing of food, and allocate it to breeding of cattle.

So not only should the live exports between Australia be fully restored (and there is some signs that this may eventually happen), the model should be used to substantially expand our relationship with Indonesia in the development of food-based opportunities.

As highlighted at The Global Food Forum recently, Australia talks of becoming the ‘food bowl of Asia’. Realistically, that is most unlikely. If we consider that if we could double our current levels of agriculture production in this country we would then supply around only one percent of Asia’s requirements to feed its 4.2 billion people.

Australia faces other major hurdles in its desire to ‘feed the region’ as our agricultural industry continues to shrink in size. Obstacles to reversing this trend include:

·        High Australian dollar.

·        Diminishing productivity.

·        Availability and high cost of labour.

·        The distance to markets, particularly from our north, is often too far.

·        Fear of foreign investment in food growing land and general agriculture.

·        Impact of climate and poor rainfall.

Agriculture in Indonesia on the other hand is almost four times bigger than Australia, employing over 44 million people who work on about one quarter of the land mass we use. Indonesia enjoys a number of comparative advantages:

·        Proximity to markets.

·        Abundance of cheap and experienced labour.

·        Incredibly fertile soil; amongst the best in the world.

·        Regular and widespread rainfall.

·        Large and growing domestic and regional market.

What Indonesia lacks however, is technical knowledge and expertise. Australian farmers, through our agriculture and horticulture industries, are amongst the best in the world. They’ve had to be good at their trade. Virtually no government subsidies combined with a harsh and isolated environment have meant that for our agriculture industry to succeed we have to be very good at what we do. And here lies the opportunity for Australia to diversify away from the sole reliance on resources:

Australia’s agriculture sector has world-class expertise in the areas of:

·        Technology

·        Science

·        Water and farm management

·        Marketing and branding

These are the things that Indonesia needs desperately to build capacity within their own agriculture sector. A partnership with Australian industry could see the development of significant exports to ‘third party’ countries whereby the strengths of our two countries come together to build new opportunities and dramatically expand trade.

Already we have seen Australian potato growers change tact from trying to compete with major suppliers from the USA and Europe in selling subsidised potatoes into Indonesia, to building partnerships with Indonesian potato growers whereby we provide expertise and the training combined with our world-class seed that we export, to allow Indonesia to develop its own industry. Already this approach has seen potato yields in East Java increase from 10 to 30 tonne per hectare. Our seed growers have a captive and developing market and meanwhile the Indonesian farmers love us for it!

Opportunities exist in mangoes, sugar, soybean, rice, and many other food-based products.

So why don’t we embrace such an opportunity? Sadly, the Australia-Indonesia relationship, despite all the nice words said between our political leaders, is still dominated by  ‘political irritants’ and a ‘Bali holidays’ mindset.

Indonesia will soon overtake Australia in economic size. For the first time we will have a regional neighbour that ‘dominates’ us. It will be a game-changer that will allow Australia enormous opportunities to build closer trade, business, and community ties.

By developing deeper and mutually beneficial relationships such as a major collaboration and partnerships in agriculture, combined with increased youth exchanges, language and people-to-people contacts, both countries could benefit enormously from Indonesia’s transition to a world-class nation.

 Ross B. Taylor - April 2013

Ross Taylor is the current chairman of the WA-based Indonesia Institute (Inc).

(Ross acknowledges the contribution of his colleague Michael Sheehy, who is based in Jakarta, and who undertook extensive research work on the opportunities for 'partnerships' between Australian and Indonesian companies within the agriculture sector.)

Immigration inefficiencies hamper better Indo-Australia relations

Most Indonesians probably don't know that their country doesn't offer foreigners student visas.
 

In a promising show of bipartisanship on the need to improve engagement with Indonesia, both sides of Australian politics last month put forward some exciting new initiatives to greatly boost the number of young Australians living, studying and working here.

Australia’s Foreign Affairs Minister Bob Carr pledged to dramatically increase the number of yearlong “work and holiday” visas for Australians to visit Indonesia from 100 to 1,000. This is in addition to the 10,000 Australians his government plans to send to study in Asia as part of its $37 million Asia-Bound Grant Program.

And as an Australian election looms, it is heartening to see that the opposition foreign spokeswoman, Julie Bishop, also announced a student mobility plan that could send “thousands” of Australians to Asia for study and internship opportunities, with a particular focus on Indonesia.

These initiatives should be commended for their vision and take on even more importance when you consider that in any given year there are only about 500 Australians studying in Indonesia — the vast majority of those on short course programs of less than a month in duration — compared to as many as 20,000 Indonesians studying in Australia.

Unfortunately, however, it looks like these proposals may prove better in theory than in practice. For any foreigner who has spent a significant amount of time in Indonesia it is clear where these initiatives might fall over: Right at the very first hurdle: Immigration.

Most Indonesians probably don’t know that their country doesn’t offer foreigners student visas. Anyone wanting to study here for a significant amount of time, must navigate the complicated process of arranging a temporary resident permit, known as a Kitas, a process similar to obtaining a work visa. In fact, the process is so difficult that no individual university in Australia is able to help its exchange students obtain one. A special consortium of universities had to be set up in 1994 to facilitate the ordeal.

In all my years in Indonesia, I know of only one person to have arranged their work Kitas themselves, and I still don’t know how she did it. Most foreigners I know either had their employer organize a visa or engaged a visa agent or broker to get one. For those not lucky enough to have a benevolent employer or enough money for an agent, they usually work illegally on social-cultural visas.

The bilateral work and holiday visa program that Carr mentioned, in particular, has encountered significant problems since it was agreed to in 2009. While the uptake of the visas for Indonesians to come to Australia was more than 90 percent in 2011, a survey also taken that year found only three Australians had successfully obtained the reciprocal visa to Indonesia. Moreover, several of those surveyed reported having encountered misinformation and bureaucratic hurdles that prevented them from applying.

I must admit that despite my long engagement with the country, I am one of those people who has rarely arranged their own visa. Whether as a student, volunteer, intern or worker in Indonesia, it has usually — thankfully — been taken care of for me. So it was with disappointment (but not much surprise) that last year I experienced significant difficulties when applying for my own work and holiday visa.

I was initially told I would have to approach Indonesian Immigration in Jakarta myself to arrange it but, after traveling to Indonesia, this turned out to be incorrect.

Upon returning to Australia I applied again and this time found that, despite a two-week processing service standard agreed to with Australia, I had to spend more than two months waiting around for it.

Indonesians I talked to about my problem usually asked, "Why don't you just pay someone?"

Although I am not a fan of institutionalized corruption, had I known whom to pay I would have happily slipped them a brown paper bag of money to make the process easier. But why should it have to be like that? Surely we should not have to engage in bribery to help build a better bilateral relationship?

In the end, I gave up because it was getting too costly to wait for a visa that may never come. I am not even sure how long it took to process in the end because nobody ever contacted me about it. It is a shame, too, because there is still much more of the country that I would like to see. Instead of Flores, Sulawesi and Maluku, however, I spent a few months traveling around Europe, Vietnam and Myanmar.

As far as I can see, for Australia’s bold new student mobility plan to succeed it would have to employ a veritable army of visa agents to process the thousands of new visas it will need. But is this really Australia’s problem to deal with alone, or should Indonesia come to the table to help make the process easier? Is a simple student visa really out of the question?

Unfortunately for Indonesia, its Kafkaesque immigration system is proving to be a major impediment to its potential to become an important destination for visitors not only from Australia but from around the world — be they tourists, volunteers, interns, skilled workers or foreign investors, and students.

Surely Indonesians do not want the very first experience visitors have of their country to be a nightmarish web of bureaucracy and red tape instead of its friendly, hospitable people or its beautiful and diverse landscapes?

Erin McMahon-April 2013

Erin McMahon is a Melbourne-based journalist and educator who has studied and lived in Indonesia for a number of years.
 

Exams, criminal justice and fuel prices: A 'hat trick' of embarrassments?

Indonesia, as most of us know, is many things: stimulating, attractive, frustrating, annoying, challenging, pleasing. But the one thing it is not, is boring.

 

Take the past fortnight. We have seen three extraordinary events played out on the public stage.

 

First, there was the National Examinations for senior high school students: the exam which plays a major role in deciding the future of those students, whether in higher education or the job market.

 

This is no small undertaking. This year, a total of 3,224,179 students, spread across the 33 provinces, were registered for the exam, which the law says must be held simultaneously. This is clearly a major logistics challenge.

 

And this year it was a challenge not met. In no fewer than 11 provinces – a third of the total – the exams had to be postponed for up to a week, due to late arrival of the exam papers, insufficient exam papers being shipped, or insufficient books in which students could enter their answers being supplied. In some cases, students were given 24 hours notice of the delays. In other cases, they were only told when they turned up to sit the exam.

 

The blame has been placed primarily on one of the companies which won one of the contracts to print the exam papers. Needless to say, questions about the tendering process are getting much media time.

 

But what of the Minister for Education, Muhammad Nuh? He has formally accepted that, as Minister, the problems are his responsibility. But when asked whether, as a sign of his acceptance of that responsibility, he will resign, he just smiles and says that the President appoints him, and thus it is up to the President to decide whether he should continue in office. Clearly falling on his sword is not his style. And there is no sign that SBY intends to take decisive action.  

 

Pity the poor students – and their parents and families.

 

Then there was the bizarre case of Susno Duadji, convicted in 2011 of two cases of corruption and sentenced to three years and six months jail and a fine of Rp200 million. He appealed the conviction to the High Court and the Supreme Court, but lost both times.  

 

Last week, a group of national, regional and local officials from the Attorney General’s Office tried to take Susno into custody at his house in Bandung. Susno though, phoned the West Java Police Chief, and sought his protection, on the grounds that there were people at his house wanting to take him away, against his will. The Police Chief sent a 60-strong group of officers to Susno’s house, and brought him to Police Headquarters, where he was offered refuge. The Attorney-General’s Office personnel tried for several hours to take Susno into custody but eventually went away empty handed.

 

When asked why he had offered protection to a convicted criminal, the Police Chief said that as a citizen, Susno had a right to ask for police protection, and as it was the job of the police to extend protection to all citizens, his request was naturally granted.

 

This had nothing to do, of course, with the fact that Susno is a retired three star Police General, a former Head of the National Police Criminal Investigation Branch – and a former West Java Police Chief.

 

SBY was asked to resolve the matter. He is reported to have instructed the police and the Attorney's General Office to deal with the issue 'as justly as possible' (seadil-adilnya).

 

Exactly when these 'legal acrobatics', as one paper put it, will end is anyone’s guess. But I doubt Susno will see the inside of a jail cell any time soon.

 

Finally, the ongoing saga of fuel prices.

 

The Indonesian government has a long-standing policy of subsidising petrol and diesel prices. Currently regular (88 octane) petrol and diesel sell for Rp4,500 per litre. This price had not changed since mid-2006 except for a few months in 2008 when it was increased to Rp6,000, before the government relented to public pressure and brought the price back to Rp4,500.

 

Consumption of subsidised fuel has been rocketing in recent years. From 19.5 million kilolitres in 2008, it had risen to 28.3 million kilolitres by 2012.

 

The cost of the subsidy in 2013 was budgeted at Rp274.7 trillion ($28.3 billion), but some economists estimate this figure could blow out by as much as an additional Rp70 trillion ($7.2 billion).

 

The official rationale for the subsidy is equity: to ensure access to fuel at affordable prices for all members of society. Officially, the wealthy are supposed to buy unsubsidised (92 octane) super petrol, which sells for around Rp9,500 per litre. Go to just about any petrol station in the country and you will see a large banner that says subsidised petrol is only for the poor. Indonesia must be a very rich country judging by the number of poor people driving ‘Mercs’!

 

This situation is unsustainable. The government knows that; all parliamentarians should know that; and virtually all economists certainly know that. But the issue is highly sensitive politically. Any suggestion of an increase in price brings 'rent-a-crowd' out, proclaiming that the poor are being discriminated against – despite compensation packages for the poor from the government, and despite the blatantly obvious fact that the primary beneficiaries of the subsidy are the urban middle (and upper) class. The sight of members of Hizbut Tahrir Indonesia–a particularly ‘vigorous’ Islamist organisation–demonstrating against a price rise which would primarily hit the rich, is unusual to say the least.

 

The government’s solution? The rumour – there has been no formal statement yet – is that the government will settle on a two-price policy for subsidised fuel: a low price (probably Rp4,500 per litre) for public transport, farmers and motorbikes, and a higher but still subsidised price (probably Rp6,500 per litre) for everyone else...including ‘Mercs’.

 

Preparations have got as far as dividing up the country’s 5,569 petrol stations selling subsidised fuel – all owned by Pertamina – into four groups: those selling both petrol and diesel at the Rp4,500 rate, those selling both at the new, higher rate, and those selling one at the lower rate and one at the higher rate. 
 

Complicated? For sure.Vulnerable to manipulation? You can bet on it. Likely to resolve the problem? Probably as likely as Susno being in jail, or Muhammad Nuh resigning before the end of the year.

 

'Boring' might not be such a bad thing after all. 

 

 

Colin Brown-April 2013

 

 

 

 

Young people missing-out as we seek to build closer ties with our (Indonesian) neighbour

My next door neighbours who went to live overseas last month were nice people.

They had lived next door to us for many years and we knew them quite well. Or sort-of ‘quite well’ that is.

We would meet at the front of the house when watering the garden or moving the cars, and always it was pleasant and cordial. We were on first-names basis, but that was it really.

And as we look back, only now I realise that maybe we didn’t have a relationship that was deeper and more embracing of really nice people. Don’t get me wrong; we did get on just fine, but it was that after exchanging pleasantries were seemed to move-on with our own lives without building on the genuine warmth we felt towards each other.

Australia’s relationship with Indonesia is a bit like that.

As our senior ministers concluded the 5^th Regional Ministerial Conference, in Bali recently at which the issue of people smuggling was be raised, senior officials from both countries  exchanged dialog with great warmth and genuine friendship and to be fair some useful initiatives were developed.

But afterwards, and following the compulsory Joint Communiqué, they returned to Canberra and Jakarta to get on with their busy schedules including the demands of forthcoming elections.

But in the meantime we don’t actually build a deeper relationship with our neighbours; a relationship that could build and create real opportunities for business, our communities and in particular our young people who will be the future of our relationship during the Asian Century.

Over recent years Australia has been ‘flooded’ by young people from Europe, and in particular Ireland, as they come to our shores on the ‘417’ visa for a working holiday. It’s been a great success as without these lovely young people, many of our cafes and restaurants would be all ‘self serve’! The other advantage of this program is that it provides a better understanding between Australians and the young people from the counties involved.

Indonesia has thousands of young people who can speak excellent English and who are internet savvy (Indonesia is number four in the world for Facebook usage) and who have disposable income for travel. They and have experience in hospitality; just ask any Aussie who has been to Bali about the standard of service from waiters there.

Yet until last year our government only offered 100 visas a year to young Indonesians to join their European colleagues to work and holiday in Australia. Truly strange given that Indonesians also are excellent workers in horticulture and could help our farmers during harvest to alleviate the terrible labour shortages they face.

Recently Australia extended the visa rules to allow 1,000 young Indonesians the opportunity to work and holiday here. All that was needed was for the Indonesian Government to ‘sign-off’ on the change and we could be served with a coffee in Perth or Sydney by someone called Ketut within a month.

That was nine months ago.

The delay has been caused by Indonesia not signing-off on the deal. Why? No one knows.

Perhaps Indonesia is ‘miffed’ that by increasing the intake from 100 to ‘only’ 1,000 – when Indonesia has a population of 240 million people – Australia is simply throwing them some scraps. They won’t say anything as ‘good neighbours are always polite’, but clearly Indonesia is not comfortable with what seems a deal in which both countries win.

Meanwhile, Indonesia continues to make it near-on impossible for young Australians to work and holiday in Indonesia, where they could benefit enormously from language and cultural experiences. All the right words are said, but nothing happens.

Why two seemingly ‘close’ neighbours – as our political leaders tell us – cannot agree on a scheme that is so fundamental to our future relationship, is truly mystifying and needs urgent attention by both governments. Perhaps this is a topic that foreign minister Bob Carr should talk to his Indonesia counterpart, Marty Natalgawa, about when they meet? It would also provide a nice break from talking about asylum seekers which hardly rates as a news topic in Indonesia.

Whilst the warmth of neighbourly contacts flowed freely in Bali our agriculture relationship – and in particular the live cattle export trade – is in tatters, and the much heralded free trade agreement (called IA-CEPA) has stagnated. Why? We are not sure.

Interestingly when the Lowy Institute asked Indonesians how they felt about Australians they learned that over the past ten years Indonesians have warmed towards us considerably, yet we do not reciprocate those feelings. Why? We don’t know other than Australians perception of our northern neighbour seems to be caught in a time-warp; much to our disadvantage.

With a very Australia-friendly president in Susilo Bambang Yudhoyono leading Indonesia it is a great shame that both countries have been unable to build on the ‘cordial neighbourly’ dialog, to develop a stronger and more meaningful relationship where both countries can benefit from our respective strengths in business, community and government. It can be done. Just ask Bill Kelty and the Australian Police Force that provided the perfect model upon which to build a stronger relationship during the Bali bombing investigations.

Both countries need to ensure we do get to know each other better. 

And we can start by ensuring our young people can move with far greater ease between two countries that are separated by a flight of only four hours. 

Ross B. Taylor - April 2013