('The Jakarta Globe' Newspaper-Tuesday 30th April 2013)
Despite
the recent economic performance of both our economies, the business
relationship between Australia and Indonesia is still underweight — as
evidenced by the trade and investment statistics — and yet we are neighbors
with growing and complementary economies.
The
opportunities are enormous for Australian business to take advantage of the
strong future growth outlook for Indonesia.
This
country’s growing urbanization, growing working-age population and growing
economy need the goods and services produced by Australia. Indonesia is already
Australia’s largest market for soft commodities including live cattle, wheat,
sugar, cotton and soybeans. And Indonesia also has an urgent need to develop
infrastructure in telecommunications, transport, power, ports, health and
education and develop its services sector.
And
Australia needs what Indonesia produces. For Indonesian business, there are
opportunities to export to Australia manufactured goods, skilled labor
services, oil and gas processing plants and food such as noodles and
specialized tropical fruit. Indonesian investors are active in Australia, with
interests in commercial property, mining and agriculture, but the level of
investment could be higher.
So,
despite these opportunities, it seems that business in both countries is
overlooking the opportunities sitting right on their doorstep.
I propose
three areas in which business and government in both countries can work
together to develop closer relations:
Firstly,
the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA)
provides a framework for greater engagement between the Australian and
Indonesian business communities. It is as much about the process as it is about
the outcome.
The scope
of the IA-CEPA is much broader and more strategic than a traditional free trade
agreement. IA-CEPA will be a new type of agreement that seeks to bring the two
economies closer together, covering investment and industry cooperation;
dealing with “behind the border” issues that frustrate business; and delivering
significant capability transfer initiatives.
The
process is important because when the commencement of negotiations was
announced, it was made quite clear that there must be opportunities for
Australian and Indonesian companies to directly participate in the framing of
this agreement.
And this
is happening. Last year, a Business Partnership Group was formed comprising the
Indonesian Chamber of Commerce and Industry (Kadin), the Australian Chamber of
Commerce and Industry, the Indonesia Australia Business Council and the
Australia Indonesia Business Council.
The
IA-CEPA BPG met three times during the year, consulted widely with the business
communities in both countries and presented a joint position paper to ministers
of trade of both countries last November.
This is
the first time in Australia and Indonesia’s trade negotiation history that
business in both countries has reached such an agreement before a trade
agreement has been negotiated. This should rapidly advance negotiations.
The BPG
report is extremely comprehensive and found that a successful IA-CEPA is
expected to result in a significant increase in trade and investment between
our two countries. The report also identified areas of opportunities and
partnerships, not just barriers. It was agreed that the first area to be
examined is that of a healthy diet: The objective is to increase the intake of
protein in the Indonesian diet and to increase the consumption of tropical
fruit in the Australian diet.
And that
is why the IA-CEPA is more than just a typical bilateral trade negotiation — it
requires imagination and innovation. It is not just about tariffs and quotas.
The goal is to develop a partnership between two complementary economies
operating in a global economy.
And it
should be a dynamic agreement that continues to evolve as the economies develop
and the issues change. It is also fundamentally important for business to
continue to be involved.
Secondly,
there is a critical need for a different approach to trade and investment
promotion and facilitation. Despite the recent favorable media coverage,
Indonesia is still not on the radar for many Australian businesses. And if it
is, the perceptions do not match the reality.
There
should be increased resourcing by both governments for more sophisticated
market development and promotion. This should start by identifying the key
opportunities in the global supply chain and then identifying where specific
Australian and Indonesian industry sectors and companies can partner to
capitalize on these opportunities.
The old
days of generic trade missions are over. We need to have the economic
development agencies more resourced and therefore able to take a more
pro-active approach to assist business to identify opportunities and potential
partners.
Thirdly,
one of the fundamental ingredients to deepening the business relationship is
education of our business leaders. The AIBC supports more resources for the
teaching of Indonesian studies in Australia’s schools and universities and
supports the Australian Opposition’s New Colombo Plan policy, especially as it
involves educating Australia’s next generation of business leaders with
practical work experience in Asia.
But we
also need to educate our current business leaders. The AIBC has brought
together executives from companies that have successfully invested in Indonesia
and also executives from companies considering investing in Indonesia. The
objective is to develop a “mentoring” or “buddy” relationship so that
Australian companies can share experiences about what worked and what didn’t.
This program promotes Indonesia as a business destination, encourages
Australian investment and most importantly, educates Australian executives
about the market sitting right on their doorstep.
I am sure
there is scope for a similar program to be hosted in Indonesia for Indonesian
executives to share their experiences about doing business in Australia.
If
government and business in both countries work together on these three
initiatives, it will go a long way to encouraging greater business engagement.
But in the end, it is up to Australian and Indonesian business to look up and
realize the many opportunities out there.
Chris
Barnes - April 2013
Chris Barnes is a former president and current national vice-president of the Australia Indonesia Business Council.
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