Improving RI-Aussie trade alliance<\/p>\n
By Bob Widyahartono<\/p>\n
JAKARTA (JP): The Asia Pacific is currently considered as the
\nworld's most dynamic region of growth in trade and economic
\noutput.<\/p>\n
This dynamic growth, as noted by Ross Garnaut and Peter
\nDrysdale (Asia Pacific Regionalism, 1995), reflects countries'
\nstrategies built on the powerful use of opportunities for
\ninternational specialization in production. This led to
\nintensified economic international ties within the region.<\/p>\n
As the Pacific Rim warms up economically, as described by John
\nNaisbitt & Patricia Aburdene in Megatrends 2000, Australia and
\nNew Zealand have been trying to \"think and feel Asian.\"<\/p>\n
Now the \"Asian Century\" has arrived. Australia is beginning to
\nfeel its economic role as a key part of the Asia Pacific Rim and
\nis beginning to identify with Asia. Feeling and thinking Asian
\nwill not be easy for many Australians of European origin. Should
\nIndonesia be considered Australia's close and trustworthy
\nneighbor, rather than a distant relative, the United Kingdom?<\/p>\n
Within the Association of Southeast Asian Nations including
\nIndonesia most business executives including top managers
\nconsider the real driving force of development to be market
\ndriven trade and investment. Asian nations have not been
\nenthusiastic about a formal economic integration of the European
\nUnion type.<\/p>\n
There are no treaties nor a region-wide free trade agreement
\nwithin the Asia Pacific except the ASEAN Free Trade Agreement.
\nThe successful initiative of the growth triangle of Singapore-
\nJohor Baru-Riau has led to another growth zone to its north; the
\ntriangle linking northern Sumatra with Malaysia and southern
\nThailand.<\/p>\n
The concept links the advances in Malaysian and Thai
\nindustries with the development in Sumatra of oil and gas
\nresources in the Aceh province, manufacturing in the Medan area,
\nand the seaport and manufacturing in Belawan. The activities
\ncould be extended to resort development in Malaysia's Penang and
\nIndonesia's Toba Lake areas as well to include joint programs
\ncombining agriculture and fishery.<\/p>\n
In recent years initiatives have been taken to develop the
\nnorthern growth area linking the economies of Brunei Darusalam,
\nthe eastern part of Malaysia, North Sulawesi and Eastern
\nKalimantan, and the southern provinces of the Philippines (called
\nthe BIMP growth area).<\/p>\n
Regional cooperation between Australia and the Eastern
\nIndonesia areas of Irian Jaya, Nusa Tenggara and Timor could be
\ndeveloped.<\/p>\n
The Nusa Tenggara islands, for instance, are close to
\nAustralia. Tourism could be further developed starting from Bali
\nand Lombok on the western side and from Darwin and Kupang on the
\neastern side, forming a kind of corridor, which could be more
\nprofessionally managed in a spirit of business alliance between
\nAustralian private enterprises and Indonesian local tourism
\nenterprises.<\/p>\n
The Nusa Tenggara islands could also be developed as an
\nintermediate zone in a manufacturing network linking Australia
\nwith the other provinces and beyond to other areas in Southeast
\nAsia.<\/p>\n
In the outer regions, especially the remote ones, there are
\nnot many industrial sites. When large foreign-affiliated or even
\nwholly Indonesian firms open in such regions, their profit is
\nsometimes drawn off to Jakarta or even abroad, leaving only a
\nfraction for the regions concerned.<\/p>\n
In Sulawesi, industrialization potential could be developed
\nthrough the effective use of primary products such as lumber,
\nrattan, ebony, coffee, cocoa, tea and marine products.<\/p>\n
At present, furniture and spices are processed in Surabaya.
\nThe possibility of opening processing plants at the site of
\nproduction (raw material oriented) could be feasible with
\nimprovement of ports, roads, feeder transportation and
\ntelecommunications. Assurance of quality could be developed
\nthrough better skills and transfer of technologies from the
\nforeign partner.<\/p>\n
In Irian Jaya, it would be vital to exploit mineral and marine
\nresources. Transportation in the hinterland is hindered by
\nmountains and forests and the greater linkage would have to be
\nreached through marine transport. The linkage to Maluku should
\nalso be improved.<\/p>\n
Promoting industrialization in Eastern Indonesia calls for
\nincentives i.e. tax exemption and deductions, subsidies to local
\ngovernment, infrastructure and the development of small and
\nmedium scale enterprises. In this regard a Council of the
\nDevelopment of Eastern Indonesia has been set up.<\/p>\n
For Australia and particularly Australian business
\nspecializing in agriculture and related industries as well as
\necotourism, Eastern Indonesia provides ample opportunity for
\npioneers willing to invest for returns in the long term.<\/p>\n
But again, how quickly will Australian business circles feel
\nand think Asian?<\/p>\n
For Australian and Indonesian business executives, cultural
\ninfluences are at work in their relationship. An unwritten code
\nof conduct guides the relationship between executives and their
\ncustomers, between superiors and subordinates. In Indonesia
\nmutual respect and avoiding open criticism or blaming others
\npublicly are still important values.<\/p>\n
While western societies love formalities and while \"modern\"
\nurban Indonesians formally adopt modern western management, trust
\nand partnership still form the basis of cooperation and alliance.<\/p>\n
In an Indonesian setting it is necessary to be able to read
\nthe behavioral and cultural signals correctly and to respond in
\nways that will not disturb sensitivities.<\/p>\n
Many behavioral differences are strongly influenced by how
\npeople value the individual compared to the group, how they
\nhandle time and space, openness or ethnocentrism, how they
\nrespect tradition and the elderly, and how much value is placed
\non new knowledge, risk taking, efficiency and harmony.<\/p>\n
The importance placed on respect, courtesy and harmony is
\nreflected in the judgement of others. Westerners or Indonesian
\nmanagers trained in a western management methods, in which the
\nideal CEO or manager is portrayed as tough, competitive, result
\noriented and able to manage conflict and crisis, will find it
\ndifficult to deal with the Indonesian business community and
\nenvironment.<\/p>\n
The West and Australian organizations operate on a \"guilt
\nculture\", the East on a \"shame culture\". Behavioral control in
\nthe West and Australian business is therefore internal, where
\npeople respond to their conscience and guilt when they don't meet
\nstandards and strict criteria. Behavioral control of the East is
\nmore \"the fear of losing face\".<\/p>\n
The West works to the order of competitiveness, challenge and
\nconfrontation and conflict situation, whereas most Indonesian
\nCEOs and managers work to the order of compromise, accommodation
\nand consensus. In this way Indonesians appear to be tolerant
\ncompared to westerners. Behavioral control in Indonesian society
\nis thus external -- the fear of losing face in front of others.<\/p>\n
Effective interpersonal relationships and communication
\nrequires a tuning in to cultural sensitivities and different
\nbehavioral norms. Indonesians are basically more tolerant in the
\nprocess of reaching agreement in negotiations. Although many
\nIndonesian firms have already opted to take up modern management
\nwith clear-cut strategies, structures and systems, executives
\nstill appreciate face-to-face communication, consensus building
\nand conflict avoidance in reaching decisions.<\/p>\n
Continuous growth, the development of Eastern Indonesia in
\ncollaboration with Australia during the decade to 2000 and beyond
\nwill largely depend on the availability of professional
\nentrepreneurs and executives to manage and influence change to
\nachieve specific objectives.<\/p>\n
The alliance of Indonesian and Australian business will thus
\nbe crucial to provide the appropriate blend of entrepreneurship
\nand professionalism. This kind of alliance should be a long term
\nprocess and based on a \"win-win\" relationship.<\/p>\n
In developing such an alliance, are prospective partners
\nwilling to share their mission and vision of their strategy?<\/p>\n
A thorough study is needed on the infrastructure, land
\navailability and transparency in the investment climate as well
\nas rules and regulations for Australia to invest in the
\nagricultural sector, and market access.<\/p>\n
The infrastructure and agricultural facilities to be developed
\nby the Indonesian government as well as the private sector could
\nfacilitate private sector investments.<\/p>\n
A business alliance is always a long term exercise requiring
\nprofessional entrepreneurs with long term vision.<\/p>\n
The writer is a lecturer at the School of Economics at
\nTrisakti University in Jakarta.<\/p>",
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