AIDA forum needs govt support

The following article is an excerpt of a paper presented by the president of the Indonesian Chamber of Commerce and Industry (Kadin) Aburizal Bakrie, at a seminar on the Australia-Indonesia Development Area (AIDA) in Sydney on May 14, 1997.

SYDNEY: In addition to our bilateral-level cooperation, the forum of the Australia-Indonesia Development Area (AIDA) will increasingly lead to a more cooperative mind-set, particularly among private Australian and Indonesian businesses.

This will help to underpin our economic fortunes as well as social development. And on a broader scale, such a strategic vision or mind-set will also help to underpin APEC's cooperative peace and progress well into the 21st century.

Through the newly-created bilateral forum of AIDA, as it has been proposed, our two private sectors can deepen and further expand their cooperative initiatives. I envision that AIDA will not just involve trade and trade-related activities, but will be a widely-encompassing arrangement cutting across a range of sectoral and intersectoral areas. These include new finance and capital market development, technological and human resource development programs, investment in infrastructure and infrastructure-related sectors, to mention but a few.

Under AIDA, our initiatives can be focused, in the early steps of this long journey, on two main agendas. First, is identifying opportunities for a more profitable private sector cooperation. In particular, opportunities that will directly and indirectly actualize market potential and the economic assets of the people within the AIDA region: namely Kalimantan, Sulawesi, Maluku, Irian Jaya, East and West Nusa Tenggara, Bali and East Timor. Second, is finding and solving constraints and problems caused either by the existing macroeconomic policies or the procedures in the real sector themselves.

What is clear is that the forum of AIDA must be fully supported by our respective governments. Since the constraints and problems need policy adjustment or even brand new policies, it is heartening to note that the Indonesian government has already committed to part of the drive of deregulation, debureaucratization and decentralization.

There are, for example, the fiscal incentives available for investment in growth node areas located in the eastern part of Indonesia -- or the region covered by AIDA. The Indonesian government is also willing to review the policies and procedures on expatriate work permits and allow more qualified Australian professionals and managers to directly assist private activities in the AIDA area -- as part of the environment for business and investment cooperation between us.

For concrete, effective and efficient reasons, the first agenda could be organized in detail or sector by sector; whereas the second one should be proposed through a case-based approach. This will enable the private sector and the government to quickly and adequately make the necessary proactive coordination between them. So AIDA will soon be an effective complementary vehicle for all of us to boost our bilateral-level economic cooperation.

Nonetheless, since we perceive the economy is the deus ex machina, where the private sector's alliances and initiatives are the most suitable keys to every lock of every window of opportunity, I believe that what we have established so far still needs constant and continuous evaluation. For this, I think all of us should proactively encourage and promote the four crucial interrelated prerequisites for the AIDA cooperation to be successful.

First, is the establishment of the most supporting business investment policies possible, in the sense of being pragmatic and productive. This will lead to productive and competitive alliances among our businesses, not just for their own financial gains but also for the interest of our society at large.

Second, is the concentration on economic cooperation and the turn away from political and ideological prejudice. History has told us that this prejudice will always restrict the inflow of necessary information; stifle our commitment, initiatives and creativity and limit our ability to respond effectively both to the domestic dynamism and to the changes occurring in the global business marketplace.

Third, is the establishment of national and regional dynamic stability. Of course we do not intend to discard our unique tradition and value systems, but the absence of societal disharmony or disorder is economically more demanding. That is why we need to foster sincere tolerance and respect for, and appreciation of sociocultural pluralism, as a crucial part of our social and psychological transformation.

Fourth, is the development of an open and equal partnership structure that accommodates not only the most productive and modern sector of the economy, but also the interests of our local small and medium enterprises (SMEs). Supportive market-driven enterprises will undoubtedly be a pivotal component in the continued dynamic progress of our economies, and more importantly for Indonesian market reform itself. Cooperative and yet suitable opportunities must therefore be available to all of them, in order to boost AIDA's full benefits.

Indonesian enterprises are still technologically undeveloped, commercially and financially lacking in access, and therefore economic power and resilience. But they do have great powers of endurance, strong determinism and ethical integrity -- the entrepreneurial spirit some of us seem to be lacking.

As two close neighboring economies, we have both recognized the potential for the exploitation of economic complementaries and synergies, primarily through private sector initiatives -- on account of our economic dynamism and diversity. With its huge population and a newly-awakening middle income market, Indonesia is a very hungry market not just for consumer and capital products. Equally important is Australia's investment capacity; expertise; science-based technology, technical and managerial know-how.

In turn, Indonesia must understand that the importance of the Australian market lies not only in its capacity to absorb the Indonesian offerings -- particularly raw materials for Australian industries to keep running. It is also a source of perfecting its knowledge-based industrial capabilities, the things that need to be spread over a wide range in order to gain from the synergistic nature of today's industrial wave.

Only by meeting the needs of newly-constructed assumption and perception, can we envision the most productive business and investment cooperation among our two private sectors. Fortunately, we have agreed that the central aim of AIDA is to improve the conducive environment for trade and investment of the private sector, especially between the Indonesian region covered by AIDA and Australia -- in addition to the memorandum of understanding between Indonesia and Australia's Northern Territory, for economic cooperation in the eastern area of Indonesia.

What we need to profoundly discuss and observe is the implementation procedures and activities. From an Indonesia perspective, the main concern is whether this cooperation can truly actualize the economic potentials of the region; and whether the process and its outcome can further mobilize the role as well as market leverage of Indonesian enterprises.

I think the section on concurrent sectoral meetings of this timely seminar, can closely observe this specific end in order for us to achieve long-term results. The alignment and empowerment of Indonesian enterprises, particularly those in the AIDA region, could be a very convincing beginning. As a matter of deep commitment and urgency, I suggest that AIDA set the target of leveraging participation of the enterprises in the more productive sectors of the economy, commensurate with the Indonesian development target to alleviate poverty by the year 2003.

There is therefore a need for instruments and mechanisms which are responsive to this dimension in AIDA cooperative activities. Educational and training development design, as well as reshaping the legal and administrative systems will further aid this cooperation, which must also be enterprise-friendly.

The next priority could be to provide the necessary trade and investment infrastructure such as telecommunications and information and transportation facilities, which offer huge opportunities for our Australian business counterparts. The Australian government should therefore develop an economic policy of active engagement with the Indonesian infrastructure projects. The Indonesian infrastructure sector for the next 10 years alone needs US$200 billion investment.

One objective of AIDA is to accelerate economic development and to strengthen our growth footing. Investment activities will undoubtedly be the main determinant factor. In order to encourage investment flows into AIDA, the availability of fiscal incentives in certain forms, becomes important. And they are now available, if the arrangement is right.

Window: Indonesian enterprises are still technologically undeveloped, commercially and financially lacking in access, and therefore economic power and resilience.