Australia, Indonesia pledge to boost trade
By Riyadi
NUSA DUA, Bali (JP): Australia and Indonesia pledged here on Thursday to take concerted measures to reinvigorate their two-way trade which has of late been declining.
Ministers from both countries, gathered here for the fourth meeting of the Australia Indonesia Ministerial Forum, said in a joint statement that the return of growth to Indonesia's economy would play a pivotal role in reviving the disrupted bilateral trade.
They said that continued domestic reforms and the liberalization of trade and investment in the two countries and globally would improve the scope for an increase in both countries' exports.
"The present level of economic relations between our two countries -- especially in the fields of trade and investment -- still does not reflect the potential that we might possibly be able to achieve," Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said at the closing of the two- day ministerial meeting.
Two-way trade between Australia and Indonesia, which has continued to grow during the past 10 years, fell to US$3.4 billion last year from $3.7 billion in 1997.
Nevertheless, Indonesia for the first time enjoyed a surplus in its trade with Australia last year.
Indonesia's exports to Australia totaled $2.1 billion last year, up 40 percent from $1.5 billion in 1997, but its imports from Australia dropped 45.2 percent to $1.2 billion from $2.3 billion in 1997.
Indonesian Ambassador to Australia Wiryono Sastrohandojo said Indonesia's increasing exports and decreasing imports from Australia was a logical consequence of the sharp depreciation of the rupiah against other currencies, including the Australian dollar.
"Because we have not much money, we can not buy many products from Australia. And because of the rupiah's depreciation, our products become cheaper and they buy more from us than before. That's logical," he said.
The only way to increase Indonesia's imports from Australia would be to improve the purchasing power of the Indonesian people by restoring positive economic growth, he said.
To mend the situation, the ministers agreed to pursue various measures, including Australia providing export credit insurance to assist the continued sale of essential items from Australia to Indonesia's export industry.
They noted the importance of providing an adequate supply of working capital for potential Indonesian exporters to take advantage of the competitive rupiah exchange rate.
Australia was also committed to helping Indonesia improve the quality of its products, especially food and agriculture products, so that these items would be able to enter Australia more easily.
Trade ministers from both countries on Wednesday signed a memorandum of understanding to work to improve Indonesia's food inspection and certification systems and facilitate trade in the food sector.
Australian Deputy Prime Minister and Minister for Trade Tim Fischer noted that the abolishment of basic commodity import monopolies by the Indonesian Logistics Agency would help boost Australia's farm produce exports to Indonesia.
The ministers were also committed to pushing investors from both countries to increase their cross-border investment, which would eventually boost two-way trade.
"The ministers noted that new opportunities for trade and investment would arise from the economic crisis and restructuring of the Indonesian economy," the joint statement said.
They identified sectors with continuing growth potential in Indonesia, including agribusiness, mining and natural resources, tourism, infrastructure, health, information technology and telecommunications as well as financial and management services.
The ministers said both governments would pursue more trade and investment through the Australia Indonesia Development Area (AIDA), a regional economic zone linking northern Australia with eastern Indonesia.
They cited agricultural production and processing, fisheries, oil and gas, timber and rattan, shipbuilding, tourism and education and health services as most promising sectors for investors in the AIDA region.