Australian business laments East Timor fallout

Australian business laments East Timor fallout

CANBERRA (Reuters): Michael Boud went cold when he saw television footage of Indonesian protesters burning Australia's flag at the embassy in Jakarta. "It's concerning to any Australian company," said Boud, the company secretary of miner Aurora Gold Ltd.

"Everyone feels a bit nervous when they see security being breached like the storming of the Australian embassy in Jakarta," he told Reuters.

Aurora has several interests in Indonesia including the 250,000 ounce a year Mount Muro gold mine on the island of Kalimantan.

Boud said anti-Australian sentiment in Indonesia, spurred by Australia's policy on the bloodied territory of East Timor, is disturbing for companies like Aurora, who already have investment decisions in other parts of Indonesia on hold.

"Like anyone else, we're acutely aware of concerns about the security situation deteriorating throughout the whole of Indonesia, because we've got people there on the ground."

Australia has said it was willing to take the lead role in an international peacekeeping force following the killing of hundreds of people in the East Timorese capital of Dili and regional towns. The killings by pro-Jakarta militias intensified after the August 30 ballot overwhelmingly supported independence from Indonesia.

The crisis has blown a hole in Australia-Indonesia relations, once held as the key to Australia's goal of forging greater ties with Asia.

Australian Prime Minister John Howard said on Wednesday that relations with the country's 10th largest trading partner had soured.

"I regret that the relationship has been put under strain, but the goal in the end is to do the right thing," he said.

Rob Hogarth, president of the Australia-Indonesia Business Council representing 400 Australian companies, said business relations were at risk alongside diplomatic relations.

"Because trade is done with Indonesia through relationships, if the rift between the countries gets stretched further then business will feel very nervous about that," Hogarth said.

"The problem is if we have this thing going on for a couple of weeks then it's just going to become a bad smell and that will overlay the good foundations we've got."

Hogarth said most of Australia's top 50 listed companies have a presence in Indonesia, including The BHP Co Ltd, Rio Tinto Ltd, Boral Ltd, Australia and New Zealand Bank and Colonial Ltd.

Australian imports from Indonesia last year totaled A$3.6 billion (US$2.3 billion) made up mainly of crude oil, jailer and gold. Other goods included cement, copying paper, clothing and sporting goods.

Exports to Indonesia reached A$2.2 billion last year, mostly made up of cotton, crude oil and grains.

Some Australian businesses, who have invested a total of A$1.8 billion in the world's fourth-most populous nation, have already felt the fallout.

Australian dock and freight workers have refused to handle good from or bound for Indonesia in a bid to pressure Indonesia to end the bloodshed in East Timor.

"It's a concern, because a lot of those goods have already been paid for," a steel importer, who didn't wish to be named, told Reuters.

"If you talk to people like BHP or Pasminco, who are exporting thousands of tonnes of zinc and steel, that's where the impact's going to come," he said.

"Because if you put embargoes on Indonesian products into Australia they are going to respond and say we're not going to take your zinc or steel."