Australian investors vow to stay in Indonesia

JAKARTA (JP): Most of the Australian businesses operating in Indonesia have vowed to stay in the country in the long-term, despite current uncertainty, an executive of the Australian Industry Group said here on Thursday.

The group's deputy president, Bill Page-Hanify, said that Australian investors had confidence in the future of Indonesia and would like to strengthen their cooperation with the country.

"A recent survey conducted by the Australian Industry Group shows that 91 percent of the Australian companies operating here remain committed to the market for the longer term," Hanify told a business forum.

The drastic fall of the rupiah against the U.S. dollar which began in the middle of last year has brought Indonesia's once bustling economy to a standstill.

Massive social unrest erupted in May and led to the resignation of president Soeharto. Foreign investment then dropped drastically as a result of investors' fears of further political and social instability.

Hanify admitted that the crisis had presented challenges to both Australia and Indonesia.

"Unquestionably, however, the opportunities over the medium to longer term far outweigh the short term challenges," he added.

The Australian Industry Group was formed on July 1 through the merger of two of Australia's oldest and strongest industry associations: the MTIA and the Australian Chamber of Manufactures.

The group represents 11,500 companies which employ one million people in Australia. The companies have an annual turnover of A$100 billion, one quarter of which is generated through exports.

The group signed an agreement with the Indonesian Chamber of Commerce and Industry (Kadin) on Thursday to create a new platform for bilateral business relations between the private sectors in the two countries.

The agreement is expected to promote the establishment of joint business ventures in manufacturing, construction, the services sector, export-import and trade.

Yesterday, the group also proposed the formation of a new Indonesia/Australia trade zone which would cover a broad range of trade and investment issues.

The new zone will be in addition to the Australia/Indonesia Development Area (AIDA), which covers only the eastern part of Indonesia and the northern part of Australia.

Hanify said the relationship could generate an expansion in bilateral trade and allow economies of scale to be exploited, and could also help to reduce regulatory barriers through harmonization of standards and rules.

Kadin chairman Aburizal Bakrie said the proposal would be studied carefully by Indonesia's business leaders and the government.

"We will examine the advantages and disadvantages of such cooperation and its possible effect on small and medium-sized enterprises in both countries," Aburizal told reporters on the sidelines of the meeting. (das)