Australian investors vow to stay in Indonesia

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)