Business as usual despite bombings, politics, Corby

Business as usual despite bombings, politics, Corby

Zakki P. Hakim, The Jakarta Post, Jakarta

Terrorist bombings, political rifts over Timor Leste's
independence and the Corby trial earlier this year have added
some unwelcome spice to the Indonesian-Australian relationship,
but apparently it's full steam ahead for the two countries'
economic relations.

"It is business as usual as far as business is concerned. It
is outside the sphere of business, and we have to look for ways
to get both countries closer to each other again," said Noke
Kiroyan, president of the Indonesia-Australia Business Council
(IABC).

He said that many Australians still see Indonesia as very
important and thus keep coming back and even staying in the
country, particularly in the tourism field.

According to the IABC, Indonesia, a country with some 220
million people, or around eleven times the population of
Australia, remains an important market that cannot be ignored
because of its size, proximity and accessibility. There are now
around 400 Australian firms active in this country.

Meanwhile, Australia is now the number-two destination for
Indonesian students after the United States, and Indonesia is the
largest source of foreign students in Australia, while tourism
plays a huge role in complementing a relationship built on trade
and education.

Nevertheless, despite the fact that the two countries are
close neighbors, bilateral economic relations are still very
limited compared to those between Indonesia and other countries.

Indonesia is ranked as Australia's 16th largest trading
partner with bilateral trade worth some A$8 billion (US$6.5
billion) last year.

Meanwhile, Investment Coordinating Agency (BKPM) data shows
that Australia is the 13th largest source of foreign investment
here with investment approvals of $29 million in the first
semester of the year.

Noke said that Australia's investments in Indonesia were
smaller than other countries as investors from other countries
have many oil and gas projects here --some of them huge -- which
is not the case with Australian investors.

Meanwhile, there are more relatively small and medium-sized
Australian companies operating in Indonesia.

"There are still many opportunities to increase bilateral
trade, considering that the two countries are geographically
close and although small in population, Australia has very high
GDP per capita," Noke said in an interview with The Jakarta Post.

He added that the consumer goods market in Australia was still
dominated by products from India, China and Vietnam.

The problem, he said, was that many Indonesians still lacked of
knowledge of the Australian market, while on the other hand many
Australians have failed to realize the potential of Indonesia's
manufacturers.

In April this year, President Susilo Bambang Yudhoyono visited
Australia to improve relations -- a visit that was marked by the
issuance of a joint declaration on a "comprehensive partnership".

The partnership is expected to lay the foundations for a free
trade agreement (FTA), as well as ease the movement of people
between the two countries for business, tourism and education
purposes.

Separately, IABC vice president Peter G. Fanning said that
Australia's relatively small population made the country
competitive, especially in the services industry.

As investments in the service industry were usually small,
that made Australian investments in Indonesia also look small in
dollar terms.

He said more large Australian mining and construction firms
would be interested in establishing a long-term presence here if
the country could ensure legal certainty.

Nevertheless, he noted, business relations between the two
countries would continue to flourish if they were supported by
good overall bilateral relations, including political relations.

"We Australians are aware that everyone will be much more
secure if we have strong relationships in the business and
political areas. There will be benefits for both sides," he told
the Post.

He also said that most ordinary Australians feel the
Australian government is a little bit too cautious when it
advises Australians to avoid unnecessary travel to Indonesia,
because they know terrorist attacks can happen anywhere.

"They know that Indonesia is basically a peaceful place. The
travel warnings really do not achieve anything positive and they
probably go toward achieving what the terrorists want, that is,
perhaps they want outside influences to go away," he said.

"The politicians make it out of proportion. Most that live
here know that the air we breath, Metrominis and bajaj are more
dangerous here than terrorist attacks," said Fanning, who is also
the chairman of the International Business Chamber (IBC).

In general, Fanning said, Australian businesses, like most
Indonesians, had high hopes that the new government of President
Susilo would create a more business-friendly investment climate.

"Obviously the people have great confidence in the current
President, who is gradually improving the investment climate.
Investors have confident that the improvement will continue and
they are impressed with the amount of action being taken," he
said.