`Business prospects boom in Indonesia -- for now'

`Business prospects boom in Indonesia -- for now'

By Jack Taylor

SYDNEY (AFP): Australia should move quickly to capitalize on
Indonesia's burgeoning economy which is creating new
opportunities for foreign companies, according to a government
report released here yesterday.

But it said Australia, slow in the past to recognize
opportunities there, could not rest on a presumed advantage of
proximity and for both countries to maximize the potential for
mutual benefit, "strategic thinking and flexibility" were
necessary.

It also warned that while Indonesia had achieved an impressive
measure of political stability under President Soeharto, it was
uncertain how its people and institutions such as the military
would adapt to his eventual retirement.

And it said Indonesia faces external pressures, especially
from the United States, which was pressing for improved wages and
workers' conditions, while East Timor had also attracted
international attention.

The report, by the East Asia Analytical Unit of Canberra's
foreign affairs department, was released here to coincide with a
major Australian trade promotion now underway in Indonesia.

Prime Minister Paul Keating, currently in Jakarta with a
number of his ministers for the promotion, held a talk with
Soeharto yesterday.

The report said the way forward for both countries "clearly
lies in economic developments which transcend national boundaries
and expand horizons.

"Integration into global transport, telecommunications and
electronic data interchange networks will be of enormous benefit
to both economies in an increasingly globalized environment."

The rapid takeoff in Indonesia's economy had taken Australia
by surprise, although Indonesia was now Australia's 11th largest
trading partner and two-way trade had trebled in five years to
three billion dollars (US$ 2.2 billion).

"Few would imagine that by the year 2020 Indonesia could be
our fifth largest export destination," it added.

Both countries were now enjoying the benefits of financial
deregulation in the 1980s and regional partnerships would provide
gains to both countries over a range of manufacturing, resource-
based, agricultural and service industries.

Australian partnership in major Indonesian projects had been
limited in the past to a few ventures involving firms like food
group Goodman Fielder's and mining companies BHP Co. Ltd and CRA
Ltd.

Doing business in Indonesia was "notoriously difficult" with
language and cultural barriers and a maze of bureaucratic
regulations.

Growth in Indonesia's industrial base would drive demand for a
range of goods and services that Australia could supply, such as
in infrastructure development where there was already a backlog
of demand in communications, power, steel production and
automotive parts.

Australia was also well placed to help develop Indonesia's
rich mineral resources.

"Having established a capability to handle Indonesian
projects, Australian companies should have excellent prospects of
building on this success as Indonesia's mining industry moves to
the next stage of development."

With Indonesia's middle class "set to explode during coming
decades", prospects for retailing were also "very bright" -- both
in supplying the products and building the modern shopping
complexes.

"Notwithstanding the fact that most Indonesians are Moslems,
the potential for beer sales in Indonesia may be enormous, given
the size of the population and the growth of disposable income."