RI, Australia urged to remove barriers

RI, Australia urged to remove barriers

JAKARTA (JP): The Australian and Indonesian governments should
lift trade and investment barriers and offer more incentives for
private firms to invest in and trade with Indonesia's eastern
provinces and Australia's Northern Territory.

The Australian National University's Heinz W. Arndt and
Indonesia's Center for Strategic and International Studies' Mari
E. Pangestu proposed yesterday both governments do more to
improve economic links between eastern Indonesia and the Northern
Territory.

They said the Australia-Indonesia Development Area (AIDA),
which links all eastern Indonesian provinces and Australia, had
made only modest progress despite the goodwill, enthusiasm and
energy both governments had devoted to it.

"Governments can do only so much, through the removal of
tariffs and other obstacles to trade, the provision of
infrastructure and subsidies of one kind or another," Arndt said
at a seminar on progress and challenges of the Indonesia-Northern
Territory memorandum of understanding on economic cooperation and
AIDA.

The memorandum was signed here in 1992 by Indonesia's Minister
of Foreign Affairs Ali Alatas, and the Northern Territory's Chief
Minister Marshall Perron.

The memorandum paved the way for the establishment of AIDA
last October, which the Indonesia expected to help reduce the
development disparity between its western and eastern provinces.

But Arndt warned that unless private investment could be
attracted, opportunities for trade between the Northern Territory
and Eastern Indonesia would be disappointing and Indonesia's
regional disparity would widen.

Mari said eastern Indonesia and the Northern Territory were
close and had the potential to compliment each other.

But she said they were constrained by a lack of information,
promotion, infrastructure, human resources, cultural and
corporate cultural differences and a conducive business
environment.

"The lack of a conducive business environment is caused by the
lack of stable and predictable laws and regulations, especially
at the local level," Mari said.

Arndt said both countries faced potential troubles.

Indonesia had political uncertainties arising from cronyism
and ethnic tensions, while Australia faced minority opposition to
freer trade and immigration which was exacerbated by high
unemployment, he said.

But both governments attached considerable importance to
closer ties, he said. "They can be expected to support any
initiatives."

Foreign affairs minister Alatas said both countries could
enlarge and strengthen their economic relationship into a fully
fledged development partnership.

"All we need is to learn more of each other, of what each can
offer the other, and if we have the will and the creativity --
which I think we have -- that enhanced partnership will be
attained and will flourish," he said.

Australia's minister for Asian relations, trade and industry,
Eric Poole, said he hoped state-sponsored institutions like the
Eastern Indonesian Development Council, headed by the state
minister of research and technology, B. J. Habibie, would
galvanize AIDA investment.

The council has identified 13 economic development zones in
eastern Indonesia to promote business activity in areas outside
provincial capitals.

Poole said the Northern Territory had decided to focus on four
of the 13 zones, namely the area around Bima in West Nusa
Tenggara, the area around Mbay on Flores in East Nusa Tenggara,
the cast coast in East Timor and Seram island in Maluku.

Non-oil exports from the Northern Territory to Indonesia have
grown rapidly in recent years, from A$10 million in 1992/1993 to
A$110 million in 1995/1996.

Its exports to Indonesia outnumber imports by about 10 to one.

Australian exports to Indonesia rose from A$1.6 billion in
1991/1992 to $2.8 billion in 1995/1996, while Australia's imports
rose from $1 billion to A$1.5 billion over the same period. (rid)