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)