RI market offers Australia new opportunities

RI market offers Australia new opportunities

Bilateral trade with Indonesia grew by 30 percent last financial year to a total figure in excess of A$5 billion. It is now Australia's 10th largest trading partner and will soon be its biggest partner in the region. Austrade has been actively promoting Australian business interests through its offices in Jakarta, Surabaya and a new office in Medan. Despite the rupiah depreciation, a property downturn, and an IMF loan bailout, many prominent Australian companies still believe strongly in the future of the Indonesian market.

Austrade's move into regional Indonesia took a further significant step forward with the opening of the new Medan, North Sumatra, office on Dec. 17 under the skilled management of Wagiman Tandun. Sumatra, located on the Strait of Malacca and part of the Indonesia/Malaysia/Thailand Growth Triangle, offers a range of untapped business opportunities for Australian companies in a resource-rich region of strong economic growth.

The Medan office will operate in cooperation with The Australia Center and the Asean Focus Group Pty Ltd. The Australia Center is an educational foundation which receives technical assistance from Insearch Language Center at the University of Technology, Sydney.

The Australia Center provides language training and educational services for the local community, as well as Australian educational institutions. It has the premier Australian profile in Medan. Asean Focus Group Pty Limited also has well-established links in Indonesia and will add considerable value to the Medan operation.

The move into Medan is part of a process aimed at projecting Australian business into regional Indonesia. No one denies the importance of Jakarta as the business capital, but there are, nonetheless, opportunities in the provinces which we sometimes miss as a result of being perhaps a little too Jakarta centric.

According to Senior Trade Commissioner in Indonesia Bruce Wallace: "This trend indicates the increasing sophistication of Australian firms in the Indonesian marketplace. They realize that while Jakarta is the preeminent business center, there are still strong opportunities elsewhere. We can offer practical support to firms entering new areas through our office expansions."

The move into the provinces began with the opening of the Surabaya operation in 1992. Surabaya has long been recognized as a successful initiative. Companies in the health sector, the sugar industry, in marine, building materials, mining, agribusiness, food and many other sectors recognize the contribution the Surabaya office has made in tapping them into opportunities in Surabaya, East Java, and beyond.

Budi Daroe, who manages the Surabaya operation, said: "Surabaya's growing role as a purchasing center for major mining operations in eastern Indonesia will be enhanced in 1998, so this should add a new facet to our relevance to Australian business. It fits in very well with our ongoing effort to open new horizons for Australia here."

The relaunch of Surabaya in new premises in November 1996 by the managing director, Charles Jamieson, was timely, enabling the profile of an efficient and effective office to be raised among both clients and customers and further underlining the relevance of regional Indonesia to a deepening commercial relationship.

A 50 percent increase in both the number of new clients and customers contacting Austrade Surabaya has been witnessed over the past year. There is also a growing Australian corporate presence in East Java.

There were only seven Australian investors present in East Java in 1992. This has now risen to 19. New faces include Mayne Nickless/HCOA, BHP and Boral. In addition, representative and branch offices have increased from nine to 35 over the same period. New faces include Aquatec Maxcon (environment), KMP (ISO 9000) and Procon Indah (property).

A prime example is the new Mayne Nickless/HCOA hospital -- RS Internasional Surabaya -- which began construction in 1996 and is scheduled to be launch in mid-1998. It is a major step forward for the Australian health sector in Indonesia, where Australian expertise and geographical proximity fit very comfortably with Indonesian demand and needs over the long-term. The Surabaya opportunity was HCOA's first in Indonesia. It now operates one and is building two other hospitals here.

EGM Southeast Asia Roger Bayliss and Bruce Wallace wanted to extend the principle to Sumatra in 1997.

"The aim is to project Australian business into an area where bilateral business links are strangely not perceived to be as strong as elsewhere in Indonesia. The Medan launch was warmly welcomed by both the public and private sectors in Sumatra and received extensive press coverage, both locally and nationally. People expressed surprise we had not been in Medan long ago," said Wallace.

North Sumatra Deputy Provincial Governor Pieter Sibarani, in opening the Medan office, acknowledged Australia's foresight in making the move at a time of considerable economic downturn in Indonesia. He said he regarded Australia as a major and natural regional partner and was delighted it had decided to move in. Local businesses agreed with him.

The community turned out in full force at the opening reception to welcome the new office. Local business representatives from Jakarta included Sabam Siagian, a former Indonesian ambassador to Australia and currently chairman of the Australia-Indonesia Business Council. He is keen to see the council establish a branch in Medan in the near future. Wagiman Tandun will be right behind this council initiative.

"The launch has already raised Australia's profile considerably in Sumatra. Australia is well-established as a destination for study and tourism. Now, we need to convince the business community that we are also ready and able to do business with here," said Wagiman. Wagiman's strong background and extensive network in local business will no doubt assist in this process.

Bayliss made the point many times to numerous interlocutors during his December launch visit to Medan that the office, like Surabaya, gives the business community access to the whole range of services available through Austrade.

Talks centered mainly on workflows and their advantages in allowing customers to identify sources of supply in Australia quickly and efficiently. Bayliss emphasized the high degree of integration which exists among the three office in Austrade's Indonesia operation and underlined the growing ability to support the needs of specialist posts and to ensure that resources are there to back them whenever required.

And after Medan? The next obvious arena is eastern Indonesia. The commitment of both governments to the development of the Australia Indonesia Development Area (AIDA) means that as the concept moves forward, there will undoubtedly be new business opportunities. The offices will need to be responsive and to adapt the models developed in the other regions to ensure they are best placed to assist Australian business to take advantage of them.