Strengthening Australia-RI ties

The following is the first part of a shortened address by the new Australian envoy Richard Smith to a luncheon held by the Indonesia Australia Business Council (IABC) in Jakarta, Feb. 6.

JAKARTA: Let me offer a few impressions based on my first three weeks here. The first is about the welcome given me by the Indonesians I have met. Nobody pretends that there have not been some strains between us in the recent past, and nobody plays down the importance of those differences from the points of view either of Australians or of Indonesians.

But it has also been evident that December's Australia -- Indonesia ministerial forum in Canberra had a positive impact, and the people I've talked to have been looking to the future.

A second impression is the "reach" of the Australia-Indonesia relationship. So many ministers and other people have got personal connections with Australia. They have either studied there themselves or had children or close family who did, or have gone there for medical attention or holidays or to invest, or all of these things.

These linkages are supported by bodies like the IABC, the alumni association IKAMA, the Australian studies centers here and the Indonesian studies centers in Australia, the Australia- Indonesia Institute, and the Australia New Zealand Association.

And activities like the Australia-Indonesia youth exchange program, help to grow this "reach" -- 36 young Indonesians and Australians spending four months together, two in each country -- it was fantastic to see this.

There are about 10,000 Australians living and working here at any one time, other than tourists, including up to 200 teachers here in Jakarta alone.

Having served in India, the Philippines and China, I feel the range and depth of personal contacts between Australia and Indonesia is very considerably greater here than in any of those other three.

Indonesians have lived with a fair degree of certainty about their national leadership for most of the past 35 years, and they are now feeling the uncertainty very keenly.

Some clearly feel that democracy itself is under test and worry about the process, while others seem to worry more about the outcome. One can only recall that the democratic path is often a bumpy one, though in the end it is still the only one worth taking.

I have been asked what "Australia" thinks. We are of course on the side of a united, democratic Indonesia and of the rule of law, but just exactly what happens within that context is for Indonesians to decide.

Frankness has not been limited to events in Jakarta. I wondered what the response would be when I raised "sensitive issues" -- the role of the armed forces in Indonesia's governance, and developments in Aceh, the Maluku islands, Irian Jaya. But they have come up early enough, often raised by Indonesians who share some of the same concerns, or who want to tell me why they think those concerns are misplaced. The arguments are worth having, and it is possible to have them.

Given all we had gone through and the importance to both sides of the events relating to and following from East Timor in 1998/1999, one Australian commentator said that it is perhaps surprising that the relationship as a whole has endured as well as it has.

This largely reflects just how much substance and activity there is in this relationship that stands separately from those political considerations.

Business and commercial interests form an integral -- and long-standing -- part of our relationship with Indonesia.

The Australian government's first trade promotion office was in fact established in Jakarta in 1935. It is now the largest single Australian trade commission office in our network -- bigger than those in Tokyo, New York and London.

There are now around 400 Australian companies in Indonesia. Many more export from Australia. Our business leaders have understood that their commitment to Indonesia must be for the long haul. Maintaining a position in the Indonesian market has not always been easy, but it has had real benefits.

Some companies have withdrawn to the sidelines, but Australian companies which have stayed have found that their perseverance has also placed them in a prime position to build for the future.

There have, of course, been some real challenges. The economic crisis of 1997-1999 saw an enormous drop in purchasing power in Indonesia and a corresponding fall in the amount of Australian products they consumed, and as a result our exports fell sharply in 1998 and 1999. But the recent improvement in Indonesian economic growth has seen our exports rise again.

In the year to November 2000, Australian merchandise exports were valued at A$2.9 billion, up by 35 percent on the previous year, though still about half a billion below the 1997 peak.

That made Indonesia Australia's 10th largest merchandise export market. Australia's service exports -- primarily tourism and education -- were valued at A$841 million in 1999.

A particularly good measure of our trade prospects -- and of Indonesia's consumer economy -- is the live cattle trade. The trade all but ceased during the economic crisis, but in 2000 exports of live cattle reached A$144 million and they are still growing.

Indonesia is our largest market for live cattle, and also cotton, of which Indonesian buyers take something between 30 and 40 percent of our annual crop. Indonesia remains a steady and important market for our wheat, and for exports of many other resources.

Indonesia's development as a major export market for Australia has been due partly to the relatively open nature of its economy.

As a member of the Asia Pacific Economic Cooperation forum and the World Trade Organization, Indonesia has remained committed to implementing a more liberal international trade regime.

The further round of tariff cuts announced last month are expected to open up prospects in excess of A$50 million for Australian exports. Naturally, our export community would like more to be done, particularly in agriculture where tariffs on sugar and rice were raised last year. But the broad commitment to tariff liberalization is clear.

Many of Australia's exports to Indonesia of raw materials and manufactures are in fact transformed and then re-exported.

Examples of this include our cotton which is made into the textiles and clothing which are such an important export for Indonesia, the wheat used for noodles, and the aluminum used for video-cassette recorders and computers.