Strengthening Australia-RI ties

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.