Strengthening Australian-Indonesian business ties

Strengthening Australian-Indonesian business ties

The following is the second 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: One reason why our exports to Indonesia did not fall
further during the economic crisis was the fact that Indonesia's
own export sector was still doing quite well.

Indonesian exporters have also gained a lot from the opening
up of the Australian economy over the last 20 years.

In 1980, Indonesian exports to Australia were valued at A$341
million; in 2000 (or 1999/2000), they ran at A$2.7 billion.

I want to state clearly my strong support for these commercial
interests. One of my earliest meetings here was with the minister
for minerals and energy, for whom I set out the concerns which
our mining companies have about the potential impact of
decentralization.

Regarding education, it is, in the detached language of the
technocrats, one of our highest-growth export sectors, generating
nearly A$400 million a year in Australia.

But of course its significance to both countries goes much
beyond dollars and cents and degrees and job tickets. Some 18,000
Indonesians study in Australia each year, probably the largest
group of foreign students in Australia. Australia has been the
most popular overseas study destination for Indonesians,
attracting some 35 percent of all Indonesians studying abroad.

Australian educational institutions are increasingly seeking
out opportunities in Indonesia, through the establishment of
joint programs, staff exchanges and the provision of technical
and professional assistance.

Education also remains a very significant part of the
Australian government's aid program to Indonesia, with around 40
percent of the total annual budget allocated to education
development. Key among the activities is the Australian
development scholarships program, which this year has been
increased to 360 post-graduate scholarships for Indonesian
students -- more than for any other country.

Under the annual Merdeka fellowships program established in
1995 as Australia's gift to the Indonesians on the occasion of
the 50th anniversary of independence, each year, two highly
respected Indonesia and two Australian fellows from business,
government and academia are selected to undertake 12 months of
study and research in Australia and Indonesia respectively.

Indonesia's economic development is a major interest for
Australia. That is why we acted quickly in the wake of the
economic crisis to raise development assistance to Indonesia --
in fact, by 22 percent to A$120 million a year. And this
increased level of assistance has been maintained. Indonesia is
our second largest recipient of our aid, after Papua New Guinea,
and we are one of Indonesia's largest donors.

Over one million people have benefited from Australian water
supply and sanitation projects. More than 10,000 Indonesians have
benefited from Australian scholarships since the advent of the
program.

Our aid programs are right "on the money" for the times. We
responded immediately to Indonesia's emerging needs during the
crisis with a greater emphasis on social safety nets and urgent
structural issues. We will further focus on supporting
Indonesia's institutions to promote long term, sustainable
development.

Our response to the economic crisis included a A$70 million
program of assistance for economic governance. This has included
rapid and flexible technical assistance to support key economic
agencies including the ministry of finance, as well as IBRA and
Bank Indonesia. We are also active in supporting
decentralization, public sector reform, legal reform and, where
appropriate, the strengthening of civil society.

We have, since early 1998 spent nearly A$80 million on
emergency programs targets at the most vulnerable groups. This
has included assistance for the nearly one million internally
displaced people in Maluku, West Timor and Aceh, areas affected
by droughts and fires since 1997, and for last year's earthquake
in Bengkulu.

Just as our aid program deserves more recognition, so too does
the work we do in science and technology, which has a long
history. The CSIRO is particularly active here, having been
accorded, in march 1997, a five year world bank contract worth
around A$7 million to assist the Indonesian institute of sciences
to deliver and manage contract research with a special emphasis
on providing services to the private sector.

Finally, let me say a little about two areas of our
relationship -- defense and immigration.

The defense relationship had a high profile in the past, but
for obvious reasons it is a little diminished now. Some key
activities, less controversial on both sides, continue, and when
the time is right we'll probably see a return to working
cooperation in practical areas.

We may expect then to see a strong maritime focus, including
the strengthening of Indonesia's maritime surveillance capability
to help combat piracy and people smuggling.

Co-operative joint survey of the archipelagic sea lanes
through Indonesia is another activity that would offer practical
benefits to both sides. Visits by senior officers will continue,
to maintain a dialog between the two defense establishments,
which is important to minimize any risk of misunderstanding.

On the immigration front, illegal immigration through
Indonesia has, of course, been a headline issue, in Australia at
least, in recent years.

The number of unauthorized boats arriving in Australia in the
period from July to the end of January through Indonesia is in
fact down by 40 percent on the same period in 1999-2000. This
reduction would not have been possible without the close
cooperation of the Indonesian authorities.

We will continue to build on these successes to ensure that
Australia as a receiving country and Indonesia as a transit
country are no longer attractive options for people smugglers or
intending illegal immigrants.

There is still strong and growing interest in the number of
people wanting to visit Australia. Last year, nearly 102,000
Indonesians visited Australia -- an increase of about 11.6
percent on the previous year. Many say it is difficult to obtain
an Australian visa, but the approval rate is around 87 percent.

Most tourist visas are processed within three to five days
while most applications for business visitor visas are processed
on the same day.

A recent report in Australia referred to Australia's interest
in "rebuilding" its relationship with Indonesia. "Rebuilding"
will have to be based on mutual respect and mutual benefit.

At some levels building anew might be the right approach. But
in other areas continuance and growth rather than "rebuilding"
might be a more apt way to describe what I will be aiming at in
my time. In this, I look forward to working closely with the IABC
and its members.