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.