Ross Taylor says Australia needs a new mindset in its approach towards a critical business and trade relationship with Indonesia.
Last week, federal Treasurer Josh Frydenberg announced Australia would provide Indonesia with a $1.5 billion loan to support their fast deteriorating fiscal position due to the economic impact of the coronavirus.
Australia has done this genuinely as a ‘kind gesture’ to our neighbour, but also with the understanding that as Indonesia falls into a sharp recession at a time when its 95 million – and aspirational – under-35 generation need an annual growth rate of 6-7% just to find employment, there are some major challenges ahead for president Joko ‘Jokowi’ Widodo and his highly respected finance minister Sri Mulyani Indrawati.
And with China in a bitter dispute with Australia, and expanding its influence in the region, it is very much in Australia’s national interest to see Indonesia continue as a close friends with a stable and strong democracy, and sound economy.
Both countries have also ratified a major trade and business agreement called IA CEPA early this year that almost all commentators and observers say is a relationship that is ‘underdone’ given the closeness of our two nations and the size of Indonesia as an emerging market.
There have been three core issues that have held us back from building closer business ties: Firstly, Australia's obsession with China to meet all our market goals at the expense of other opportunities in our region.
Secondly, Australia has generally approached the Indonesian market in terms of a transactional model with a ‘we sell, they buy' approach to the business relationship, and finally in Indonesia President Jokowi, despite the warmth towards our PM, has seen Australia as a relatively small player in terms of trade, business and investment, preferring a focus of looking north rather than south towards Australia.
Here in Australia therefore, we should not fail to appreciate that this very decent gesture of a $1.5 billion loan – whilst ostensibly unconditional apart from the need for Indonesia to repay the loan at some stage – can play directly into business, as it reinforces strongly to Indonesia that despite us being a small player compared to the major economies of Japan, China, Korea, for example, we can still become a very important partner – rather than simply a supplier – to Indonesian business by not only supporting Indonesia financially during COVID-19, but also re-positioning ourselves as a small, but very advanced and sophisticated neighbour with a high level of experience and skills in business, particularly in health, services, education, agriculture and technology.
Over recent years Australia and Indonesia have already years quietly formed strong partnerships amongst numerous SME's – including a number of highly successful business links here in WA – and also with our respective government departments, including defence, policing and our electoral commission who contribute to the development of a sound and strong electoral process with our neighbour.
We therefore, just need to redefine our overall relationship from being primarily transactional, where we seek to 'sell stuff' to Indonesia, to one that presents ourselves as this small but smart, advanced partner who can punch way beyond our weight (and size) in supporting Indonesia to not only get through the COVID-19 pandemic, but also in reaching its goal of becoming one of the top five economies in the next 20 years, with Australia going along for the economic ride.
We therefore need to approach this critical business, trade and political relationship with a new mindset and this should be the role of our federal government agencies including DFAT, and Austrade along with the various state government trade departments. Business can then do the rest.
- Ross B. Taylor AM is the president of the Perth-based Indonesia Institute Inc., & a former national vice-president of the Australia-Indonesia Business Council.
