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Do we really need Indonesia anyway?

With the issues facing the Indonesian government at the present time, it is interesting to look at our trading position with them.

The latest Australian Bureau of Statistics figures for 1998/99 indicate that our exports to Indonesia amount to $2.2 billion and accounts for 2.56 per cent of the total exports out of Australia. Our imports from Indonesia amount to $3.2 billion and account for 3.24 per cent of all our imports.

By that analysis Indonesia does not even rank in the top ten of our trading partners.

However, WA’s position is somewhat different. We have a much more vigorous trading position with Indonesia and have a substantial trade in services.

There are a number of resource projects being undertaken in Indonesia with WA mining firms providing expertise or infrastructure.

In 1998/1999 WA exported $475 million of goods to Indonesia and imported $666 million from them.

The figures for 1998/99 are down considerably on levels of previous years. This is due, no doubt, to the Asian economic crisis that affected the region.

The major items of export from WA are classified by the ABS as Combined Confidential Trade. This is a euphemism for those products whose markets are dominated by one or two large players.

For commercial confidentiality the product’s nature is not revealed. An example of this type of product could be alumina or wheat.

Last year, combined confidential trade was 65.2 per cent of the total exports from WA to Indonesia.

Petroleum oils are the next biggest category, accounting for 7.1 per cent of total exports.

Petroleum oils are our biggest import totaling 30.2 per cent of all imports from Indonesia. Gold and non-monetary items form 29 per cent, and jewellery and silversmiths’ wares around 26 per cent of the total.

Nothing we import from Indonesia is irreplaceable. There are ample substitute source markets.

The other aspect of trade with Indonesia is the tourism sector. In 1997 we had 51,000 visitors from Indonesia. In 1998, this fell to 30,000, again due to the Asian crisis.

The average spending by these people is estimated to be $98 per day and their average stay was thirty days. This is an additional expenditure amount in Australia of around $80,000,000 per annum.

Given this trading position, can we cease all trade and tourism with Indonesia without a major impact on our economic position?

From Australia’s point of view it would seem that the answer would be that we could comfortably sustain a non-trading position with them.

Western Australia’s viewpoint could be different. Indonesia does represent a very substantial destination for our exports.

However, the exports are concentrated in a few products. Most of the products are resource based and substitute markets would be easily found as world growth increases.

There are no imported products that couldn’t be sourced elsewhere, even though the tourism sector would receive a temporary shock.

WA’s case would therefore also be sustainable in the event of a total ban on Indonesian trade.

The question then is whether, by withholding resource exports to Indonesia, we are disadvantaging the lay citizens who have little to do with the genesis of the problem.

That is less an economically-based question than one requiring a social decision by our parliamentarians.

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