Reform in Indonesia will benefit business

Small-to-medium businesses in Western Australia are hesitant to do business in Indonesia. Yet, as that country’s second democratic elections come to a close, the economic and political outlook appears positive, according to Australia-Indonesia Business Council (WA) president, Ross Taylor.

DESPITE the lack of violence or major disruption during voting in Indonesia’s second democratic election, businesses in Western Australia remain cautious about working with our closest neighbour, the world’s largest Muslim nation.

While established and major WA exporters continue to provide a wide range of goods and services to their Indonesian buyers, the number of small-to-medium businesses wanting to do business in Indonesia remains relatively small.

But it has all been about perceptions.

During the past two years we have been swamped with negative reports from Jakarta, with news of bombings, riots, political unrest and corruption, and this obviously has had a detrimental effect on people wanting to engage with Indonesia.

I returned to live in Perth last year following a term as the State Government’s regional director to Indonesia.

I found that business activity between WA and Indonesia could be segmented into two categories.

Firstly there are the long-standing exporters, such as Harvey Beef, AWB, and a number of our universities.

These are seasoned, professional people who understand the complexities of doing business in Indonesia. And for them, despite the bumps, life goes on.

It is our small-to-medium businesses, which may have been considering a move into exporting to the region, that are far more cautious and many have simply put their export plans on hold.

Despite the hesitancy, Indonesia is a potentially huge market for WA, with a strong consumer demand for food, including gourmet products, agricultural equipment, and health and training services.

The potential is varied and enormous

Business people are amazed when they are told that Indonesia has recently engaged a Western Australian company to build (farm) dams in Java, and are also seeking to buy large quantities of illuminated road sign stickers.

The election of Indonesia’s first people’s president scheduled to take place in July, following the counting of votes for the national parliamentary elections held last week, should assist in providing a more stable business environment.

Indonesian president Megawati Sukarno Putri (PDI-P) appears to be in trouble as the former Soeharto party, Golkar, makes a strong comeback, with people rejecting the lack of law-and-order and the perceived aloofness of Megawati.

The emergence of former army general and vice-president Susilo Bambang Yudhoyono (PD-Democratic Party) is a wild card in the presidential race.

The Democrat Party (DP) lead by SBY, as he is known, has captured a surprising 7 per cent of the parliamentary vote and is now positioned to nominate Yudhoyono in his own right as their presidential candidate.

So could we see a return to a totalitarian style of rule? I’d say no. Indonesia is a very different place today.

People are far more politically aware than they were in previous years.

They now want jobs for their children, security within their villages and homes, and political honesty – a rare commodity within Indonesian politics over than past 30 years.

To many Indonesians, SBY offers genuine hope of sustained reform and a clean break from the old guard.

Trying to pick the winner in the July presidential election is very difficult, however.

But both SBY and the welfare minister Jusuf Kalla should be watched over the next few months.

Whatever happens, the economic and political outlook appears good and Indonesia will get through this election process relatively smoothly – and that is good news for business.