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Two events that will change our region; and the Indo-Oz relationship

By Ross B. Taylor AM

This past week has seen two important events take place that will affect deeply the Australia-Indonesia relationship:

1. Australia’s significant upgrade of our defence capabilities
Australia’s decision to develop a more assertive defence position will have implications for our region. Whilst almost all commentators and observers agree that this announcement is in response to China and its far more aggressive role in our region, some have questioned how this decision will affect the bi-lateral relationship with Indonesia?

As Indonesia and a number of other ASEAN countries have their own problems and challenges with China, can we assume that Indonesia would welcome such an announcement from Australia given our past habit of failing to consult formally with our neighbours early on matters of defence, policing and even domestic politics affecting the relationship? Our institute feels this time, the handling of a potentially sensitive issue has been different, and that Indonesia will quietly welcome the Australian move.

Indonesia needs a close partnership with Australia as we both deal with a far more assertive and belligerent China. Importantly, Indonesia was fully briefed on the key aspects of this Strategic Defence Update at both senior political and defence levels in advance of the public release last week.

It is our judgement that the considered and measured handling of this issue with Indonesia reflects the developing close strategic relationship between our two countries at a very important time in our region.

It should be mentioned, that as Indonesia’s defence minister Prabowo Subianto arrives home from his second visit to Russia in five months, Australia will also need to be ‘comfortable’ about Indonesia wanting to move away from their over-reliance on US military technology, and are therefore is developing closer ties with the Putin regime in order to achieve this objective.

Ironically, the relationship between Australia and Indonesia following this significant increase in our defence spending, has the potential to address the current incorrect perceptions about Indonesia by Australians as seen in the latest Lowy Poll-2020. With only 36% of Australians saying they ‘trust Indonesia to act responsibly’ and only 39% saying Indonesia functions as a democracy, we still have a long way to go in getting to know these ‘strangers next door’. But we do feel positive about the opportunities to substantially improve the perceptions we have of each other and to create significant opportunities for business and our wider communities.

2. IA-CEPA Trade Agreement

Last Sunday, IA-CEPA finally came into force, presenting huge opportunities for Australia and Indonesia. Much has been written about this important deal between two neighbours and we commend the work of Phil Turtle and his team – including the ‘founders’ of IA-CEPA, Ian Satchwell and Chris Barnes over ten years ago – at the Australia-Indonesia Business Council (AIBC), and also the  DFAT teams who have worked so hard to make this trade agreement a reality. But we should not ignore the challenges that we face. Covid–19 will make building new partnerships and creating business opportunities more difficult. And given the results of the Lowy POLL shown above, we need to build more trust within Australia’s business community towards their Indonesian counterparts as a priority.

Indonesia must also do their part. As a person who operated his own business in Medan, Sumatra and later representing a large Australian fertiliser export business in Indonesia (before representing my state of WA as the Commission to Indonesia), I have to say it was not easy to start and operate a business in Indonesia. But was it worth the trouble? Yes.

Indonesia still must deal with ongoing issues of corruption, and confusion between national,  provincial governments and their interface with the 350 plus regencies (councils) who today enjoy a far greater level of autonomy and power than in previous years. Business needs certainty, clarity and consistency.

If we are realistic, and work together to change our current collective mind-set that trade deals will ‘help us sell more stuff’ to Indonesia, and replace that with a ‘partnership approach’ where we can look at building added-value opportunities to business models, then both nations can obtain a huge benefit for our respective peoples. The prime minister could kick-start the process of getting closer to Indonesia, by allowing Indonesian tourists, young people and holidaymakers easier and cheaper access to vacation in Australia; to let them come here and get to know us. It might just also help our tourism and hospitality sectors as they rebuild post-Covid 19.

There is much work to do and we already have numerous companies here in Australia who have built incredibly successful partnership businesses in Indonesia. So it can be achieved. It’s time to do just that.

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