Australia and Indonesia build business ties
Updated
Indonesia's president Susilo Bambang Yudhoyono has left Australia after a three-day visit that has been hailed a big success in re-building the recently-troubled relationship between the two countries. The President spent the final day of his trip meeting with the leaders of Australian companies which are investing in Indonesia's abundant natural resources or wanting access to its potential 240-million consumers. But the most important link in strengthening economic ties between the two countries - a Free Trade Agreement - is no closer to being signed.
Presenter: Scott Alle
Speakers: Susilo Bambang Yudhoyono, Indonesian president; Simon Crean, Australian Trade Minister; S.D Darmono, President, Indonesia Australia Business Council; Ian Satchwell Australia Indonesia Business Council
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ALLE: No doubt mindful of Indonesia's tarnished past reputation as an investment destination, President Yudhoyono emphasised the economic reforms under way in south-east Asia's largest economy, and extended this invitation to Australia's business leaders.
YUDHOYONO: I hope the entrepreneurs of both countries find ways of complementing each other and a strike up partnership that benefit us all
ALLE: Indeed the economic relationship between Asia's 5th and 7th biggest economies which despite being so geographically close, is, in the words of Australia's trade minister "underdone", and has been for some time.
CREAN: Two way trade in merchandise and services amounted to just over 10 billion dollars in 2007, and Indonesia rates 13th on the list of Australia's trading partners.
ALLE: Both governments are keen to open-up access to each other's markets, and encourage greater investment. Australian trade minister Simon Crean
CREAN: Our task is join those dots to get much more engagement between business and government within our prospective countries to take the economic opportunities forward.
A Free Trade deal is seen as the best way of achieving that, but progress has been checked by Indonesian concerns that such agreements could hurt local industries, and now could be up two years away.
From the Australian perspective too a lot of work still has to be done on so-called behind border issues such as mutual recognition of professional qualifications, infrastructure, customs clearances, and other bureaucratic obstacles.
ALLE: Ian Satchwell is the convenor of the Free trade advisory group set-up by the Australia Indonesia Business Council.
SATCHWELL: In the past tariffs were the big thing but we've reduced effective tariffs to quite a low level now and they're going to be phased-out to zero effectively over the next few years. So those behind the border issues assume much greater importance.
ALLE: An example of an existing flourishing relationship that's only expected to strengthen as dietary trends change in Indonesia is the 300 million dollar live cattle export market from Northern Australia. Ian Satchwell foresees increased investment in both countries.
SATCHWELL: Longer term I think the aspiration is to develop a cross border industry thinking beyond shipping cattle from one place to another to thinking about a two country industry that is much more integrated than it is today with breeding and slaughtering and marketing occurring between the two countries.
ALLE: S.D. Darmono President of the Indonesia Australia Business council agrees while Australian agricultural products could tap into new markets there's plenty of opportunity the other way too, especially in health care.
DARMONO: Every couple of months an estimated 60 to 70 thousand Indonesians head overseas for medical treatment, at the moment mainly to Singapore and Malaysia. So this also the area Australia can do very well but the handicap is the government must allow foreign doctors to practice or give consultancy in Indonesia.
ALLE: S.D. Darmono's who's a prominent property developer says tourism, while often maligned, provides a vital first step in many business relationships.
DARMONO: If you first start with tourism cultural exchange and so on you know the risk becomes small and then the relationship becomes better the perception is changing and seeing is believing then other things will come automatically
ALLE: For big multinationals though the experience of investing in Indonesia hasn't always been pleasant. The country's banking system is seen as weak and prone to shocks, and inadequate or non-existent infrastructure remains a source of frustration, a point acknowledged by President Yudhoyono.
The government is investing heavily in this but we are confident private investor will partner with us in completing this massive endeavour. This will happen because we are earning the trust of investors.
But trust takes time to build, and can easily be undermined and de-railed by political crises, especially such as the one now involving the two government figures responsible for crucial economic reforms.
