The IABC Australia Day Business Luncheon and Investiture Speech by HE Greg Moriarty, Australian Ambassador to Indonesia
Jakarta, 26 January 2011
Thanks for the opportunity to be here today, to the IABC for hosting this Australia Day event – and to you all for coming along.
The IABC and its members play a crucial role in promoting bilateral business cooperation between Australia and Indonesia
- the Embassy values its long-standing links with the organisation and its relationships with individual IABC members.
From the outset, I would like you to see me and my colleagues at the Embassy as here to help: both to help Australian businesses achieve their goals in Indonesia, and to support Indonesia’s plans for greater investment both ways.
But we need your input – and for you to tell us where you think we should focus - because it’s you who know best what the opportunities and challenges are.
Today I’d like to talk briefly about how far Indonesia and Australia have come in broad terms
- about where I think we can do more
- and about the importance of working together to harness the potential in our economic and business relations.
How far Indonesia has come
As I will have remarked to many of you already – I’m excited to be here in Indonesia
- not just because of the obvious cultural and historical appeal of this diverse country
- but because of the opportunity it gives me to be part of what could be a time of real growth in the relationship.
First I’d like to take a step back and make a few personal observations about Indonesia, and how different it is from the Indonesia I encountered when I arrived 12 years ago.
Most of you know that I was last in Indonesia as Political Counsellor at the Embassy from 1999 to 2002. Those were days of political and social turmoil across the country.
There may be more cars on the streets these days, but that is much better than having the troops and demonstrators that often blocked the traffic in 1999.
Ten years on, the changes that Indonesia has forged for itself are truly remarkable. Few would have predicted that this degree of stability could be achieved in such a short time, and under such trying circumstances.
Indonesia has achieved a free and maturing democracy. It’s had three successful direct Presidential elections. And strengthened some of its key institutions
- it has achieved relative stability through its nation-building efforts
- and achieved increasing affluence for its people and the reduction of poverty for 16 million people.
It has worked hard to bring about religious and ethnic unity
- and one of Former President Gus Dur’s greatest legacies, in my view, was to allow the acknowledgement of ethnic Chinese identity, and recognition of the huge contribution made by Chinese Indonesians to their country.
Indonesia’s people and its leaders can be rightly proud of its cohesion and unity.
Strategically, Indonesia is a cooperative and responsible global citizen
- and one that Australia works closely with in many international fora, not least on shared interests such as countering terrorism and people smuggling
- Indonesia’s place on the world stage has been further heightened by its membership of the G20
- and this year its Chairmanship of ASEAN and the EAS will further add to its international standing.
Economically, Indonesia’s achievements are significant
- GDP per capita is now five times the figure in 1998 (USD540 billion in 2009) and Indonesia’s middle class has grown significantly – as anyone who has spent time in Jakarta’s empire of shopping malls will quickly realise!
- Indonesia’s performance during and since the global financial crisis is well-recognised – ranking as the third-fastest growing economy in Asia after China and India.
This progress has been enabled by Indonesia’s efforts to undertake economic reform
- and I am confident this country will continue to become more prosperous as Indonesia reforms further
- in trade terms, in 2010, Indonesia’s exports are likely to exceed US$150 billion. For January to September, exports grew by over 38 percent compared to 2009
- greater market openness will help boost exports more, as Indonesia takes its place in the global supply chain
- and through the economic reform process, restrictions on investment in Indonesia have been eased considerably.
All these factors have led to increased interest and confidence among investors and business who want to bring their business to Indonesia
- realized investment from January to September this year reached a new record of almost 150 trillion rupiah (surpassing the previous record of 143 trillion rupiah in 2007)
- and Australia wants to support further steps in this direction
- because more investment in Indonesia and an attractive investment environment means more opportunities for Australians to bring their business here, to employ Indonesians and to contribute to the economic development of both countries.
But Indonesia’s government is, quite rightly, not complacent. Despite the strong macroeconomic picture, there is no illusion that the work is all over.
The Government has taken steps to address some of the challenges that we are aware businesses have faced here
- this includes plans to improve some of the infrastructure shortfalls, including through a proposed new land acquisition bill
- it has taken steps, including in cooperation with Australia, to bring about greater legal and regulatory transparency and accountability – an ongoing problem area where significant improvements would greatly enhance investor confidence
- and the Investment Coordination Board has introduced the National Single Window for Investment, or One Stop Shop, to streamline investment processes.
By creating investment opportunities and by further addressing standing constraints to productivity – such as infrastructure, labour laws, and government efficiency – trade will continue to grow
- President Yudhoyono himself has identified corruption and lack of transparency as key challenges for the Government to tackle
- Australia stands ready to support Indonesia’s reform agenda to facilitate business engagement, to help Indonesia become an engine of greater growth, including through development cooperation, technical assistance and capacity building.
Bilateral
It will come as no surprise when I say to you that a stable, strong and prosperous Indonesia is also vital for Australia’s prosperity and security
- indeed as a neighbouring country - Indonesia’s continued stability and unity is a core interest for Australia.
Our bilateral relationship is underscored by cooperation towards shared goals, a point reinforced during the visit to Indonesia by Australia’s Prime Minister, Julia Gillard, in November 2010
- the very fact that she decided to visit so soon after her election is a clear demonstration of the importance and depth of the relationship - and of how far we have come together.
As President Yudhoyono said in March 2010: Australia and Indonesia have a great future together. “We are not just neighbours, we are not just friends. We are strategic partners. ”
Australia greatly appreciates the significant gesture of Indonesia’s contribution of US$1 million to Queensland at this very difficult time.
Historically, our relationship stands on the firmest of foundations: Australia remains proud of its strong support for Indonesian independence
- the government relationship is as strong as it has ever been
- including our close cooperation on the Australia Indonesia Partnership, worth A$460 million this financial year, to achieve improvements in education, health, infrastructure and governance, to help bring about a better future for younger generations.
Like all the closest of relationships, ours has been marked by periods of tension as well as friendship and cooperation; by areas of great strength and by those that need to be strengthened further
- I feel privileged to be here representing my country in taking forward this unique relationship, facing mutual goals and challenges as strategic partners – and knowing that across business, cultural and government sphere we enjoy such strong and genuinely warm sentiments.
Business – and the potential
And this brings me – literally to business. Because it’s here – in the business to business relationship – that I plan to devote a lot of energy
- this is where I see real potential for growth.
This is not to say the economic and trade relationship is not growing – it is
- currently 400 Australian businesses have operations in Indonesia in fields ranging from mining and agriculture to education, and
- Australian businesses had invested over A$4.7 billion in Indonesia in 2009.
But while the relationship is growing – it’s not growing as fast as it could
- the stats over the past five years look good – a 6.1 percent increase in our total trade in goods and services
- but from 2008-9 to 2009-10, we saw only 1.1 percent growth
- despite our proximity and complementarity – Indonesia is ranked only thirteenth among Australia’s trading partners in terms of total trade volume
: and number twelve as a source of imports for Australia (number eleven for exports to Indonesia)
- while Indonesian investment in Australia is seriously underdone – at only A$339 million for 2009.
We can do better than that. But it will take effort on both sides.
For governments – we need to do what we can to facilitate investments so that Indonesian and Australian businesses are aware of the possibilities.
Australian companies have much to offer in a business partnership
- not least an interest in genuine, long-term partnerships
- their appetite for long-term commitment is demonstrated by those companies who are expanding their operations here and bringing services and other benefits to Indonesian consumers
: you know who you are.
Potential Indonesian partners can – and should – expect to benefit from robust corporate governance regimes; a commitment to corporate social responsibility (CSR) programs and responsibilities; strong training programs; and world-class expertise in many areas
- I know that most of the Australian companies I have spoken to here take great pride in what they are doing for local communities.
I engaged widely with Australian businesses before taking up this post. And the message from them was clear
- Indonesia is increasingly on their radar.
But Indonesia is also an unfamiliar frontier, despite its proximity
- people worry about the unknown – they need understanding, certainty and clarity about the business environment
- whereas often things in Indonesia are not clear until you are on the ground
- Australian businesses need to put real effort into finding and nurturing the right local partnerships.
My message to Australian businesses is that they need to at least have an Indonesia strategy – because there is too much potential to miss.
The CEPA
For us – the Embassy and the Australian Government – the Comprehensive Economic Partnership Agreement (the CEPA) presents the perfect opportunity and vehicle to do more
- the decision by President Yudhoyono and Prime Minister Gillard to commence negotiations on an Indonesia-Australia Comprehensive Economic Partnership Agreement (or the IA-CEPA) reflects the maturity of the strategic partnership between our two countries
- the key word in this agreement is “comprehensive” – it is much more than an FTA negotiation
- it’s about economic cooperation and integration, about encouraging investment both ways, and includes a capacity building element to ensure Indonesia is as well placed as it can be to maximise on the agreement.
We plan to work with Indonesia and to support Indonesia to ensure we reach the best possible outcome for both countries.
It will be absolutely crucial to consult all sectors – and we particularly need to consult with the business community and those organisations that represent the business community.
We want to know what you think – and where you see the CEPA as potentially adding value to existing cooperation
- the Department of Foreign affairs and Trade has already called for submissions: please talk to me or my staff if you would like to make a submission
- we want to hear if you think there are areas that we should focus on: areas where you have concerns; areas where the agreement can support your business
- and I hope an agreement can also work towards big picture goals – such as food security – and enhancing Indonesia’s capacity to play a greater role in the global production and supply network for the security of future Indonesians and the future of the countries Indonesia can, in turn, supply
- we can draw on areas where Australia has expertise to create new opportunities – for example in agribusiness, in medical capability, research and technology, and in services
- and look to areas where Indonesia can enhance its potential as an investor overseas and as a country where investors want to be in ever-greater numbers.
Of course consultation with business is nothing new, because business links are a core pillar in the bilateral relationship
- business contributes in a fundamental way to the vital component of the bilateral relationship that is investment and economic growth
- but in terms of our long-term relationship, it’s the way that business is done that counts
- and by that I mean the personal and people-to-people links that bind us and set us apart from other relationships around the globe
: because I think we do have a unique relationship with natural synergies that can be harnessed to the benefit of both countries and peoples.
More broadly, our people-to-people links can be seen in terms of tourist flows and our unique education relationship
- Australia offers a close destination for quality higher education and vocational education and training
- statistics rose last year with more than 18,000 Indonesians enrolled in Australian education institutions.
In the IABC, it’s clear that relationship and people-to-people links matter.
Looking around this room – I see many faces who have used their personal qualities and strong relationships with Australia and Australians to contribute a great deal to the relationship.
In particular I would like to single out Bapak Moetaryanto
- I will have the great honour today, on behalf of her Excellency the Governor-General of Australia, of appointing Pak Moetaryanto as an honorary Officer of the Order of Australia (AO) for his services to the IABC and to the bilateral relationship
- Pak MP has been a member of the IABC since he assisted with its formation in 1989, and was President of the IABC from 1992 to 1996. As a highly respected businessman, he has promoted trade and business links between our two countries over the past 40 years, and lent valuable assistance to many Australian businesses
- I know that Pak Moetaryanto shares our vision of a bigger, more fruitful business and investment relationship
- thank you, Pak, for your contribution – and thanks also for the support of your family who have joined us here today.
Since the announcement of negotiations towards a CEPA, I know that interest in Indonesia among some Australian investors has increased
- the economic importance of Indonesia is being recognised in Australia and there is a growing desire by many Australian businesses to have a presence here
- through an ambitious and effective CEPA, and with patience and determination, we can work together to make this a reality and to significantly build trade between our two countries.
I will continue to talk to Australian businesses and encourage them to take a close look at Indonesia
- it’s an exciting place – the environment is transforming, though problems remain.
That’s all from me. Thank you all for listening.
I look forward to working closely with you all.
And finally, allow me to wish you all happiness, success and prosperity in 2011, and a happy Australia Day.