The Australia Indonesia Business Council 2018 conference was held on the 11—13November at the Gold Coast. Under the theme of “partnering for prosperity in a world of change”, the conference urged both countries to increase collaboration and trade partnerships. The conference was attended by several Ministers from Indonesia and Australia, including Tom Lembong (Indonesian Minister of Investment), Bambang Brodjonegoro (Indonesian Minister of National Planning and Development), Sally-Ann Watts (Australian Minister of Commercial (Indonesia) and Hon. Steven Ciobo MP (Australian Minister of Defence Industry). Participants discussed exploring opportunities and challenges in various industry sectors: technology and the digital economy, food security, tourism, manufacturing, culture and governance, healthy cities and education.
Sally-Ann Watts, Minister of Commercial (Indonesia) and the Austrade GM of ASEAN and the Pacific stated that despite living next to each other, when it comes to their needs,
“Indonesia looks west and north, but doesn’t look south”.
With an economic growth rate of 5.17 % per annum and the population undergoing a demographic bonus, Indonesia is predicted to be amongst the world’s top five economies in 2030. But currently, Australia exercises a much stronger economic relationship with Papua New Guinea than Indonesia. Out of 50,000 exporters in Australia, only 2,500 conduct trade with Indonesia. Watts commented that “today would be the perfect time to contribute more to Indonesia, otherwise Australia will miss out”.
The Australian Shadow Assistant Treasurer and Shadow Minister for Trade in Services, Hon Dr Andrew Leigh MP, implied that Australians lack connectivity not just to Indonesia, but to other ASEAN countries due to language barriers. References were made to successive government’s cutting funding to Asian language education. The CEO of Indonesia’s Sintesa group, Shinta Widjaja Kamdhani, commented that Indonesian exports to Australia in 2017 (USD 2.5 billion) were even lower than in 2007 (USD 2.9 billion). This may be the result of difficulties in obtaining licenses for trade in some industries.
There was much discussion on the yet to be signed Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). The IA-CEPA will reduce non-tariff barriers to trade, allowing 99% of Australia’s goods exports to enter Indonesia duty free, or with significantly improved preferential arrangements. All of Indonesia’s goods exports will enter Australia duty free. The agreement builds on existing free-trade agreements with ASEAN and is expected to contribute to capacity building, people-to-people links and bringing both nations closer together. Delays in the agreement being finalised are said to be because of Scott Morrison’s proposal to shift the Australian embassy from Tel Aviv to Jerusalem.
The conference discussed great opportunities in various sectors that may benefit both countries. Several sectors such as education, agriculture, manufacturing, technology and the digital economy and tourism were identified as having the most potential for business collaboration. The digital economy sector has been strengthened with the Indonesian government launching the Palapa Ring project, which has connected over 143 million Indonesians to the internet.
Indonesia’s four unicorns (start-ups that are valued at more than $1 billion) came from this industry. Amongst the four, the rapid rise of Go-Jek is regarded as phenomenal. According to Erik Meijer, CEO of telkomtelstra group, the opportunities in this sector are abundant because Indonesians are “not afraid to adopt new technologies”.
The Indonesian Minister of Trade, Bambang Brodjonegoro, urged the Australian government and businesses to invest in Indonesia due to the opportunities available from development and infrastructure projects–a key priority of President Joko Widodo’s government. Currently Australia’s foreign direct investment in Indonesia ranks at 10th place, below Singapore (1st) and Japan (2nd).
Indonesia is also focusing on human capital development through education. Australia has been playing a major role in this sector as it is a popular destination for Indonesian’s studying abroad. There are also opportunities for Australia to expand into vocational education and training (VET) in Indonesia. The Australian Minister of Commercial (Indonesia), pointed out that around 45% of Indonesians do not have the right qualifications for their job.
Panellists in the education sector agreed that the demographic bonus in Indonesia would be wasted if Indonesians are not equipped with qualifications on the jobs, and this will be a great opportunity for the Technical and Further Education (TAFE) institutions across Australia to expand their business to Indonesia. To attract more investors in this sector, the Indonesian Minister of Investment pledged that Australian universities and TAFEs would have “curricular autonomy”. This is in response to international education providers expressing concern that their curriculum may not comply with Indonesian policy.
Overall, the conference provided significant insights into Indonesian-Australian trade opportunities. However, further discussion on the opportunities for investment and collaboration in the health sector is needed. As Indonesia approaches a bonus demography, governments will need to pay more attention to the health-security nexus.
