Indonesia Free Trade Agreement


Trade between Australia and Indonesia goes way back. Long before Captain Cook turned up Makassans were travelling to the Top End for sea cucumbers and the Yolungu people of Arnhem Land would catch a ride back to Sulawesi.

Today we are more like next door neighbours who barely look over the fence. We don’t know each other or work with each other anywhere near as much as we should.

Two way trade has actually gone backwards over the last five years.

Think about this for a minute. Every day 37 planes fly from Australia to Auckland. Only two or three fly to Jakarta. More than 18,000 Australian companies export to New Zealand. How many do you think export to Indonesia? The answer is about 2,000. That’s got to change.

Almost a quarter of a century ago Paul Keating said “no country is more important to Australia than Indonesia”. It’s taken time, but like a lot of things Keating did and said, I think we are slowly coming to realise he was right.

Right now the GDP of Australia and Indonesia are roughly the same. It won’t be like that for long. In just over a decade Indonesia’s GDP is predicted to be three times ours. It is an economic juggernaut in the making.

We focus a lot on China. That’s understandable. China is our biggest trading partner, by a long way. And that relationship is only going to get bigger and more important in the years ahead. But we also have to invest a lot more effort into our relationship with the giant archipelago to our north.

A good trade agreement can be part of this. Trade negotiations were started by former Labor Trade Minister Craig Emerson. They stalled in 2014, and now it looks like they have been finalised. I haven’t seen the details yet, but I hope it is a good agreement. If it is it could be economically and strategically very important.

Tom Lembong, the former Indonesian Trade Minister, has made the point that a lot reform is needed in Indonesia to make it more competitive and an easier place to do business. There is a lot more we need to do here as well.

Fewer Australians are learning Indonesian Bahasa today than when I was a kid. One in five Australians have Asian heritage. It is an enormous potential asset, but very few Asian Australians are on the boards or in the senior ranks of our top companies.

Just as depressing is the number of Australian business people with any experience working and doing business in Asia.

AsiaLink recently surveyed the directors and senior executives of our top 200 listed companies. What they found was only 10 percent had a high level of experience doing business in Asia. No wonder a lot of businesses are reluctant to take on Asia. Why would you if you don’t know how it works.

Trade agreements open doors, but Australian businesses still have to walk through them. To tackle some of these challenges last year Chris Bowen launched Labor’s FutureAsia plan. Since then Penny Wong and I have added to it.

If we win the next election we will increase the number of students studying Asian languages and we will set up a program with the Australian Institute of Company Directors to mentor people with experience working in Asia and get more of them on boards.

We will also establish an Australian Asian Diaspora Program to better coordinate and tap the skills and experience and connections of our Asian diaspora here at home and our Australian diaspora in Asia.
We will also set up a joint team made up of people from DFAT, Austrade, and the Agriculture and Industry Departments to help companies struggling with non-tariff barriers imposed by other countries.

On Indonesia, we will seek to establish annual 2+2 meetings of our two countries Finance and Trade Ministers. That’s a very practical way to make sure we drive closer economic engagement and make the most out of any trade agreement that is signed.

This is just the start. We will be announcing more of our plan to make the most of the rise of Asia in the months ahead.

There is an old Indonesian saying: Tak kenal tak sayang – you can’t love someone if you don’t know them. Hopefully this trade agreement will help us get to know our next door neighbour a little better than we do today.

Originally published in the Australian Financial Review on Saturday, 1 September 2018 as Australia must do a lot more with Indonesia
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