Indonesia Australia Business Council Conference (Surabaya, Indonesia)






Thank you for the invitation to be part of this Conference.

I want to thank the Indonesia Australia Business Council for the work you do – helping build business links and opportunities between our two countries.

It’s important work, and we have got a lot of work to do.

Australia and Indonesia are next door neighbours, but we barely look over the fence.

We don’t know each other, speak to each other or work with each other anywhere near as much as we should.

A few quick examples:

  • There are more than 18,000 Australian companies currently working in New Zealand (our other next door neighbour) and only about 300 here.
  • We currently trade more with Malaysia, Thailand and Singapore than we do with Indonesia – even though Indonesia is the biggest economy in South East Asia by a long way.
  • Every year about one million Australians come to Indonesia for a holiday, but less than one hundred thousand come to do business.

Almost a quarter of a century ago the former Australian Prime Minister 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, Australians are slowly coming to realise he was right. 

At the moment the GDP of our two countries is roughly the same. It won’t be like that for long.

If Indonesia keeps growing the way it is it will be the fourth biggest economy in the world in just over thirty years. 

An economic and geo-political juggernaut.

In Australia we tend to focus a lot on China. That’s understandable. Like almost every other country in the world, China is our biggest trading partner.   

And that relationship is only going to get bigger and more important in the years ahead. 

But more and more I think Australians are starting to understand we have to invest a lot more time and energy and effort into this relationship. 

If we are smart enough to do this – and if Indonesia and India and the other countries that share the Indian Ocean reach their full potential – the impact for Australia could be as significant as the rise of China has been. 

To get there we have to get beyond the transactional issues we tend to focus on and build a real strategic partnership. 

I hope that the Indonesia – Australia Comprehensive Economic Partnership Agreement (IA-CEPA) currently being finalised can be part of that. 

I am the Shadow Minister for Trade, so I haven’t seen the draft documents but if it is a high quality agreement it has the potential to not just kick-start more commerce, more trade and investment,  but also bring our two countries closer together.

Agriculture is part of that. 

The appetite of Indonesia’s rising middle class creates opportunities.

The value of food consumption in Indonesia is predicted to quadruple over the next 30 years. Over the same time local food production is only expected to double. If that’s right Australia can assist.

We already export a lot of wheat, beef and sugar. About 20 percent of all the wheat we export comes here to Indonesia. 

There is more we can export – everything from dairy to fruit to seafood – and more we do together in agribusiness innovation and research to help boost productivity and food security here in Indonesia. 

The changes already announced – the cut to the tariff on sugar to five percent and the extension of the live cattle import permits from four months to a year – are good news and I look forward to seeing what else is in the final agreement. 

Hopefully there will be more to minimise the sort of unexpected changes that can make life difficult for exporters and act as a disincentive to export to Indonesia. 

I understand that both countries have agreed to develop a cooperative work program as part of IA-CEPA to tackle these sort of regulatory or non-tariff barrier issues, and if that’s right that’s a good thing. 

There are lots of other opportunities in education and health care, tourism, e-commerce, infrastructure and a raft of other areas. 

It’s up to us to make the most of them.

The former Indonesian Trade Minister Thomas Lembong has made the point that a lot of reform is needed to make Indonesia more competitive and an easier place to do business.

Well, there is also a lot of reform needed in Australia too.

Trade agreements open doors, but Australian businesses still have to walk through them.

The Australian companies here know that – but there are a lot of other companies back at home still sitting on the sidelines. There are about two and half million businesses in Australia. Only 53,000 of them are exporters.

We are becoming more part of Asia every day. One in five Australians has an Asian heritage. Including my little boy.

It’s an enormous potential asset, but very few Asian Australians are on the boards or in the senior ranks of our top companies.

A lot of Australians speak an Asian language, but that’s more a product of immigration than education.

Fewer Australians are learning Indonesian Bahasa today than there were 50 years ago.

We are good at exporting resources and agricultural products, we are good at attracting students and tourists, but we have got a lot more to do to really enmesh ourselves in Asia.

Tomorrow the Shadow Treasurer Chris Bowen will be speaking at this conference. A few weeks ago he made a major speech in Australia launching our party’s ‘FutureAsia’ plan.

Part of that is building our Asian literacy skills. Part of it is building our Asian business skills.  

Only 10 percent of the directors and top senior executives of our top 200 publicly listed companies have a high level of Asian skills and experience.

That’s an appalling statistic. And it explains a lot.

We have announced a number of policies to help boost the Asian business skills of Australian professionals.

We have also committed to establish:

  • An Australian Asian diaspora program – like the one that operates in the US,
  • An Australia-ASEAN Studies Centre in one of our major universities,
  • A joint team made up of people from DFAT, Austrade, the Departments of Agriculture and Industry to help Australian businesses to overcome some the non-tariff barrier issues that exist in lots of markets, and
  • If Indonesia agrees, we would like to establish an annual 2+2 meeting of Indonesia and Australia’s Finance and Trade Ministers to make sure we keep the focus on driving deeper economic engagement between our two countries after IA-CEPA is signed.

Bilateral trade deals are good. Regional and multilateral trade deals are better.

In a few days’ time APEC leaders will meet in Vietnam. APEC is an important forum. It has helped cut tariffs in half across the Asia-Pacific over the last 30 years.

In the years ahead it could play an even more important role.  

Unlocking the full potential of our region requires peace and stability.  

Trade can help with that.

One of limitations of the original TPP was that it included the US but not China.  

Likewise, one of the limitations with RCEP is it includes China but not the US.

We need a regional trade agreement that includes both China and the US and us and all the countries of the Asia-Pacific. Enmeshing us together.

Just a final point about politics.

Everyone in this room sees the benefits of trade and open markets. But that’s not the case everywhere.

Trade is not particularly popular. It doesn’t win a lot of votes.  

There are lots of people who blame trade for losing their job or for making their life harder. They think big companies benefit from trade, but they don’t. And we have seen the consequences of that recently in the US.

A big reason for the growing scepticism about trade is the growing gulf in income inequality. That’s not unique to the US. You see it in Australia and here in Indonesia.

We ignore this at our peril.

Signing ceremonies won’t change the way people think. The only thing that will is people feeling that their life is getting better.  

That means making sure that the deals we do and the domestic reforms we implement tackle this problem and create opportunities for as many people as possible, not just a few. And that those who don’t benefit are assisted and not left behind.

If we don’t, the sort of things we are talking about here at this conference are going to get harder and harder in the years ahead.

Thank you very much.