Indonesia is the biggest economy in the South East Asian region, and our closest neighbour. It’s the tenth largest economy in terms of purchasing power in the world, yet doesn’t rank among our top ten trading partners. Yet another report is unlikely to help, Duncan Graham explains.
We export twice as much to Singapore, a country of 5.9 million people, than we do to Indonesia. Overall, less than four percent of our goods head to Southeast Asia – a market of more than 688 million, almost eight percent of the world’s population. Business chances flee because we won’t relate to our neighbours, don’t know how and don’t care.
Australian federal elections wrap with a ritual: after the niceties, the winner darts into a phone booth, rips off the soiled rags of domestic politics and dons the statesman’s shimmering cape of foreign affairs. First stop Jakarta.
All leaders since Gough Whitlam have trumpeted the importance of knowing the locals. Worthy aim, but a perpetual fail. Now stubborn Canberra tries yet another bash at getting into the traffic heading north.
It’s doomed through a double fault: The only road our politicians and bureaucrats know into the market is through a dodgy Cold War potholed track, and we’re too smug to learn trade literacy – essential in international business.
Once we were keen. In 1992, twenty-two Australian universities were teaching Indonesian language and culture. Now it’s down to a dozen.
Another trade agreement?
Canberra’s response to these irksome realities has been to ask investment banker Nicholas Moore to find fixes.
His 208-page attempted U-turn – Southeast Asia Economic Strategy to 2040 is, however, unlikely to find traction.
That’s because it follows the old road of seeing the people next door as buyers rather than partners, foreigners instead of mates.
Those folk are in the Anglo sphere.
Positions perish, and change is hurtling our way. A new Indonesian president with a fresh ministry and different alliances will be elected next year. They’ll be revisiting policies on foreign business, maybe promoting, possibly rejecting, but most likely squeezing and confusing.
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So far, the coarsest attempt to try and get pally with the neighbours is to nuzzle up to ASEAN, a policy Foreign Minister Penny Wong inherited from her predecessor, Marise Payne. This is not through ideology, but because there’s no alternative.
ASEAN power
At the urging of the US, Indonesia set up ASEAN in 1967 during the Vietnam War with Thailand, the Philippines, Malaysia and Singapore. The intent was to block the advance of Communism.
Now there are ten members, and ironically, two latecomers are ‘reds’ – Vietnam and Laos, with feudal Cambodia sticking close to China. Tiny Brunei joined in 1984, and despotic Myanmar in 1997. Talk of Australia joining the 1960s relic is academic because decisions must be unanimous. Tell ’em they’re dreaming.
Apart from Singapore, ASEAN’s members are afflicted by what Indonesians openly call KKN Korupsi, Kolusi, Nepotisme.
The Moore report ignores these critical impediments to investors.
Only Indonesia, Malaysia, Singapore and the Philippines follow forms of ‘flawed democracy’ as assessed by the Economist Intelligence Unit. That doesn’t mean they’re pure, just not so bad as the rest.
The US is still involved, finding $142m this year to support a ‘rules-based order’ and ‘the robust implementation of the ASEAN Outlook.’
Foreign Minister Wong’s backing is curious because it’s long been a Coalition favourite pushed by the weapons-industry funded Australian Strategic Policy Institute (ASPI).
The title suggests neutrality, but former Foreign Minister Bob Carr reckons ASPI has a ‘one-sided, pro-American view of the world.’ Much of its money comes from the weapons industry.
Military cooperation
While we’re fumbling to get trade right, we know how to get close to Indonesia’s military, a force with a fearful record in human rights abuses.
No unpleasantness was obvious in the Australian Defence Department’s jolly account of September’s joint exercises. ’Big smiles and hugs’ followed a ‘rich series of training’ (sic). Now Canberra is exploring a defence cooperation treaty.
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The only twine stringing the ten disparate nations together isn’t language, culture, history, ideologies or economies. It’s geography.
Darwin is only 830 kilometres from Kupang, the capital of Indonesia’s East Nusa Tenggara province, but physical proximity means next to nought in zonal geopolitics. We have little in common with them and vice versa.
We claim we’re in the region. They think we are worlds apart.
That shouldn’t stop us from being friends, doing business and having good relationships, best achieved through the intermix of citizens.
Easy access is key
ASEAN citizens can wander visa-free through Southeast Asia, but Australia disallows easy access, particularly for Indonesians. Many obstacles mean no trust.
Last year we got just 91,000 Indonesian visitors – but sent 610,000 visitors, mainly to Bali.
Labor governments appear to take the issue of relationships with SE Asia more seriously. That doesn’t guarantee more success.
Eleven years ago, PM Julia Gillard released the Australia in the Asian Century White Paper ‘nurturing deeper and broader relationships … by taking advantage of the opportunities offered by the Asian century.’
It was an advance on the earlier Keating doctrine that Asia is where our future substantially lies, but it ‘famously disappeared from official websites following the election of Tony Abbott. It became the White Paper that dared not speak its name.’
However, you can read a copy here.
What’s next, Mr Moore?
The proposals in Moore’s September report are floundering for attention against the Voice Referendum and its wash-ups, and now the Gaza War.
But the question is too important to be filed under ‘noted’. Why are we so far behind many other countries in doing deals with the neighbours?
The awkward truth is that we put our dollars and goodies into the US, the UK and Europe because we reckon they’re transparent and safe harbours while ASEAN is not.
Moore’s report notes:
Some Australian investors continue to view the region’s risk–return trade-off as unattractive.
Better be blunt: we’re ignorant and fearful.
His report wants us to ‘lift investment in Southeast Asia literacy at all levels, from stimulating demand and teaching languages and cultural awareness to school and university students to training government officials and senior executives and board directors on Southeast Asian commerce and business practices.’
Our Jakarta Embassy brags about the 63,000 Indonesians who’ve studied in Australia since 2002. This balloon has been pricked by Newcastle University Professor Richard Heller, noting that we have twice as many students from Singapore as from Indonesia.
Embarrassingly, Canada is poaching in our paddock, ‘developing trusted relationships for investment, including having spent more time on the ground understanding markets, taking minority stakes in businesses, joining boards, and building experience in the region.’
Ottawa is 15,600 km from Jakarta; Canberra is a third of that distance.
Southeast Asian states don’t see us as the PR industry would have you believe – the land of cuddly koalas and bonzer barbie hosts.
We’re a Western nation aligned with Northern Hemisphere powers, superior and racist – an image already hardened by the Voice result.
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The locals want our wheat, meat, and investment dollars, but they don’t want us.
Time to cremate the absurd notion of joining feudal ASEAN, toss the ashes in the Arafura Sea and focus on following Moore’s advice on learning and understanding.
Indonesia’s presidential election will be on 14 February. Here’s a guarantee: The winner will not say his priority destination is Canberra. His first stop will be Mecca.
Duncan Graham has a Walkley Award, two Human Rights Commission awards and other prizes for his radio, TV and print journalism in Australia. He now lives in Indonesia.