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Why Australia will work tougher to construct ties with Indonesia


“Saya cinta Australia!” says Indonesian pupil Sari Puspita Dewi.

“I love Australia! It is my dreamland to live and to study.”

The PhD scholar from Jakarta has an electrical enthusiasm for Australia that belies the nation’s often-lukewarm financial relationship along with her homeland Indonesia, its big neighbour to the north.

Culturally totally different, however geographically shut, the 2 nations have collaborated on border safety and counter-terrorism, and share a nervousness in regards to the rise of China, however the business relationship has been underdone.

Pre-Covid, the vacation island of Bali was awash with carefree Aussies, however a lot of the huge Indonesian archipelago, from Sumatra to Sulawesi, usually stays unnoticed.

Indonesia, the world’s largest Muslim nation with a inhabitants of 270 million folks, would not even make it into the highest ten of Australia’s most profitable buying and selling companions.

“It’s hard to think of two neighbouring countries, each with economies in excess of a trillion dollars, that trade so little with one another,” says Leigh Howard, the top of Asialink Business on the University of Melbourne.

“The extent to which international investors have made real commitments in Indonesia over the past decade – not just China and major partners such as Japan and Korea, but Europeans, Emiratis, Singaporeans, and even Canadians – strongly suggest Australia is not seeing opportunities that others do.”

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Language and cultural limitations have hindered Australian engagement with Indonesia. There have been simpler pickings elsewhere for entrepreneurs in Singapore, the Philippines and the Pacific.

“More small (Australian) businesses go to Fiji than Indonesia. I think Indonesia has traditionally been a closed market,” says Tim Harcourt, chief economist on the University of Technology Sydney. “Generally Indonesia is a bit like the United States or Brazil – they think about the domestic market first rather than a place like, say, Singapore, that’s very much open to trade and investment from the global economies.

“Indonesia was by no means this low labour value place that China, Vietnam and Bangladesh had been. Indonesia’s all about being a big center class [that’s fuelling] a home financial system.”

But that could all be about to change if Jennifer Matthews has her way.

She’s the national president of the Australia-Indonesia Business Council and is evangelising on Indonesia’s new openness in a travelling roadshow across Australia in partnership with the Department of Foreign Affairs and Trade (DFAT).

It has visited Darwin in the Northern Territory, which is closer to Jakarta (2,700km) than it is to Canberra (3,100km), and will soon head to Sydney to promote the digital economy.

“The time is true,” she says of accelerating Australian trade with Indonesia to boost jobs in the post-pandemic recovery. “There is certainly a possibility to develop this relationship. We can see the transformational change that’s going down in Indonesia proper on our doorstep.”

Australian Prime Minister Anthony Albanese (2Nd L) Speaks At Hasanuddin University On 7 June 2022

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In July 2020, the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) came into force.

“By some estimates, Indonesia would be the world’s fifth largest financial system by 2030, and IA-CEPA ensures that Australia is well-placed to deepen financial co-operation and share in Indonesia’s progress,” DFAT said. The pact aims to jettison tariffs while nurturing commerce.

Anthony Albanese, the recently elected Labor prime minister, made a trip to Indonesia within a few weeks of winning the election on 21 May.

It was an unequivocal statement that the new management in Canberra coveted the relationship and wanted trade to bloom.

“The street to Jokowi’s (the favored title for Indonesian President Joko Widodo) coronary heart will likely be enterprise and funding,” Prof Dewi Fortuna Anwar, from Jakarta’s Research Centre for Politics, told the Australian Broadcasting Corp. “The ball is in Australia’s courtroom,” she added.

The key lies with innovation and companies.

Agriculture, resources, energy, education, training and healthcare are all sectors with potential, along with expertise in renewable power technology.

Tim Harcourt’s advice is for Aussie firms to look beyond the sprawling Indonesian capital for fertile ground.

“In West Java, I met plenty of South Australian, defence and agricultural corporations which have carried out fairly effectively. Yogyakarta, the gaming and IT centre of central Java is one other alternative. So, take into consideration the archipelago as numerous very totally different, distinct markets reasonably than simply zooming in to Jakarta.”

Brett Hosking


Other sectors have been quietly going about their business with Australia’s giant neighbour to the north.

“Indonesia is by far our largest buying and selling associate in the case of exports of Australian wheat. It’s a reasonably good relationship in the intervening time,” Brett Hosking, chair of GrainGrowers, an industry group, and a farmer in Victoria, told the BBC News website. “We need to be delicate to the cultural uniqueness of every nation, so understanding that Indonesia is a largely Muslim nation. If we make the additional effort to take action we construct a a lot stronger relationship.”

Australia’s biggest trading partner by some considerable distance is China. Its appetite for resources, most notably iron ore, made Australia rich, but geopolitical tensions have surfaced in recent years. Trade has suffered, too, with restrictions imposed on various Australian exports.

Brett Hosking’s personal interaction with Indonesian flour millers and government officials has helped to ensure that ties remain on a sound footing.

“We’ve had a disagreement with China round barley not so way back. That has had an impression on our market. But disagreements will come and go. I might say there’s a maturity in our buying and selling relationship with Indonesia,” he says.


Indonesians have a long history of migration to Australia. Increasingly, its super young population wants to savour the education and lifestyle offered by its multicultural southern neighbour.

With a YouTube channel and a following on social media, PhD student Sari Puspita Dewi, who arrived at the University of New South Wales last December, is doing her bit to encourage her compatriots to join her.

“So many individuals get impressed to review in Australia. It is near to Indonesia. They do not feel too homesick,” she says. “I used to be so blissful after I was chosen [for a scholarship]. If I’ve an opportunity, I wish to stay right here longer, however in fact on behalf of my nation and contribute to Indonesia.”


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