ASIALINK, STATE OF THE NATION FORUM
Engaging Indonesia: a practitioner’s view
Speech by the Australian Ambassador to Indonesia Mr Greg Moriarty
Melbourne, 17 May, 2012
Check against delivery
Good afternoon Ladies and Gentlemen.
Sid Myer, Chairman of Asialink and Jenny McGregor, CEO.
I’d like to thank you and Asialink for the opportunity to speak at the Indonesia State of the Nation Forum today.
And also acknowledge the impressive battery of Indonesia experts attending today.
No doubt their contribution to our discussion, and the questions from this well-informed audience, will help to fill the gaps in what I plan to say.
My purpose today is to give a practitioner’s account of Australia’s relationship with Indonesia.
I want to bring you up to date with where I see the bilateral relationship in this second decade of the new century, the Asian century.
And also outline what the Australian Embassy in Jakarta sees as the main areas where we can strengthen our engagement with Indonesia over the foreseeable future.
Given Indonesia’s complexity, how can you best describe where Indonesia is today?
This isn’t a question that usually lends itself to a brief answer.
But let me try by recalling something told to us by a good Indonesian contact.
This person mixes in senior circles in Jakarta, and would have the mobile phone numbers of top CEOs, and political leaders saved in his Blackberry.
He enjoys telling foreign observers and locals alike that Indonesia is “a disappointing country”.
It disappoints both the optimists and the pessimists.
For those of you who are familiar with this joke, it probably captures an essence of Indonesia today.
There are in fact many things to be optimistic about.
And there are areas of Indonesia’s progress that would cause some observers to ask whether it can fulfil its enormous potential.
What is clear from Australia’s perspective is that we have a lot at stake in Indonesia’s success.
A stable, democratic and increasingly prosperous Indonesia is squarely in our interests.
In economic terms, Indonesia’s rise is part of the great re-emergence of Asia, as its big economies grow and shift the balance of economic activity towards this corner of the globe, creating new opportunities for commerce.
In political terms, Indonesia’s successful democratic transition places it in the same company as the region’s other democracies.
Indeed, Indonesia is projecting itself in a modest way as a democratic idealist that is willing to share its experience with other nations.
In strategic terms, a stronger Indonesia offers Australia a partner with whom we can work together to shoulder regional challenges – tackling traditional and non-traditional security threats, because in an age of interdependence, no country can solve these problems alone.
These are just some of the reasons why there is no more important relationship for Australia than that with Indonesia.
Our partnership today is strong, yet in many ways, unlikely.
As neighbouring countries, we could not be more different.
We differ in language, religious makeup, population size, in culture and in social, political and legal systems.
The same distinctions could be said about Australia’s relations with other countries in Asia.
But over the past 60 years, there have been periods of fragility and tension in our relationship with Indonesia.
…confrontation over the formation of Malaysia;
…and disagreement over East Timor in 1975 and again in 1999.
Tensions that had a direct bearing on our interests in the region.
I mention these differences with Indonesia not to rake over old coals.
But to show how these differences in our history contrast sharply with what we have achieved together and the healthy state of relations today.
Our differences alone are not a barrier to deeper partnership if both sides are committed to making it work.
So as we look at the state of bilateral relations, we should start by refreshing perceptions about Indonesia.
Let me propose ten things—in no particular order—worth knowing about modern Indonesia:
- Indonesia doesn’t owe the International Monetary Fund anything.
- Indonesia’s own budget for national development and infrastructure is 200 times larger than the value of Australia’s bilateral development assistance.
- Foreign Direct Investment grew 30 per cent to a record US$5.6 billion in the first three months of the year.
- Its economy was one of only three Asian economies that grew at a rate above six per cent last year.
- Indonesia is on track to achieve universal primary education by 2015.
- Dozens of political parties are flourishing in a robust democratic contest – and the 2014 Presidential elections are wide open.
- Indonesia’s middle class is larger than Australia’s entire population based on A.C Nielsen data.
- The world’s 3rd largest Facebook user base after US and India and the 4th largest Twitter-sphere is Indonesian.
- By 2025, Indonesia will have more young people as a proportion of its workforce than most countries in Asia.
- One of Indonesia’s current top rating TV shows is Junior Masterchef Australia.
That last point had little to do with diplomacy; it was just an interesting fact.
But what this list shows is that the Indonesia we are dealing with today is a country that is changing rapidly.
In many respects, Indonesia is a different country to the nation I encountered when I first worked at the Embassy in Jakarta more than 12 years ago.
Today, the level of engagement at the government level is unprecedented.
Since December 2007, there have been more than 100 two-way high-level visits, including at Leader’s level – that’s equivalent to a visit on average nearly every three weeks.
The intensity of political exchanges has followed a pattern of deepening engagement from successive Australian Governments.
As a reflection of the bipartisan commitment to the relationship, we welcomed a recent visit to Jakarta by the Opposition’s Foreign Affairs and Trade spokesperson, The Honourable Julie Bishop.
And we look forward to a visit very soon by the Minister for Foreign Affairs.
Senator Carr has already met his counterpart Dr Marty Natalegawa and they are in regular contact.
I’m familiar with the famous warning by the late Professor Jamie Mackie not to put too much store into personal chemistry between our political leaders.
But when it works to your advantage you should seek to maximise its impact.
Certainly, President Yudhoyono and his key ministers are warm in dealings with their Australian counterparts and that has helped.
In the past, when contentious policy issues broke out, or as we prefer to call them— “irritants”—they tested relationships and impacted on broader interests.
Today, however, a key difference is that our relationship has strengthened and matured to a point where both sides have been able to manage potential irritants constructively.
I believe this has been helped tremendously because of positive changes in Indonesia in two important areas:
- First, the Indonesian leadership looks for opportunities to cooperate with Australia, and
- Second, there is a generally warmer attitude towards Australia among Indonesians more broadly
Take for example, the main potential irritant of 2011, which emerged as I was well into my first year as head of mission in Jakarta: the temporary suspension of live cattle exports.
Whatever you thought about the Four Corners documentary and the public reaction in Australia, at the embassy we had a clear responsibility.
And that was to work quickly and effectively with Indonesia to ensure that exporters of live cattle and their Indonesian partners met the animal welfare standards that were agreed by the Australian and Indonesian governments.
Indonesian Ministers and their officials were very open to cooperation to resume the trade, to put in place animal welfare systems, and to set up supply chain assurance systems for the export of cattle.
President SBY has said publicly that the suspension was merely a “hiccup” and went on to say that the relationship was strong and could withstand such challenges.
His determination to deal with the matter quickly and constructively was important.
The President wants our strategic partnership to work.
Foreign Minister Marty Natalegawa is also looking for ways to deepen our strategic partnership.
He has also stressed the point that what matters is not that potential irritants arise, but how they are handled.
These attitudes reflect measured and constructive responses by Indonesia’s leadership.
The Indonesian people more broadly are more self confident about their place in the world that they were 10 years ago, and now more than ever, are preoccupied with providing a better future for themselves and their families.
And perhaps, as many of our contacts remind us, Indonesians now know more about Australia than we know about them.
The estimated 18,000 Indonesians enrolled at any one time in Australian education institutions might help explain that.
Or perhaps it reflects in some way the efforts by the Embassy, our growing aid program and institutions like Asialink over the years to deepen personal links.
The results of polling from the Lowy Institute, which showed Indonesians feel warmer than ever towards Australia, are very positive.
Warmer Indonesian attitudes towards us should be regarded as an asset in the bilateral relationship.
But we should recognise that democratic Indonesia now, has a domestic constituency to consider.
And Australia can no longer presume that all future difficulties can be fixed if we continue to get it right at leaders level.
And we cannot presume that the Indonesian public or their elected representatives in the future will react in a measured way to all future irritants.
What would help is if more Australians used our sense of curiosity to update our perceptions about Indonesia.
I wonder sometimes if Australians have thought about what the new rough and tumble Indonesian democratic politics might mean for how they conduct foreign relations and how we need to conduct our bilateral relationship in an environment where the Parliament, civil society, and the media often have different perspective to the Administration.
Because popular Australian attitudes towards Indonesia suggest we are still to a certain extent stuck in the past.
We can move on and push the refresh button.
For governments at least, there is an acknowledgement that no one issue can or should dominate the relationship.
The embassy’s role in prosecuting the relationship is to advance our interests on a whole range of issues – not just the issue of the day.
Given the scale of our interests in Indonesia, we can’t allow the issue of the day (whatever it may be) to wholly distract us from pursuing the multiple objectives we have at stake in the relationship.
Whether it’s the fact that 60 per cent of Australia’s aviation traffic and key sea lanes transit Indonesia.
Or that Indonesia is Australia’s second-largest outbound tourist market, with more than 877,000 of our compatriots travelling there last year.
Or that next year, Indonesia will host APEC, the pre-eminent regional forum on trade and economic issues.
Or indeed our ongoing efforts to counter terrorism and fight organised crime.
We have a diverse and complex range of interests that all need to be advanced.
All of our interests are important, need attention and quiet, patient diplomacy.
Take trade for instance.
One of my priorities is to do all I can to help narrow the gap between our actual bilateral trade performance with Indonesia and its potential.
If Australian boardrooms have not yet turned their attention to Indonesia, then an Indonesia-Australia Comprehensive Economic Partnership Agreement should help address some of the market access, regulatory, institutional and legal concerns that have made companies baulk at entering the market in the past.
As the two largest economies in South East Asia we ought to be trading more.
I appreciate doing business in Indonesia can be complex.
But as one foreign businessperson put it to me recently, “the cost of not being in Indonesia far outweighs the costs of being there.”
Our advice is to be patient. A good local partner or local advice is indispensible.
And if the numbers and the sentiment stack up, it is worth making a long-term commitment to the market.
It is hard not to be interested hearing the well-known forecasts of Indonesia becoming a trillion dollar economy—and potentially overtaking Australia—in the next few years.
This strong performance has been driven by and large by the SBY administration’s pursuit of sound macroeconomic policies aimed at promoting openness, competitiveness and integration with regional and global markets.
But progress isn’t running in a smooth line.
What we are seeing now in Indonesia, in its debate about self-sufficiency in food and efforts to derive social benefits from growth industries like mining, is part of the unevenness that investors experience from time-to-time in a fast-growing emerging economy.
Over the past six months in particular, the business climate has seemed to be getting tougher for some Australian exporters and some categories of foreign investors in Indonesia.
There has been a discernable increase in regulatory changes and economic nationalism…changes that are not aimed at Australia but they do affect Australian interests.
The unexpected decision last month by ratings agency Standard and Poor’s to keep Indonesia’s sovereign credit rating one notch below investment grade was based on its impression of policy uncertainty.
In this environment, our advocacy needs to be clear-eyed and agile. What may suit one company may not be right for others.
What’s clear is that doing more business will contribute to Indonesia’s economic growth and it will complement the country’s move into the ranks of middle-income economies.
And in Indonesia, as in many other countries, effective and appropriate support from Embassies can help a good company lever opportunities.
The Embassy has an increasing work load supporting new entrants to the market and the 400+ Australian companies already with a presence in Indonesia.
In Indonesia’s consumption-driven economy, consumer goods and mobile phones are flying off the shelves. Motorbikes and cars are pouring onto the roads in a relentless procession.
But in spite of this new wealth, Australia is still strongly committed to assist Indonesia, reduce poverty because in Indonesia each year there are still tens of millions of people who get sick because of bad water.
And there are millions of children who can’t move past primary school because schools are too expensive, too far away, or the quality of teaching is poor.
In spite of the overall progress, the level of development in a few of Indonesia’s provinces and districts still ranks on par with some of the poorest countries anywhere in the world and, in total, around 120 million people still live on $2 or less a day.
Even more starkly, 1 in 20 children sadly die before they turn five. And one in three are stunted because they are malnourished.
It’s in this context that Australia has made a long-term commitment to help Indonesia reduce poverty and achieve sustainable development.
The total value of Australia’s aid to Indonesia next year will be $578 million dollars.
This makes us Indonesia’s largest bilateral donor.
But it is still modest given Indonesia’s scale.
We provide only $7 per poor person living in Indonesia compared to $180 in Papua New Guinea and $285 in East Timor.
The biggest component of our aid will support Indonesia’s goal of giving every child a good basic education.
And in areas such as infrastructure, our aid means that poor households are getting connected—many for the first time—to clean water.
Beyond helping people overcome poverty, the Indonesian government holds our aid program in high regard, partly because it is less prescriptive than others and also because it responds to Indonesian priorities.
Our aid program is another asset in the relationship, and the opportunities to engage Indonesia on issues of long term importance through the aid program is something we should not lose sight of when pursuing the issue of the day.
In security and defence, our common interests with Indonesia are profound.
Whether it is in countering terrorism, for which Indonesia has made impressive achievements, to policing cyber-crime, we are well served by the strong relationships between our defence and security agencies.
The Indonesian military understand the imperative to reorient itself as a more professional and externally focussed force. Progress will take time, but there has been progress and we should continue to be there on the ground assisting with this transition.
The deepening of its relationship with the ADF, through exchanges, an alumni network, joint exercises and training, reinforces our ambitions for a stronger strategic partnership.
In relation to people smuggling, my responsibility is to work with the Indonesian police, customs and security agencies to target smugglers and disrupt people smuggling networks. This is only possible when we are engaged and seen as a partner that approaches the relationship with mutual respect and appreciates Indonesia’s broader law and order priorities.
Then there are consular issues, where both countries have interests at stake.
Consular issues impact us both. And in democratic Indonesia, with a lively press and energetic public, there is an increasing focus on the welfare of Indonesians abroad.
Even though it is a tempting device to use people to illustrate a broader point, in consular matters, each case should be dealt with on its merits and shouldn’t define the relationship.
If I were to nominate one issue that has the potential to detract from our achievements, it would be ill-considered and reckless proposals concerning the future of Indonesia’s Papuan provinces.
Let me be clear.
Australia has a treaty-level commitment to Indonesia’s sovereignty and territorial integrity.
And the Australian Government firmly believes that the best chance for a secure and prosperous future for the people of Papua and West Papua lies within an integrated Indonesian state.
We support efforts by the Yudhoyono administration to accelerate development and improve the welfare of the Papuan people.
The Vice President’s office has been tasked to take forward the so-called UP4B, the unit for the accelerated development of the Papuan Provinces.
Dialogue between Papuans and Jakarta, which the President has said he supports, is not going to be helped by foreign suggestions that Indonesia’s national unity should be up for debate.
The Australian Embassy works with the Indonesian Government, the provincial governments and local governments to achieve lasting development in both Papua and West Papua provinces and to promote human rights there and throughout Indonesia.
As we advocate on the range of our interests and engage Indonesia, it is crucial that we avoid seeing this engagement as a transaction or a series of transactions.
By that, I mean we shouldn’t practice diplomacy by saying, if you do something for me, I will do something for you.
Our broader strategic relationship should not be run as if we were at a negotiating table or in a bazaar.
That would be a flawed way to pursue relations.
Our long-term objective of a strategic partnership with an increasingly prosperous, stable and democratic neighbour can’t be achieved using a transactional approach to diplomacy.
Our objective should be to increase our influence over time and across all our interests.
Our approach should be aimed at positioning ourselves to have standing and influence in Indonesia in 10, or 20 years time. It begins by reinforcing the point that we regard Indonesia as a like-minded, as an equal.
We should be mindful of its size and the complexity of its decision-making.
We should bed-down consultation to provide as much notice of changes to policies that affect both sides in order to avoid misunderstandings.
Because we have today a relationship that benefits both countries.
It is mature and has the resilience to absorb occasional shocks.
As a practitioner, I have a responsibility to make this relationship work for both sides – pursuing expansion of cooperation that is working well and seeking to resolve any differences constructively.
Because what is certain is that the Indonesia of the future will play a different role in the world to the nation I first encountered many years ago.
A nation that is shaping up as a power with global influence…increasingly prosperous, democratic with increased standing in the region and the world should be a great strategic partner for Australia, if both countries continue to work hard to get the relationship right and to manage differences effectively.
From what I’ve said today, I hope you will come away with some fresh perspectives on the relationship with our closest Asian neighbour.
So I’ll conclude by saying that there is much to be optimistic about, in relation to Indonesia and our future bilateral relationship.
Thank you.