05 November 2019

I’d like to thank the Indonesia Australia Business Council for inviting me to speak at this conference.

The work you do is very important - you are building important links between our two countries.

And today I want to talk to you about what we can all do to help deepen and strengthen those links - economic, political, social and cultural - between Australia and Indonesia.

In recent decades, politicians and foreign policy experts in Australia have regularly employed two maxims in seeking to analyse and explain the relationship with Indonesia.

You may have heard them before but I think they’re worth repeating.

The first is this: that no country is more important to Australia than Indonesia.

This is true, of course, but I would argue it is truer now more than ever.

Indonesia is, I believe, more important to Australia than Australia is to Indonesia.

With its growing economy, huge population and pivotal geostrategic location, Indonesia now wields more influence than at any time in the seven decades since it gained independence.

It’s clearly in Australia’s national interests for Indonesia to be stable, democratic and more prosperous.

The other popular adage about the Australia-Indonesia relationship is that no two neighbouring countries anywhere in the world are more different.

After all, our two nations differ in race, ethnicity, religion, language, culture, history, economy and population. But I do think we share a sense of good humour, and an optimistic view of life.

Because of our differences, the political relationship between Australia and Indonesia can be volatile. And because of our friendship and attitude to life, we are able to overcome our disagreements.

I want to argue today that we can both do better.

That we must do better. But in particular, Australia needs to do better.

Despite our differences, we have plenty in common.

For a start, we both value democracy and openness – and this is not something we share with some other key partners in the region.

We have shown we can work together successfully in times of crisis, including the Bali bombings in 2002, the Aceh tsunami of 2004 and the Victorian bushfires in 2009.

At a government level we have collaborated to safeguard our maritime routes, fight terrorism and deter transnational crime.

Many do not realise that Australia and Indonesia share deep historical ties stretching back more than three centuries.

And those ties were entrenched through trade.

From around the year 1700, fishermen from the Makassar region in Sulawesi would set sail every December for the Top End of Australia in search of trepang -- or sea cucumbers.

They would stay for months at a time in temporary bamboo huts, working with the Aboriginal people as they caught, boiled and dried the trepang delicacy.

The trepangers then returned to Makassar to sell the product to Chinese traders.

Studies by anthropologists have found that the Makassans negotiated with the Yolngu people of Arnhem Land for the right to fish certain waters.

They traded in cloth, tobacco, pottery, glass and rice, while the Yolngu traded turtle-shell, pearls and cypress pine.

All this well before the First Fleet arrived at Sydney Cove in 1788.

But as we stand here in 2019, trade between our two modern nations is far from where it should be.

More than 18,000 Australian companies export to New Zealand, but only 2000 export to Indonesia.

Indonesia has a population of 260 million – but it accounts for just 2 per cent of Australia’s exports.

In what comes as a surprise to many, despite our geographic proximity Indonesia is only our 14th biggest trading partner.

Australia currently trades more with far smaller South-East Asian countries such as Singapore, Malaysia and Thailand.

And our companies invest more in distant Luxembourg and Ireland than in Indonesia.

A stronger economic relationship won’t just happen overnight.

It will require Australians, in particular, to put more effort into better understanding Indonesia, its people, its language and culture.

The sad truth is that our engagement with Indonesia is languishing. It’s up to Australians to proactively engage with Indonesia yet we fail to do so.

For instance, at Australian high schools and universities, there has been a dramatic collapse in the number of students learning the Indonesian language.

This makes no sense when you consider it has occurred just as Indonesia itself has become only more attractive and more accessible to Australians. This requires nothing less than a national effort to address.

Tourism remains an important element of the relationship because it powers economies, builds links between people and leads to greater understanding.

More than 1 million tourists from Australian travel here to Bali each year -- and that’s understandable given the island’s extraordinary natural beauty and world-class hospitality.

Yet only a handful venture to other parts of an archipelago that is rich in culture and stunning landscapes.

Tourism should also flow both ways.

In my home state of Western Australia, Indonesia is the most popular overseas destination, with 330,000 visitors in 2017-18.

Yet only 31,800 Indonesian tourists arrived in WA in that same period, according to a report last month by the WA Department of Treasury.

Think about it – 330,000 West Australians headed up here to Indonesia (mainly to Bali) but just 31,800 Indonesian tourists went the other way to sample the delights of Perth, Fremantle, Margaret River or the Kimberley.

Before I was elected to the Australian Parliament, I was the Chief Operating Officer of the Perth USA Asia Centre, and I helped to organise the visit to Perth of the sixth President of Indonesia, President His Excellency Susilo Bambang Yudhoyono.

It truly was a pleasure to work with Bapak Yudhoyono’s team of good people. We worked together on the schedule.

The University of Western Australia was awarding SBY with an Honorary Doctorate and appointing him as a Senior Fellow with the Perth USAsia Centre.

There was a lot to fit in to the week-long visit. But one thing was not negotiable: a visit to Fremantle.

And in particular, dropping into a bookshop (and we all spent a delightful hour in the First Edition Bookshop); but specifically - lunch at Cicerrello’s Fish and Chips on the Fremantle Fishing Boat Harbour was absolutely compulsory.

I was very sad to hear of the recent passing of Ibu Ani Yudhoyono. May Allah rest her soul in eternal peace. I am grateful for the opportunity to have met her.

I remember her fondly from her visit to Perth, but in particular this day spent in Fremantle – as a keen photographer, Ibu Ani spent much time taking photos of the fishing boats, and posting them to her millions and millions of Instagram followers! Cicerello’s new found popularity with Indonesian Instagrammers came as quite a surprise to them.

Notwithstanding the incredible influence of people like Ibu Ani, Australia is only the 11th most popular destination for Indonesian tourists.

Each year we welcome 270,000 Singaporean tourists and 250,000 Malaysians to our shores -- but only about 100,000 Indonesians.

As Indonesia’s middle class grows, those numbers should grow naturally but we cannot take that for granted.

Australia should do more to make Indonesians feel welcome.

We should heed the concerns of Indonesians who complain that our visa process is too expensive and slow.

In response, these tourists are shunning Australia and choosing to holiday in other countries.

We can also do more to attract Indonesian students to Australian universities.

Australia is the most popular destination for Indonesians studying overseas.

But the numbers are not high -- around 20,000.

Far more students come from China (about 166,000) and India (about 70,000).

As Indonesia’s middle class expands, we should view it as a growth market.

Education exchanges are critically important – and not just because of the export revenue. They contribute greatly to our understanding of each other.

I acknowledge the work of the Australian Consortium for ‘In-Country’ Indonesian Students (ACICIS) which for 25 years has encouraged and enabled Australians students to undertake a period of study abroad in Indonesia.

Australia is fortunate that some of Indonesia’s most prominent people, including many politicians, have studied at Australian universities.

Alumni include former Foreign Minister, Dr Marty Natalegawa – an ANU graduate - and the former vice-president, Professor Dr Boediono, who attended my alma mater, the University of Western Australia as part of the original Colombo Plan.

In fact, I was Chief of Staff to the Vice-Chancellor of UWA and was delighted to play a part in welcoming Vice-President Boediono as he returned to the campus in 2011 to be awarded an honorary doctorate for his contribution to global affairs.

Despite these very important exchanges, Australian attitudes towards Indonesia have remained steadfastly and regrettably negative.

The annual Lowy Institute Poll has been asking Australians for their views about Indonesia for 15 years - and their answers have shown a lack of knowledge about our largest neighbour.

It has consistently shown that most Australians do not view Indonesia as a democracy.

When this year’s Lowy poll was conducted, Indonesia was in the middle of its presidential election campaign.

Yet only 34 per cent of Australians agreed that “Indonesia is a democracy”.

We should recall the words of former President Yudhoyono, a good friend of Australia’s who did his best to engender closer bilateral relations.

When Dr Yudhonono addressed our Parliament nine years ago, he spoke with great candour of the misperceptions that Indonesians and Australians have of one another.

He said, and I quote: “There are Australians who still see Indonesia as an authoritarian country, as a military dictatorship, as a hotbed of Islamic extremism or even as an expansionist power”.

And in Indonesia, he said, “There are people who remain afflicted with Australiaphobia – those who believe that the notion of White Australia still persists, that Australia harbours ill intention toward Indonesia and is either sympathetic to or supports separatist elements in our country.”

He went on to outline the problems that these mutual suspicions have caused – most notably the East Timor crisis of the late 1990s.

Dr Yudhoyono wanted a closer, deeper and wider relationship.

As Labor’s Shadow Trade Minister, I believe greater trade and investment should be central to that aspiration.

It was for this reason that the former Labor government launched negotiations while in office for what has become the Indonesia-Australia Comprehensive Economic Partnership (IA-CEPA).

The legislation for this trade agreement passed through Australia’s House of Representatives recently with Labor’s backing.

It is expected to be approved in the Senate by the end of the year.

Of course, entry-into-force of the agreement will also be subject to Indonesia’s own parliamentary processes.

We supported IA-CEPA because we believe it will raise living standards in both Australia and Indonesia.

And we supported it because we know Indonesia is poised to become a global economic powerhouse in the years ahead.

Indonesia is already home to the world’s fourth largest population, with about half of its residents under the age of 30.

The economy is the third fastest growing economy in the G20, behind India and China.

Indonesia also boasts one of the region’s most rapidly expanding middle-classes, with more than 52 million people in this category according to the World Bank.

The growth of this consumer group has been driven by a huge reduction in Indonesia’s poverty rate over the past two decades.

Indonesia’s consumers are as tech-savvy as anywhere in the world.

The country has an astonishing 128 million Facebook users and about 100 million users of WhatsApp. And 59 million users of Instagram – the fourth highest usage of that platform in the world.

So, while it entirely a good thing to have Roger Federer post a quokka selfie to promote WA, perhaps we need to look to those important influencers in our nearest neighbour, Indonesia.

Based on current trends, Indonesia will move from the 16th largest economy in the world to the fourth largest by 2050.

It will dwarf the size of Australia’s economy.

But to realise its potential, Indonesia will need to continue the important structural reforms that have been undertaken by President Joko Widodo.

For example, the Big Bang liberalisation package that in 2016 removed foreign ownership restrictions on thirty-five industries is viewed as the most progressive economic policy reform in Indonesia over the last decade. It has undoubtedly driven increased international investment in the nation.

Protectionist trade policies have hindered Indonesia’s participation in the established and emerging supply chains of South East Asia.

Thanks to the reforms of President Jokowi, and the enthusiasm of Indonesian business groups for a more open approach, businesses here are transforming their domestic market focus into internationalisation strategies and are quickly becoming significant players in the regional value chains of South East Asia.

Importantly for the cause of open and free trade in the region, under IA-CEPA, Australia will eliminate all of its remaining tariffs on Indonesian goods imports.

In return, Indonesia will provide duty free access to 99 per cent of goods from Australia, and will reduce many non-tariff barriers to trade including granting automatic import permits for beef and rolled coil steel.

The economies of Australia and Indonesia will become more complementary in the years ahead.

Rising demand in Indonesia for consumer goods and services - particularly premium food and beverages, education, healthcare, financial services and tourism – will align well with Australia’s capabilities.

Indonesia’s ambitious infrastructure investment agenda should mean higher demand for Australian steel and building and engineering expertise.

And that’s before President Widodo’s recently announced plan for a new capital city in East Kalimantan.

Under IA-CEPA, there is also real potential for greater people-to-people engagement.

The number of working holiday visas available for young Indonesians will increase from 1,000 to 5,000 a year.

This potential additional 4,000 workers from Indonesia will equate to just 0.03 per cent of the national labour force.

While some in Australia have expressed concern that this could help to drive up unemployment, it’s worth noting that these numbers are still relatively small. Frankly, I think the numbers are ambitious given young Indonesians have not yet demonstrated a preference to live and work in Australia.

Indonesia clearly remains under-represented in terms of working holiday makers in Australia.

In 2017-18, a total of 210,456 working holiday visas were issued in Australia - and Indonesia accounted for just 0.5 per cent of them.

The Indonesia-Australia agreement will lock in fresh trade opportunities for Australian steel manufacturers, as well as our grains, cattle, sugar, dairy and horticulture industries.

Our education providers will be able to establish ventures in Indonesia with significant Australian ownership.

Labor has supported IA-CEPA because as a party we have a long record of advocating for an open global trading system.

Not everyone supports free trade – in fact many of our traditional supporters believe it makes their lives harder.

But Labor was the party in the 1980s that opened up Australia to competition and helped make our exports globally competitive.

Bob Hawke was the founding father of APEC – a vehicle for free and open trade and investment in the Asia-Pacific region.

Decades earlier, another Labor Prime Minister, Ben Chifley took Australia into the world’s new multilateral trading system that began after World War II.

I should add that Chifley also strongly supported independence for Indonesia.

Labor’s dedication to trade reform has remained strong ever since.

And we continue to call for countries to shun protectionism and to back the multilateral rules-based trading system that has underpinned global economic growth for decades.

Right now, that system is under threat.

Finally, I urge you as business people to take advantage of IA-CEPA, and to do your bit to help take the Australia-Indonesia relationship to a new level.

But at same time we should all ponder the broader purpose of agreements like this.

We can all contribute to building genuine trust and closer personal links – not just between political leaders, but between ordinary Australians and Indonesians.

Thank you for welcoming me here today.