Friday, July 08, 2016

Mutual interest of long-term investment flow from a rising Indonesia to Australia

Australia's former Minister for Foreign Affairs and Trade and Former Minister for Defence during the Australian Labor Party's Rudd and Gillard governments argues for a refocus of the proposed Indonesia-Australia Comprehensive Economic Partnership Agreement. Now Winthrop Professor of Law at the University of Western Australia, Mr Stephen Smith encourages negotiators to provide an enduring pathway for future Indonesian investment flow to Australia, opening up opportunities for collaboration in a wide range of areas:

The Honourable Stephen Smith, Minister for Foreign Affairs (2007-10). Minister for Trade (2010), Minister for Defence (2010-13). University of Western Australia professor of international law since 2014.

AUSTRALIAN DEPUTY PRIME MINISTER Barnaby Joyce’s remarks during the recently concluded federal election campaign that suggested a link between asylum seekers and live exports was an unfortunate reminder of the diplomatic and political sensitivities that have long vexed Australia-Indonesia relations.

In defusing the issue, Australia’s two major party leaders, Malcolm Turnbull and Bill Shorten, both praised Indonesian President Joko Widodo and emphasised the need for greater Australia-Indonesia co-operation.

Much of this increased co-operation must begin by strengthening supply and value chains and investment ties between the two countries.

State of Play

Negotiations for the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) were revived recently after a three-year hiatus.

Together with government-to-government negotiations, the proposed agreement’s main mechanism for business engagement, the Indonesia-Australia Business Partnership Group (IA-BPG), has also restarted consultations, including a recent session in Perth. This is a unique bilateral business forum to provide both governments with proposals for the agreement to drive a fundamental change in the economic relationship between the countries.

The resumption of negotiations presents the opportunity to bring the countries’ economies closer together to enhance trade and improve access to each other’s markets.

But the truly significant economic outcome the agreement could achieve would be to enhance Australian investment in Indonesia and, most importantly, encourage long-term Indonesian investment flows into Australia. This investment will ultimately be crucial to Australia’s ongoing economic prosperity.

To achieve that, Australia and Indonesia must start now to make mutual investment the hallmark of their economic relationship.

Beyond free-trade agreements

To achieve such investment we cannot simply adopt provisions of free-trade agreements that have gone before, however high quality they may be. As talks on the IA-CEPA resume, negotiators should not simply pick up where they left off three years ago.

The strategic and economic ground has shifted over that time. There are new, fast-developing trade and investment links centred on the Indo-Pacific.

In Asia, trade in services is growing faster than trade in goods. Goods and services are being traded within single, complex products. Global supply and value chains, where value is added to goods and services at multiple locations before being delivered to customers, make up the newest, fastest-growing mode of trade and investment.

The trade landscape in the Indo-Pacific is a complex web of old and new trade agreements and economic groupings: the Regional Comprehensive Economic Partnership (RCEP), the Trans-Pacific Partnership (TPP), the ASEAN Economic Community (AEC), Australia’s free-trade agreements with Japan, South Korea and China, and APEC.

Some, like the TPP and AEC, are known for their broad scope and for tackling difficult issues in agriculture and human movement.

Other agreements have focused principally on the old trade agenda – lowering or abolishing tariffs and tackling non-tariff barriers to trade in goods and services. And others have such broad membership that it is uncertain what real outcomes will be achieved.

By the mid-point of this century, Indonesia will be the fourth-largest economy in the world after the US, China and India. Australia’s North Asian partners are already active in Indonesia, laying the groundwork for future Indonesian investment flow to North Asia.

Australia must start the job of ensuring Indonesian investment also flows south. A modest investment by Indonesia now, from Australia’s perspective, opens up the opportunity for collaboration in a whole range of areas – not just for one-off projects but for decades to come.

IA-CEPA therefore needs to address the building of transborder industries, supply and value chains to other markets, co-operation in energy, natural resources and infrastructure, working together on skills formation and capability-building, transferring knowledge and technology, and enabling movement of students, professionals and tourists between our countries.

This is a major task for Australia. The agreement’s scope and depth should focus on how we can turn the Indonesia relationship into a substantial investment opportunity for prosperity into the future.
The Conversation

Stephen Smith is Winthrop Professor of Law, University of Western Australia. This article originally published on The Conversation. Read the original article.

See also: Business can help reset the clock on the Australia-Indonesia Economic Partnership (12 Feb 2016)

Saturday, June 04, 2016

Vale Sabam Pandapotan Siagian (1932-2016)

BEYOND HIS ESTEEMED reputation for journalism in Indonesia, Sabam Siagian represented his country internationally from as early as 1960 when he worked for the Indonesian
section of Radio Australia based in United Nations headquarters in New York. His reports, in the Indonesian-language, were broadcast to Indonesia from Radio Australia's short-wave transmitters in Melbourne. He returned to Indonesia in 1970 to work on the national afternoon newspaper Sinar Harapan. In 1983 he became the founding editor of Indonesia's first globally-focused, English-language newspaper, The Jakarta Post from where he was plucked by President Suharto to serve as Indonesia's Ambassador to Australia during 1991-1994. He also served as Chairman of the Indonesia Australia Business Council and as Patron of the now 20-years-old Australian International School in Indonesia.

I first met Sabam in 1990 when I interviewed him for a report on English-language media in Asia. He patiently explained to me how President Suharto had brought together five major domestic publishers to invest in a newspaper that would provide a window to the world for “alternative information about Indonesia" and which would also promote the study of English in Indonesia. The latter responsibility he said was so that Indonesia could be a full participant in ASEAN, the Southeast Asian regional association. ASEAN's working language is English which meant the Philippines, Malaysia, Singapore and Brunei managed agendas, chaired meetings and wrote the minutes for its constant events "and we Indonesians and Thais had to catch up." 

President Suharto's appointment of Sabam as Ambassador to Australia was a surprising but smart move away from regular diplomat and senior military appointments who found Australia's suspicious media difficult to deal with. Current Foreign Minister Retno Marsudi recalls how Sabam's disposition gave her confidence as a junior diplomat in Canberra. In the aftermath of the 1991 massacre of mourners in Santa Cruz cemetry in Dili, East Timor, the Indonesian embassy in Canberra was blockaded by demonstrators. "It was very difficult," she recalled, "but I learned a lot from the way my ambassador tried to handle that issue: how to work very fast, how to engage journalists. I know it was a very difficult time for Indonesia but as ambassador he handled it in a very good way." 

Ambassador Sabam Siagian assisted the improvement of relations between President Suharto and Prime Minister Paul Keating, which greatly assisted the establishment of the Asia-Pacific Economic Cooperation Forum (APEC).

Sabam's people skills were also timely when new Paul Keating became Australia's new Prime Minister in December 1991 and was determined to raise bilateral relations with Indonesia to a new level as part of his "big picture" for modernisation. He frequently said that there was no country in the world that was more important to Australia than Indonesia. Sabam's ambassadorship helped ensure the success of Australia's ambitous, one-month-long 'Australia Today Indonesia’ business and cultural promotion in 1994 that attracted a rush of state offices and investment in Indonesia from more than 300 Australan companies. 

Returning to Jakarta and journalism, Sabam continued his links with Australia through two terms as Chairman of the Indonesia Australia Business Council where he proved a great mentor and facilitator
Sabam (centre) with Australian
International School
Derek and Penny Robertson
for two-way trade and investment. He continued on as a respected advisor. With an eye to the next generation, Sabam also donated his time to the Patronage of the Australian International School (AIS), which has grown from one campus in 1996 to separate junior and secondary schools in Jakarta and campuses in Balikpapan and Bali. 

I served on many business committees with Sabam and also eight years alongside him as an independent board member of the AIS Foundation. His great stories, gossip and insights were always memorable, as too his wisdom on the differences between Indonesia and Australia. One of his long-lasting critiques was on the need for both countries - government to government, business to business, and people to people - to constantly reinforce the shared positive experiences and to "be nice" to each other. 

And it was not just a one-way demand on brash Australia (the conservative political side of which he tribally disliked). “We have never heard any [Indonesian] official publicly stating that the relationship with Australia is one of the most important for Indonesia," he told The Jakarta Post in 2012 durng  lobbying to smooth over the ruckus of the Julia Gillard government's 2011 unilateral halt of live cattle exports. "We should respond positively to Australia’s intentions to engage more with us. Indonesia should be nice to Australia, not for the sake of being nice, but for the sake of our national interests.” 

Rest in Peace Pak Sabam. 

Geoffrey Gold