After the IABW 2015: Growing Australia’s business with Indonesia’s middle class

By  Andrew Robb
Australian Minister for Trade and Investment

INDONESIA HAS COME an extraordinarily long way over the last 15 years.

Two years after the Asian financial crisis in 1997, Indonesia's gross domestic product was just $75 billion. Its gross domestic product has since grown to reach $1.2 trillion today, while over the same period, the size of the Indonesian middle class has swelled from 4 million to about 50 million.

For Australia, Indonesia with its 250 million people – more than half of whom are under 30 – and its rising middle class, is a market and neighbour we simply cannot afford to ignore. The growth opportunities are immense – two-way trade with Indonesia is about $16 billion, a tenth of that with China.
Mr Andrew Robb MP

With this in mind, there is a renewed focus on how we can work together on areas of mutual benefit. We are determined to grow business-to-business links and build deeper commercial ties.

There are about 245 Australian companies with an Indonesian presence, but there is no reason that number should not be 1000.

Over the last two weeks, under the Indonesia Australia Business Week banner, I led a delegation of 360 forward-looking business people, our biggest-ever mission to Indonesia. The delegates represented companies in key areas where Australia excels, including infrastructure, resources and energy, health and aged care, education, tourism, advanced manufacturing, agriculture, premium food and beverages. The program comprised 110 separate events and 25 site visits across four cities

'Meeting of the minds'

Prime Minister Malcolm Turnbull's "meeting of the minds" with President Joko Widodo, helped create the right atmospherics for me and my Indonesian counterpart, Thomas Lembong, to confirm that stalled negotiations for a bilateral trade deal, a Comprehensive Economic Partnership Agreement, would be reinvigorated next year. My objective would be to conclude this if possible within 12 months.

While this will provide a platform for future growth, our business mission produced some immediate results with some excellent deals consummated between Australian and Indonesia companies during the week.

Careers Australia, for example, launched the Australia Indonesia Professional Training Centre, a joint venture with local food and beverage firm Es Teler 77 to grow Indonesia's skill base in the hospitality industry.

Mr Robb witnessing the signing of an MOU between Australia's
Blackmores and Indonesia's Kalbe at IABW 2015 in Jakarta
Newcrest International agreed to undertake mineral exploration in conjunction with Antam, a large and diversified Indonesian mining and metals company. And health supplements maker Blackmores announced its entry into the Indonesian market by partnering with Kalbe Farma, one of the largest healthcare companies in south-east Asia.

This will team Blackmore's exceptional production and quality control with Kalbe's scale and established distribution capability.

Additionally, an agreement between the Australian Automotive Aftermarket Association and the Indonesian Off-Road Association will jointly promote Australia's quality aftermarket parts, accessories and services to a growing number of Indonesian auto enthusiasts.

A beginning

This is just the beginning of the types of partnerships we expect to blossom.

When you deepen trade and commercial ties, new investment inevitably follows. While in Jakarta I hosted an investment roundtable with a selection of high net worth Indonesians with a cumulative wealth of about $60 billion. I took this opportunity to showcase major opportunities in Australia, including northern Australia and found a very receptive audience.

The beef industry supply chain is, of course, an area of great complementarity between us, and Indonesian companies have made significant recent investments in Northern Territory cattle stations. Australia is great at breeding premium-quality cattle and Indonesia has a real strength in fattening them for market through their feed lots.

It is a similar story for wheat. Australia already exports about $1.3 billion worth of wheat to Indonesia – compared to live animal exports of $560 million – with its quality and white flour ideal for noodles and baked items which Indonesia produces for domestic sale and export.

There are also rapidly emerging opportunities for a wide array of Australian services in Indonesia, both in the direct provision and in the building of capacity. Services are needed in response to growing middle-class demand and they will also be a critical source of future jobs.

Indonesia Australia Business Week was about using the badge of government to open doors into another important market. It follows similar successes in China and India. Early next year, the inaugural Australia-United States Business Week will showcase the new possibilities that are opening up with one of our oldest trading partners.

Trust is the key to any successful relationship and as our most recent business delegation to Indonesia has demonstrated, the best way to build trust is to turn up.

First published in the Australian Financial Review. Follow Mr Robb on Twitter and Facebook.