Exporting to Indonesia

Our trade future

From Indonesia’s perspective, there’s hope that an FTA could deliver other benefits. Indonesia’s Trade Minister Marie Pangestu says she’d like nurses, construction workers and hospitality industry professionals to join the Australian labour market under the proposed free trade agreement. An FTA could deliver benefits in two-way commercial linkages, market competitiveness, improved business transparency, secure intellectual property rights, ease of establishment for Australian businesses in Indonesia, and the recognition of overseas professional qualifications.

“Indonesia will always be a different sort of country,” Harcourt adds. “But there are many things the Indonesians are keen to achieve that would make things easier for our exporters and investors. So, the more support their efforts attract from the Australian business sector, the better.”

A key level of support all Australian exporters can provide is in approaching the market with respect and adhering to important cultural principles, such as maintaining a commitment to the market through thick and thin.

“Australian businesses have to work hard on the quality of their business relationships in Asia,” says Harcourt. “If you are a carpetbagger who pulls out of the Indonesian market the moment that business gets a bit slack, or the going gets tough, you’re going to find there’ll be no business for you when you decide to go back in.”

What of the future? Is Indonesia’s modernisation program destined to continue uninterrupted?

Presidential elections are to be held in Indonesia in 2009 and there are expectations that Vice President Jusuf Kalla will challenge President Yudhoyono. What is likely to happen if Dr Yudhoyono loses office? The view from Canberra is that, despite all the upheavals that have affected Indonesian in the past decade, none have significantly eroded the push for modernisation and reform.

Whatever happens, goes the thinking, things are bound to keep on improving.

CASE STUDY: Reaching Export Heights

When you’re talking about small businesses, they don’t come much smaller than the Victorian lifting equipment specialists, Global Track (globaltrack.com.au). But when you get down to looking at achievements, they hardly come any bigger.

Greg McKay and his son Bruce are the sum total of Global Track’s staff at its Geelong headquarters, but this two-man operation has achieved success in Indonesia that has outclassed some of the world’s biggest operators.

With Greg doing the designing and negotiating and Bruce in charge of the company operations in Australia, the McKays subcontract much of their manufacturing to local firms. The result is a firm that currently exports some 30 percent of its production with expectations for this to grow significantly as more international crane companies pursue their expertise.

Global Track’s global push began last year when they took part in the Australian Technology Showcase expo in Melbourne. “An Indonesian guy asked us to quote on 16 two-tonne by 15-metre manual crane bridges,” Greg explains. “The biggest manual crane bridge built in the world previously was just 10 metres but, because of our design, we were able to build up to 15 metres. I won the deal, despite his chief engineer claiming the crane bridges wouldn’t work.”

The Indonesians flew their engineer to Geelong where his face fell when he saw how big the crane bridge was, but lit up when he activated it. They ordered another three cranes before he returned to Indonesia. The company has now placed a further provisional order for 38 more.

“The Indonesian factory covers 10 hectares and processes 15,000 tonnes of steel a month,” says Greg. “It employs 800 people round the clock and our cranes are being operated by women who have no trouble loading trucks with them. There’s nothing like it anywhere else.”

Greg is designing a 21-metre power driven crane for them using Global Track’s unique pivotal technology.

The biggest problem he had doing business in Indonesia related to language. Now the company has a teacher there coaching staff how to speak English. As for the nuts and bolts of business, he found Indonesians to be hard negotiators but prompt payers.

He counsels other SME exporters to do their homework to make sure they are dealing with a reputable company. “It can be hard breaking into a market dominated by strong multinationals and it takes time to establish your reputation. And there’s no magic formula for success, it’s just a matter of getting off your butt and working at it.”

Global Track says the biggest crane company in the world, Germany’s Demag, is now assessing its products with interest in the United States and Indian markets.

Greg’s enthusiasm for design is undimmed. He is currently “increasing the size of our back paddock” by building a new design curved track bridge crane at Corowa in NSW. “But you can be certain I’ll continue dealing with Indonesia,” he adds.