Exporting to Indonesia

Times are changing in Indonesia, bringing fresh opportunities for trade with a neighbour that’s within swimming distance of our northern shoreline. It’s time to ignore the negative stereotypes of the past and realise the potential of the Australia–Indonesia relationship.

It’s hard to avoid the impression that Indonesia and Australia are just like a couple of bad-tempered neighbours, yelling at each other over the back fence while ‘family’ members, such as media commentators, urge them on to ever greater expressions of mutual distrust. 

But speak to a bunch of exporters—especially SMEs, who make up the majority of people engaged in our bilateral trade—and you’ll discover that this is largely what it is: an impression.

No one denies that critical events have impacted on the Australia–Indonesia relationship: the Bali bombings, attacks on Australia’s Jakarta embassy, the tragic fates of young Australian drug smugglers and worrying incidents like outbreaks of avian flu. Business people are also aware that Indonesia was hammered during the Asian financial crisis, necessitating a major financial rescue operation from the International Monetary Fund. Indeed, the last 10 years have seen enough negative reports emerging from Indonesia to keep even the most demanding pessimist happy.

So, yes, Indonesia is a difficult market. But it’s also important to understand that things have been changing quickly—and sometimes radically—around that great archipelago to Australia’s north.

Towards democracy

Indonesia’s Minister of Finance, Dr Sri Mulyani Indrawati, has exemplified this break with the past by receiving Euromoney magazine’s World Finance Minister of the Year award. His country’s economic performance has improved universally and Indonesia’s investment climate is now regarded as being quite good.

The changes go far beyond money management. The recent death of President Suharto, the military strongman who dominated Indonesia for 32 years, has highlighted the achievements of his current successor, President Dr Susilo Bambang Yudhoyono, who is credited with having turned his nation into a fully-fledged democracy.

Late last year, President Yudhoyono made an extraordinary appeal for both Indonesians and Australians to look beyond the ‘tyranny of stereotypes’ and make full use of opportunities in each other’s countries.

Australia’s Senior Trade Commissioner in Indonesia, Rod Morehouse, couldn’t agree more. He believes we all need to put a bit more effort into loving our neighbours, especially a neighbour that’s almost within swimming distance of our northern shoreline and which is home to more than 222 million people.

Distinct sounds of harmony emerged from Canberra in March when Indonesia’s Defence Minister, Dr Juwono Sudarsono, flew south for talks with his Australian counterpart, Joel Fitzgibbon, who described our mutual defence relationship as “approaching the same warmth it experienced before East Timor in 1999”. Fitzgibbon’s chat with Dr Sudarsono went beyond the niceties, exploring opportunities in building, management, science, technology and other support projects. Trade Minister Simon Crean had already chosen to make his first overseas visit to Indonesia.

And consider this: there are nearly 3,000 Australian companies currently doing business with Indonesia, 400 of them with offices inside the market, and Australia’s merchandise exports to the market in 2006-07 were worth $4.24 billion while services exports totalled $858 million. All up, our two-way trade in goods and services is worth $10.4 billion.

“It’s the fourth-fastest growing economy in Asia after China, India and Vietnam, and the biggest market on our doorstep,” says Morehouse. “Australia is already Indonesia’s seventh-largest source of imports and rising consumer demand is creating brand new markets for life-style products and services.

 “Indonesia has a burgeoning middle class with approximately 22 million consumers capable of spending $1,900 a month. More than half the population is under 25.”