Is Australia Ready for a Rich Contemporary Relationship with Indonesia?

The Lowy Institute Report provides a snap shot of Indonesian perceptions and attitudes towards the World. The Good News is Australia is viewed positively and in Australian investment and trade is welcomed.

The Lowy Institute released a report on Indonesian Public opinions and attitudes towards foreign policy on Tuesday 20th March, and alongside this report was an opinion piece in The Australian by Fergus Hanson – Program Director for Polling at the Lowy Institute. The results of the Lowy institute report – Shattering Stereotypes: public opinion and foreign policy reveals an Indonesian public that has in general a positive and forward thinking view of foreign investment, western engagement, and Australia. Fergus Hanson in his opinion piece provides a short overview of the findings before asking at the end of the article:

“These poll findings are a wake-up call, a reminder Indonesia is ready for a rich, contemporary relationship. The question is, are we?”

This is an interesting question and goes to the heart of what has been a fundamental problem with Australia’s relationship with Indonesian over the past decade. A relationship still encumbered by perceptions of chaos, financial collapse, terrorism and perhaps a little colonialism. Australia’s relationship with Indonesia has failed to live up to the opportunity presented over the past 7 years of President Yudhoyono’s Presidency despite strong encouragement from our Indonesian friends. 

 Over the past few months I have described some of the barriers and hurdles that Australia has imposed upon our relationship, particularly in regards to business and trade (such as with our agricultural policies). However, our perception of Indonesia and our engagement policies that go beyond business and move into the AID realm seem to equally be missing the opportunity. Australia is currently the largest AID donor to Indonesia, yet the projects that Australia funds, are not branded successfully as  “Brand Australia”. The Lowy Institute Poll demonstrates this when it details how only 14% of those surveyed could identify Australia as being the largest donor, in comparison to 33% who identified the US as the largest donor, or 24% who identified Japan as the largest donor. This is despite Australia donating nearly 25% more that the US, and 50% more than Japan (US$324 Australia compared to US$263, and $170 Million). Australian government engagement in Indonesia is not hitting the mark.

Australia's Foriegn Policy must evolve to be more supportive, encouraging, and contemporary if Australia is to take advantage and expand upon the opportunities that exist in the Indonesian Market.

 The good news for Australia in this Lowy Institute Poll, is Indonesians are in general supportive of closer ties and relationships with Australia, particularly in relation to trade and investment. The message here is that Indonesia wants Australian investment. Possibly one of the interesting components of this poll is how Indonesians view their role in Asia, in comparison to China.  Indonesians expressed a greater preference for Australia over China in this poll, and additionally viewed themselves as a leader in the ASEAN region. The good news for Australia here is that the Indonesian public have a lot of good will towards the US and Australia, which has been increasing over the past six years since the previous Lowy Poll in Indonesia.

 So what can we possibly do about these findings?

 The Australian government needs to adopt a more progressive and supportive stance towards the Indonesian relationship, and shed some of the colonial attitudes that seem to have clouded our engagements in recent years. Most business leaders I speak to who are invested in the Indonesian market express hope that Australia’s new Foreign Minister Bob Carr will be able to move our relationship to a new level. In addition to this macro – government response, there is a need for Australian business to realise the opportunity that exists in Indonesia. Australia is viewed as a positive presence and partner, and there are opportunities for Australian business to leverage their Australian branding to take advantage of the economic partnership opportunities that are increasingly presented in the Indonesian market.

 So is Australia ready to build a rich contemporary relationship with Indonesia? The answer should be yes……but that is dependent upon Australian government and business awakening to the partnership opportunities emerging in our closest neighbour.

The Negative Effect of Australian International Agricultural Policy on Australian Agricultural Exports

Animal Cruelty is inexcusable, and there needs considered policy responses that are not knee-jerk and business destroying

Australia has a long-standing reputation for producing high quality agricultural produce, and in many cases these different crops are unaffected by disease and parasites which affect the same crops. Protection of these crops from unwanted disease has been one of the key reasons for restricting agricultural imports. This has been the case up until quite recently with apples (from New Zealand and China), and Mangos from Indonesia. In the case of apples, their import restriction had to be lifted under risk of WTO retaliatory action, while mangos are still currently prohibited from being exported from Indonesia to Australia. There have also been ad hoc responses to other domestic political issues such as the live export of cattle to Indonesia and subsequent suspension of the trade. Ultimately Australian policy responses in these cases have affected or risk effecting Australian agricultural exports in the future, and it is important that Australia see itself as part of a global trading system, not isolated and insular.

Animal cruelty is a terrible thing, however, the reaction of the Australian Government, and its handling of the Indonesian Live Cattle issue has been less than satisfactory. The live export ban of Australian Cattle to Indonesia announced in June 2011 has been disastrous for the Australian Cattle industry, and more broadly to agricultural industries looking to expand their export exposure to the Indonesian market. Additionally there are important questions that need to be asked about the impact of this unilateral trade sanction upon the future trade relationship between Australia and Indonesia, and the Australia – Indonesia Comprehensive Economic Partnership Agreement that has been under negotiation for the past 12 months.

Unfortunately the Live Export ban was implemented unilaterally, without consultation with the Indonesian Government, and as such the Australian Government has made a crucial political ally in our region to look foolish and inept. The Australian Government effectively got on a very high horse and was determined to take a high moral stand, irrespective of the international political, and trade repercussions. This unilateral response has been made to appear xenophobic due to the lack of consistency in the reasoning for the ban. The Australian Government banned live export of animals to Indonesia, while allowing live trade to other countries which had similar animal welfare standards. The ban included abattoirs which did adhere to World Standards and Australian Best Practice, such as the Elders run Abattoir in Indonesia. And, most damning was that the moral standard the Australian Government was enforcing upon a sovereign country, were the same standards not enforced inside Australia – there are multiple Abattoirs in Australia (including SA) where stunning of animals prior to slaughter is not mandatory. How could the Indonesia Government not feel there was an underlying xenophobic reason for the Ban?

So what are the repercussions of this ban to the broader business community?

Since the re-opening of the live cattle trade, the export numbers have cut substantially by Indonesia. This effects Australian Farmers

The Indonesian Government subsequently announced a reduction in the import permits awarded to Australian Exporters. This has an immediate effect for the cattle farmers in the north of Australia, as it means they will not be in a position to sell all of their cattle. Losses are to be made. We have seen a number of large agricultural companies such as Elders announce profit downgrades and potential losses as a direct result of the ban. These large agricultural companies in many cases are diversified and so can pass on the cost to other parts of their business in the Southern Australia, but what about smaller companies and farmers? The ban may result in small farmers leaving the industry. There are also flow-on effects to complimentary industries such as transport in the north of Australia. This experience has been very damaging for the Indonesian Government, and has demonstrated the danger of being over reliant upon one trading partner such as Australia for vital food supplies. Australia has for many years leveraged its close geographic proximity to Indonesia to sell grain, meat, seafood and other agricultural products to Indonesia. The Indonesian Government will now reassess if this trade is in the best interests of the people of Indonesia. If the Australian government was prepared to cease all cattle exports to Indonesia over a small issue could they do it again but with a different resource, such as Grain? I would not be surprised if Indonesian agricultural importers looked to other markets in North and South America to diversify their imports, and secure supply. If this was to occur, then the net effect would be negative for farming communities in Southern Australia.

There have also been recently announced new restrictions on the import of Australian fresh food to Indonesia. This may seem a little strange given the food security issues at play in Indonesia, however, it is a case of Indonesia playing the global trade game well, and essentially playing the Australian game of arbitrary restrictions on imports. The restriction on import into Australia of Indonesian Mangos is great concern from Indonesian farmers and politicians, and when this is combined with the Live Cattle Trade debacle it is easy to see how the Indonesian government could see Australian policy as being biased. Ultimately these policy decisions affect the export ability for Australian farmers. Australian farmers therefore are punished for the policy decisions of ‘protectionism’ from the Australian Government. So when we think about the effect of the international agricultural policies, we should consider the broader impact upon the Australian business community. Let’s hope, now that Australia can mend some of the bridges it has been burning in the past year. The export success of Australian business relies upon it.

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