With Kevin Rudd returning as Australia’s Prime Minister, ousting Julia Gillard, Indonesia has again begun to focus on the relationship with its southern neighbour. However while the Australian government has issued a new country strategy for Indonesia, key issues need to be addressed, and more needs to be done.

Australia’s shift in Indonesia policy is promising, but more is needed

With Kevin Rudd returning as Australia’s Prime Minister, ousting Julia Gillard, Indonesia has again begun to focus on the relationship with its southern neighbour.

However while Australia’s Department of Foreign Affairs and Trade has issued a new Indonesia strategy, focusing on Indonesia as a key partner in Asia, and Rudd has visited Indonesia as the first overseas trip of his new term, at a time when Southeast Asia’s biggest economy is becoming one of the world’s premier investment destinations and the country is increasingly seen as a key regional player, expanding and strengthening Indonesia-Australia relations appears to remain a lower priority than it should.

TIS analyzes the country strategy and argues that Australia should do more to engage its closest neighbour, especially economically, and must seek to strengthen public perceptions of Indonesia as a major developing economy and partner in economic, cultural and security affairs.

Australian and Indonesian media have been rife with headlines over the last week examining the relative weakness of the linkage between the two countries. Despite their close geographic positioning, aligning security interests and some similarities in economic makeup, relations currently tend to focus on “boats, beef and Bali,” Australia’s ABC notes.

While Rudd’s visit – which included a meeting with Indonesia’s President Susilo Bambang Yudhoyono – may have generated headlines and worked some cosmetic improvements to the relationship, perhaps more important going forward is the official government strategy as outlined by DFAT.

The country strategy goes some way towards recognizing the growing  importance of Indonesia’s economy as an emerging regional powerhouse and notes that Indonesia is one of the key partners with which Australia must engage over the next decade amid the ongoing shift in economic power towards Asia.

 

TIS Analysis shows that public perception of Indonesia in Australia is still skewed towards a view of the country as a regional backwater plagued by poverty, human rights issues including smuggling of asylum seekers to Australia on rickety boats, mistreatment of Australian beef cattle, one of Australia’s major exports to the country, and terrorist threats.

The DFAT strategy notes that

Indonesia has always been strategically important to Australia. However, in an increasingly multi-polar world, where large regional powers will grow in political and economic significance, Indonesia’s strategic importance is set to increase. Indonesia is a valued partner for Australia in negotiating the global economic agenda of the G20. It is an important fellow player in the United Nations and in the region, including in the East Asia Summit and APEC.

Indonesia continues to play a strong regional leadership role in ASEAN. Australia’s challenge towards 2025 is to harness and develop the skills we need across the country, to deepen and strengthen our relationship with Indonesia.

As Indonesian President Susilo Bambang Yudhoyono eloquently put in an address to the Australian Parliament in 2010, “we need to bring a change to each other’s mindset”. Indonesia is in the midst of a significant economic, social and political transformation, and it is important for Australians to understand what this means for Indonesia and for us.

 

It says that looking towards 2025, Australia needs to change perceptions across the entire community, becoming more “indonesia-literate” including by developing language skills and cultural awareness.

 

Only 0.6% of Australian students finish high school with fluency in Bahasa Indonesia, according to government data, while fluency rates in Japanese, Chinese and Korean are also low, although enrolment rates are higher.

 

At Australian universities, enrolment rates in Bahasa Indonesia classes have dropped by 40% from a decade ago, with several major universities canceling their Indonesian studies programs, in part due to government classification of Indonesia as a high-risk destination following the Bali and Jakarta bombings a decade ago.

 

 

TIS Analysis of Bahasa Indonesia students over several years at a major Australian university indicates that even for those enroled in Bahasa Indonesia, few take the subject as a major, and overall fluency rates even for those completing three or four year courses in the language remains relatively weak.

Indonesia’s reaction

Indonesian commentators have reacted relatively tepidly to the strategy report.

English-language daily The Jakarta Post describes the strategy as “solutions without problems,” which “often feels like a quick list of remedies that do little to address fundamental problems that will color the relationship.”

Materials from DFAT itself are instructive – the department quotes a submission from Indonesian school children that “we have a saying in Indonesia, 'tak kenal maka tak sayang'. This means that if we do not know each other then we would not care for each other. Knowing more of each other's needs, views and thoughts is an important building block in our relationship.”

Strengthening Bahasa Indonesia capacity at educational institutions – especially high schools and universities – should be a key plank in the government’s shift in strategy. In the 21st century, there is little benefit to be gained for Australian students by learning European languages such as French – while Indonesia’s language education standards are weak, at the very least all school students are required to take English lessons for several years, and even a basic grasp of the language is an incalculable advantage when fostering relations – whether business, cultural or other.

 

Economic relations also need work

 

In terms of economic relations, the country strategy also says that

Looking towards 2025, the challenge for Australia is to change perceptions across the entire community. To achieve this goal, Australians will need to develop and harness new skills that are relevant to Indonesia. Indonesian language skills are important.

 

We will also need a greater appreciation of Indonesia’s culture, society, businesses and economy. Towards 2025, the challenge for Australian communities will be to build awareness of, and the skills needed to capitalise on, the cultural and educational opportunities offered by contemporary Indonesia.

 

Awareness will also be a key priority for businesses in building stronger trade and investment relationships.

Strengthening the business-to-business framework, environment and partnerships will be critical.

 

TIS Analysis indicates that there is a long way to go before Australian-Indonesian business ties are up to the level of Australia’s ties with other major trading partners, such as China.

 

A TIS interview with an Australian recruitment consultant, who recruits foreign and local workers within Australia and outsources work to other countries, indicates that perceptions of Indonesian business practices and the quality of the local labour force are weak.

 

This person states that he would prefer to recruit workers from other countries – such as the Philippines – where rates of English ability are higher, indicating that he would not consider outsourcing skilled work to Indonesia, as communication would be an insurmountable challenge. He also says that overall education rates in the Philippines are higher than in Indonesia.

 

However this person says that he is optimistic about Indonesia’s economic development and would be keen to support more labour-intensive industry in the country. The person also suggested that Australian resources firms, in the midst of an apparent downturn that may even lead to a recession, should be looking north to Indonesia to drum up more business.

 

Indonesia remains only the 12th-biggest trading partner for Australia despite its geographical proximity and the demand in Indonesia for Australian beef and other goods.

 

Meanwhile, investors from Japan and Korea – who have long been willing to take on the risk of doing business in a fast-growing developing country in exchange for higher return on investment – are pouring into Indonesia’s economy, far outpacing growth in investment and trade by Australia.

 

Indeed, Australian thought leaders have long urged the country to engage more.

The McKell Institute  notes that

The old rhetoric that Australia’s geographic location and mineral resources will be enough to sustain long-lasting and deep relationships with our Asian neighbours is out-dated and against our interests. Our future peace and prosperity rests in the region, not separate to it.

The Lowy Institute for International Policy notes that perceptions of Australia in Indonesia are markedly different from expectations.

- Indonesians are concerned about China’s rise: 56% say it is likely that China will become a military threat to Indonesia in the next 20 years.

- 61% of Indonesians are in favour of a company, bank or investment fund controlled by the Australian government buying a controlling stake in a major Indonesian company

- Of 21 countries, Australia was the fourth most warmly regarded moving from a lukewarm 51° recorded in the Institute’s 2006 Indonesia Poll to a warm 62°.

 

It finds that

Indonesians were most supportive (90% in favour) of ‘promoting more educational exchanges between Australia and Indonesia’ and ‘trying to make it easier for Indonesians to get visas to study and work in Australia’ (85%). There are also very high levels of support for ‘building closer relations with Australia’ (82%), ‘promoting more trade and investment’ (80%) and ‘building greater understanding between Australia and Indonesia’ (80%).

 

TIS Analysis: Public perceptions, and macroeconomic fundamentals, indicate thatAustralia’sgovernment would do well to shift at least some of its economic focus to Southeast Asia from the East. While Indonesia is on a relatively stable growth trajectory, despite recent wobbles, there is a chorus of long-term bears who think that China’s searing growth story may be overrated and that the centralized elements of the country’s economy could be pushing the country towards a cliff. Even a relatively moderate trimming of Chinese growth has threatened to tip Australia into recession, while there are warning signs that an overreliance on the Chinese demand-driven resources boom is a threat to Australia’s broader economy. But despite these potential pitfalls, bilateral trade with China totals $120 billion a year and moves are afoot to make the Aussie dollar and Chinese renminbi fully convertible.   (Expect more analysis by TIS on the Australia-China relationship in coming editions.)

The strategy report also touches briefly on issues like the trade in wheat, for which Indonesia is Australia’s biggest overseas market, and promises lower barriers to entry for business, while providing few clear details.

It also fails to touch on the issues of live cattle exports, or on asylum seekers – although Rudd in his visit to Indonesia addressed these with local authorities.

Australia in 2011 briefly banned live beef cattle exports to Indonesia after TV footage emerged of animal rights abuses at Indonesian cattle facilities, while asylum seekers from trouble spots in the Middle East, Africa and elsewhere frequently pass through Indonesia on their way to seek passage to Australia in rickety, unsafe boats operated by Australian and Malaysian people smugglers – many losing their lives in the process.

Cattle Council of Australia president Andrew Ogilvie said it was the "first step in starting afresh" in relations with Indonesia over the trade. He warned that cattle producers in Australia’s northern areas are in a "perilous situation" due to the live export ban and severe dry weather conditions, although he said the weakening Australian dollar is mitigating the damage. Ambassador Nadjib Riphat Kesoema says Indonesia wants guarantees there will be no future bans, and is confident the trade will return to previous levels, although there is no firm deal as yet. Indonesia has reduced its import quota from 660,000 head of cattle a year to 260,000 despite the lifting of the ban, and Australian graziers say the industry is in crisis.

TIS Analysis: While mistreatment of animals is an emotive issue, Australia’s reaction can be seen to have been heavyhanded and reactive – domestic industry has slated the policy response, and the trade has yet to recover to anywhere close to its previous levels. Addressing alleged animal rights abuses is something that can be done on a case-by-case basis at individual facilities or companies, rather than via a blanket ban – this not only hurts trade, but harms perceptions of Indonesia in Australia and creates bad feeling on both sides.

The issue of “boat people” – Australian vernacular for refugees arriving on its shores by boat – is far more intractable and has much wider-reaching implications.

Refugee arrivals are a hotly debated issue on both sides of the fence, with Indonesia claiming it lacks the resources to prevent asylum seekers passing through its borders on their way to Australia, and to stamp out people smuggling, while refugees themselves are often left in limbo in Indonesia with few options other than to try boarding a boat.

Rudd and Yudhoyono signed a joint communique rejecting the Australian federal opposition’s “turn back the boats” strategy, signalling that the current leadership is keen to seek common ground with Jakarta.

While there is merit to both sides of the Australian end of the debate – seeking regional solutions or unilaterally refusing to allow asylum seekers entry – it could be instructive to listen to what Indonesians have to say on the issue.

Whilethe asylum seeker issue is outside TIS’s scope of coverage,commonground can and should be sought in finding a solution – and the Indonesian perspective should be taken into account. TIS believes thatin the spirit of Australia’s new stance on Indonesia, listening to Indonesian perspectives, such as that published by The Conversation ahead of the meeting between Rudd and Yudhoyono, can only be beneficial in seeking solutions to this difficult, yet crucial, bilateral issue.

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