Australian business sets sail for new Indonesia ties after diplomatic tension
Indonesia wants foreign investment to develop its vast maritime resources. Juergen Freund
by
Greg Earl
The Indonesian government is examining a joint venture to build Tasmanian-designed boats as part of President Joko "Jokowi" Widodo's push to revive the country's maritime transport capacity.
Indonesian investment officials will visit Hobart-based boat builder Incat on Tuesday in the first stage of a co-ordinated, two-week bid to rebuild business ties between the two countries after diplomatic tensions over the past year.
The events include Prime Minister Malcolm Turnbull making Jakarta the first stop on his first major overseas trip on Thursday, a planned visit to Canberra by the highest profile figure in the Jokowi government, Maritime Affairs Minister Susi Pudjiastuti on Friday, and a business delegation of almost 300 people led by Trade Minister Andrew Robb next week.
"It's going to be a pretty intensive period of building business ties," said PwC Asia partner Andrew Parker, whose firm has partly sponsored a new study of potential business co-operation which will be launched by Mr Robb.
The events in Australia and Indonesia underline a new effort by the Jokowi government to improve foreign investment and trade under a reshuffled ministerial team after a series of decisions earlier in the year prompted concern the government was shifting to more economic nationalist policies.
The two countries agreed to a loose schedule of at least one ministerial visit each way a month about three months ago, leading up to the business events which will be the most extensive series of such events since the big push into Indonesia under the Keating government in 1994.
'Massive market'
"Indonesia is generally a massive market. The president's maritime focus blends beautifully with what we are trying to achieve with our vessels," Incat marketing executive Richard Lowrie said.
He said Incat was discussing joint-venture production of ferries and maritime patrol boats in Indonesia for the Indonesian market but still planned to run its export business out of Hobart.
The Australian business and government effort to participate in President Jokowi's maritime infrastructure development priority will be underlined by an agreement between the Port of Townsville and Indonesian port operator Pelindo in Canberra on Friday.
But other Australian businesses are looking at other infrastructure opportunities in Indonesia now the government has pushed through some land acquisition reforms and accelerated spending as the economic growth rate has come under pressure.
Mr Parker said Indonesian officials were now under pressure to deliver on key performance indicators for trade and investment set down by President Jokowi. "He is about doing things – that's way he manages his government. He is holding people to account."
Provincial governors from East Java, Lampung and Banten will also visit Australia this week as part of a campaign by the Jokowi government to highlight how project approval decisions have been pushed down to the local level in many cases, making it necessary for investors to met local officials.
Economic counsellor Irwan Sinaga, who has organised a business conference in Canberra for Ms Pudjiastuti's visit, said, "The money is really in the local governments now that we are autonomous."
Risk averse
He said the Indonesian government knew that Australian companies were reluctant to take risks in Indonesia and had been talking about this issue for the year since the Jokowi administration came to power.
But he said there was a high level of interest by Australian businesses in meeting Ms Pudjiastuti and officials from the investment approval agency this week before some of those businesses also join the Australian Business Week in Jakarta mission led by Mr Robb, who will also attend the annual conference of the Indonesia Australia Business Council in Yogyakarta.
Newly appointed Trade Minister Thomas Lembong will speak at the conference and may expand on recent indications that the Jokowi government wants to increase its involvement in free-trade agreements, including the Trans-Pacific Partnership. Discussions with Australia on an economic co-operation agreement have been moribund since last year.
Indonesia now ranks as Australia's 11th largest goods trading partner with $12 billion in two-way trade, but the investment relationship is weaker with $5 billion in direct Australian investment there.
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