The shape of the world a generation from now will be influenced far more by how we communicate the values of our society to others than by military or diplomatic superiority. William Fulbright, 1964

Friday, August 12, 2016


When trade worlds collide          

The street peddlers who hawk kitchenware, garden plants and sweet pastries have no Javanese word for ‘disposable income’.  But they can sniff money, which is not too difficult when the carports are full.
Twenty-five years ago during the Asian boom, Sawojajar was just another ricefield on the outskirts of Malang, the ancient Indonesian hilltown - population one million.  Developers slapped asphalt on the richest volcanic soil in the world and knocked up crude terrace housing. They flogged two-bed homes at 20 per cent interest to young couples who’d broken with tradition: both worked.
The buyers represented another new demographic with no easy translation: Upwardly mobile.
Change accelerated when their ambitious offspring headed for the city’s 28 tertiary institutions. Previous generations had rarely gone beyond high school. Now the kids are in the workforce; they’ve moved from two wheels to four and park the babes with the oldies while working long shifts.
So extra storeys have been added and individual designs smothered sameness. Other tastes are changing: Three new boutique bakeries sell to locals who once ate only rice. The supermarket stocks yoghurt and iced coffee – unknown last year.
Enlarge by 60 million and this is the much-hyped ‘emerging middle-class’ whose accounts Australia is desperate to open but has yet to find the passwords.  The exceptions are grains (competing with Russia), milk powder, meat (now also from India) and a few niche foods.
Last year former Trade Minister Andrew Robb led the “biggest ever” delegation of 360 hungry traders to Java, all keen to partner.
Nine months later there are few births to announce. Australia-Indonesia Business Council President Debnath Guharoy, a man who has been more hard-nosed than most in his assessments of the hurdles, tried to be upbeat:
“While the feedback (from delegation) participants was very positive, there is no formal survey to back up any claims,” he told this writer.
“Robb's visit stirred Australia's lacklustre involvement with Indonesia … and more of our exporters are engaged.  New entrants from our non-traditional sectors are exploring investment opportunities … ranging from electricity to e-commerce, shipbuilding to tourism.
“Perth's Oropesa signed an MOU in Palembang to develop a new port in the Special Economic Zone. Others are looking at similar opportunities in the infrastructure arena.
“Existing investors … are adding hundreds of millions in dollars to their current operations across the country. Good news, getting better.”
But is it?  ‘Engaged’, ‘exploring’, ‘looking’ are euphemisms for failure.  Businesses that nail major deals usually trumpet success to investors – but the orchestra has been curiously mute. 
There are many reasons but two harsh facts remain deeply embedded: Our neighbors are protectionist and we are free traders.

The second is Indonesian pride and fear.
The nation of 250 million desperately wants to be seen as a big guy on the world stage.  But when it has to import rice (it was once a major exporter), the dream of self-sufficiency fades to black.
While reluctantly offloading containers, Indonesia dreads reliance on its Western neighbor for food and energy, worried the archipelago could be economically drowned and its farmers ruined.  This is Indonesia’s version of our asylum seeker nightmare and just as politically potent.
Last year Guharoy told the media that Australia was unpopular in Indonesia because it didn’t consult, citing the sudden halt in live beef exports back in 2011.
But Indonesia isn’t popular in Australia  because it takes a fickle approach to trade, one moment dropping harbor booms against imports, the next lifting  them when stocks fall and domestic prices rise.
Seeking stability Australia still publicly reckons a Comprehensive Economic Partnership Agreement is possible.  Negotiations collapsed three years ago but were cranked up again in March.
Till this month the signs were sunny.  Trade Minister Thomas Lembong, 45, was a Harvard-educated urbane banker who knew how to talk business in a language all understood.
He visited Australia, said an agreement was on its way and seemed to charm all he met.  Though not back in the Republic. The Australian effused he was an ‘apostle of liberalisation’ which was probably the kiss of death in a legislature and bureaucracy favouring tariff and tolls above competition. 
Lembong also failed to keep food prices down (an impossible task in an ill-disciplined and corrupt nation) so was flicked sideways.  He lasted just 11 months, his protectionist predecessor Rachmat Gobel, four weeks less.
News of Lembong’s replacement by Enggartiasto Lukita, 64, brought this scathing attack from The Jakarta Post’s managing editor Rendi Witular:   
“A veteran politician with a questionable past and no slight expertise in both domestic and international commerce (who) crawled up the national ladder” through property deals.  He was a member of the “graft-ridden budget committee.”
Witular added: “For the first time in more than a decade, Indonesia has a trade minister with no international business network and who lacks the eloquence in English to sway his international counterparts during trade negotiations.”
Lukita’s opposite number is also a newcomer.  Steve Ciobo replaced Robb (who retired from politics) in the new government and almost immediately headed to Jakarta waving a ‘position paper’ called Two Neighbours: Partners in Prosperity.
The jargon proposes more people-to-people links because “there are vast, untapped areas of complementarity.” There’s no Javanese word for that either.
No counterpart document has come from the Indonesians. A similar paper was produced earlier this decade with no discernible result.
Ciobo, a lawyer and Liberal politician for the past 15 years, came out of the meeting with Lukita saying nothing of value other than he had nothing to say.  
Despite the changes in personnel Indonesia and Australia continue to claim they want a free trade deal by the end of 2017. By then there’ll be a new minister in Jakarta with another ideology, and headlines from Canberra will be shouting: Trade Deal Soon.
Meanwhile back in Sawojajar no-one has time for reports or gala dinners. They just get in and meet the needs.

 (First published in New Mandala 12 August 2016 - see:

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