TALKATHONS DONE - NOW THE WALKATHONS

 TIME TO STIR


It’s so obvious, and so is the question: Why wasn’t it done long ago?


The logic of geography is clear; on one side a huge under-populated continent efficiently producing vast amounts of food. Next door an overcrowded archipelago that can’t grow enough to satisfy its almost 270 million citizens.


Clearly the two should get together and trade. No doctorate in economics needed to see the sense, but understanding the social and political realities helps explain why it hasn’t happened.

A New Platform for Deepening Economic Ties tries to untangle the almost completed Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA).

 https://perthusasia.edu.au/getattachment/Our-Work/A-New-Platform-for-Deepening-Economic-Ties-The-In/PU-139-Trade-6-IA-CEPA-WEB.pdf.aspx?lang=en-Au

The 36-page report is from the USAsia Centre - ‘Australia's leading think-tank for the strengthening of relationships between Australia, the Indo-Pacific and the US’. Most funding comes from governments. It’s based at the University of WA.

The report’s clunky title and bland text suggest authors Poppy Winanti and Kyle Springer have been seduced by the negotiators’ bureaucratese. Fortunately clever infographics lift understanding. Here are the issues:


‘Indonesia’s share of Australian trade has remained far smaller than Australia’s trade with other nations in the Indo-Pacific region. It has consistently sat at around two per cent of Australia’s trade, with no growth trends for the past ten years.


‘Not only does Australia trade far more with distant economies in the region than with its closest neighbour, Indonesia-Australia economic ties suffer from the lowest bilateral trade volumes of any contiguous pairing within the G20.’


Minus jargon, the IA-CEPA is a free trade agreement between Australia and Indonesia that rubs out tariffs and other barriers. These have long boosted Jakarta and Canberra tax takes, but made buying and selling across national borders costly and onerous.


Inevitably many traders have given up and looked elsewhere for easier deals.


It took more than a decade to create the IA-CEPA and it’s still unsettled. The eager Aussies have done their bit; now they’re waiting for Indonesia’s April-elected parliamentarians to say OK.


They probably will, as their advisors recommend uncapping pens. Last year President Joko Widodo urged Indonesians to shake off any inferiority complex and see their potential as international business stars.


The talks have been arduous and tough. However the walk ahead may be even longer as rent-seekers won’t lift barricades that quickly.


Another fear is that an unforeseen event might tip the deal on its side before it gets traction. Like a blown tyre on a motorway can lead to a roll-over and a pile up, so perceived insults to national pride could shut down the show.


This happened in 2013 with revelations of Australian spies tapping the phones of President Susilo Bambang Yudhoyono and his late wife Ani. Unsurprisingly the trade talks shuddered to a halt.

When about to restart Indonesia executed two Australian drug runners, ignoring mercy pleas from the then Prime Minister Tony Abbott.


This is why all the urgency in getting this deal moving is being fuelled by Australia.

The IA-CEPA gets a run almost every week in the mainstream media Down Under, and often outside the business pages. The rural press has gone gaga with forecasts of huge sales. However it’s rare to read much in the Republic.


This suggests there’s more here for Australia than Indonesia, though the report points to the benefits ‘anticipated to boost Indonesian exports to Australia’. Electric cars get a mention – though they’re way down the road - along with furniture and textiles.


Even with a showroom-polished IA-CEPA some Indonesian exporters won’t buy; complex quarantine rules and quality controls stay put, making the small Australian market too bothersome unless profits are sizeable.


Also contentious is the increased quota on work and holiday visas eventually allowing 5,000 Indonesians a year into the Great South Land. Australian unions have objected yet these visas are unlimited for most European backpackers who labor on market gardens and farms.


After an IA-CEPA handshaked by all, bulk carriers of Australian wheat won’t necessarily offload straight into Surabaya’s silos. If Black Sea growers can deliver quality grains cheaper than the neighbours, then that’s where the bakers will buy.


Service industries like education and health care will be open to Australian providers. Getting approvals may be the easiest part; the labyrinthine Indonesian bureaucracy

is infamously corrupt, opaque, and untouched by the IA-CEPA. Only the most persistent and flexible entrepreneurs will survive.


The Australian industry-backed group Sustainable Skills has been struggling for three years to develop trade training in Indonesia. It’s still talking. So are German providers who’ve also spotted a market.


President Widodo has been calling for foreign money but lenders are wary. According to the report Australia has $5.6 billion invested next door, compared with $720 billion in the US and $480 billion in the UK. Even little Luxembourg gets four times more in deposits from Australia.


The reasons for this weird imbalance include Indonesian nationalists’ fears of relying on a Western country for loans and food security, and a flawed Investor State Dispute Settlement system. In short – distrust.


Ironically trade was flourishing long before European colonialists arrived in the region and started imposing rules. Makassan adventurers were regular visitors to the Kimberley coast, gathering shellfish and sea slugs for Chinese medicine.


They brought iron cookpots, metal tools, cloth, rice and exotic plants like tamarinds in their multi-hulled prau. Some returned to South Sulawesi with Aboriginal wives and artifacts. Where trade treads, friendships follow – another reason for pushing the IA-CEPA.

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First published in Strategic Review, 27 November 2019: http://sr.sgpp.ac.id/post/where-trade-tread-friendships-follow

SHUFFLING AROUND

Still in the groove                    

In pre-digital days journalists reporting inaction on critical issues favored the metaphor of a needle stuck on a record turntable.

The revival of vinyl has kept the cliche circulating - particularly with new urgings to stop Australian-Indonesian relations from forever going round and round.

The latest wind-up comes from a well-intentioned group of 21 academics, economists, business people, NGOs and public servants; they gathered in Perth in July for a  closed-door session seeking better ways for the two nations to cooperate. This Track 2 (outside official channels) initiative was engineered by the USAsia Centre at the University of Western Australia.

The result of the one-day 'extensive in-depth discussions' is the just-released report The Power of Proximity: Enhancing Australian-Indonesian Economic Relations.   Grand title - but that's about all.

The test of any think tank's effectiveness is whether it articulates practical action or is struggling for traction. The latter is the case here - only half the 12-pages have much to say and even less that's original. The words sound energising but none have driving power.

To be fair this was not the ambitious matchmakers' fault.  Their brief was worthy but flawed.  The difficulties in getting Indonesia and Australia to develop a trustful relationship after years of hot-cold wariness are formidable. Repairs require firm political will on both sides of the Arafura Sea.

Professor Tim Lindsey of Melbourne University once called the two countries the 'odd couple' of Southeast Asia. The pair live in the same location but long-term  marital tensions are too strained to share one bed.

The one politician present at the workshop and only as an observer was Bill Johnston, the West Australian Minister for Asian Engagement.  This is the smallest of his four portfolios. The two biggest names Marty Natalegawa (Foreign Affairs) and Mari Pangestu (Trade) are former ministers long out of office.

All the report's ten recommendations carry auxiliary verbs rather than imperatives. Although many participants were more mid and regional than peak and central - Indonesia’s official reps were from consulates - most had long records in the game and their voices deserve the ears of government.   

In the current climate those who get heard are inner circle ambassadors, Cabinet ministers from Jakarta and Canberra, gold star corporate tycoons and party  chessmasters with the president or prime minister's numbers on speed dial. When these giants murmur things happen.  

The report's author Kyle Springer from the USAsia Centre later commented that  'Australia simply has yet to see Indonesia as an opportunity ...There is yet a narrative of Indonesia’s rise and what it could mean for Australian businesses ... Instead of perceiving each other as a threat, they should choose to see each other as an opportunity.' The repetition suggests exasperation.

But why?  The answers get nudged out for this room is full of elephants.  The pachyderms which won't leave include the growth of fundamentalist Islam, surging nationalism, whether the Indonesian military is playing political games, and human rights concerns in West Papua.

For the Indonesians it's fear that Australia is plotting to fracture the Unitary State by supporting secessionists, and promote 'liberal lifestyles' - code for acceptance of homosexuality. Any of these beehives could be tipped over by agents provocateurs in the lead-up to the 2019 General Elections.

The closest the report's language gets to reality is this comment: 'Bilateral crises derail progress on economic issues and Australia and Indonesia lack a mechanism to manage and communicate during diplomatic crises'. That should be an all-stations alert.

To an outsider the equations look simple: One highly-efficient exporter just over the horizon from 260 million people in an economy growing at three per cent annually. Why does Australia do more trade with tiny New Zealand (population 4.5 million) than the colossus that's closer?

How come more than a million Australians every year holiday with the Balinese but Indonesians don't dart Down Under for a break?  Just 156,000 made the short trip after negotiating a 15-page visa questionnaire and paying more than AUD 150.  Australians have visa-free entry into Indonesia.

Outside the forum participant Ross Taylor, president of the Australian-based Indonesia Institute echoed exasperation: “We talk about building closer links,” he told Strategic Review. “But both governments still make it hard for young people to move between our two countries due to unnecessary red-tape”.

Why is the fourth largest country in the world desperate for infrastructure investment but Australian developers aren't building?  They see Indonesia as high-risk with a questionable legal system. Australia invested AUD 2.2 trillion overseas last year but only AUD1.9 billion in Indonesia.  

But as Springer points out, China: 'with its lack of government transparency, shaky property rights, and bureaucratic corruption, it actually falls rather close to Indonesia on the World Bank’s ease of doing business index.'

For the record China ranks 78, thirteen points better than Indonesia.

The Power of Proximity leans on the trade trends report The World in 2050 by the international financial analyst Pricewaterhouse Coopers. 

This forecasts Indonesia overtaking Russia, Mexico and Brazil to become the fourth largest economy behind China, India and the US.

Fogging the USAsia group's vision has been the awkward progress of the Indonesia – Australia Comprehensive Partnership Agreement (IA-CEPA).  Negotiations are supposed to be finalised this year.

The laptops were opened in 2013, closed over domestic disputes, and rebooted in 2016.  Once called 'free trade talks' the term is now seldom heard suggesting the results will not meet expectations.

(In a separate forum Mari Pangestu revealed that while Trade Minister she talked of 'fair trade' to avoid antagonising economic nationalists.)

The Power of Proximity continues the trend of trade-or-fade auguries and muted responses.  The conservatives in Canberra seem more concerned with defence and security believing trade is best left to free-market entrepreneurs.

The experts who gathered in Perth are not so convinced, concluding: 'In short, despite robust diplomatic, political and military ties Australia and Indonesia have yet to fully take advantage of the power of proximity.'  

The needle stays stuck.

First published in Strategic Review 16 October 2017

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LOVE SAUDIS, LOATHE OZZIES

Indonesia’s ‘likes’?  Not the isolationist neighbors                       

On the surface the foundations for friendship are standouts: Australia backed Indonesia in its struggle against the return of colonialists last century and not just through words.  Waterside workers blockaded ships supplying the Dutch with arms.

When natural disasters hit, the neighbors move fast and dig deep; relief following the 2004 Indian Ocean tsunami exceeded AUD $1 billion.

More than a million Australians visit Bali each year.  Every sun and fun seeker spends on average well above  US $1,000 according to Indonesian research.

This year AUD $323 million goes to aid projects across the archipelago.  Indonesians are hungry for Australian meats and grains, and thirsty for milk; producers are keen to trade and want to send more. 

Political bonds have bounced back, according to Foreign Minister Julie Bishop.  She reckons  relationships are ‘in very good shape’ having been pummelled senseless in 2015.

In that year ambassadors on both sides were yanked home after Indonesia forced reformed drug couriers Andrew Chan and Myuran Sukumaran before a firing squad.

All regrettable – but all past, says Australia. Time to move on. Spin is a bureaucrat’s art form, but a release of fresh data should sink Canberra’s buoyancy.

Despite all the goodwill Indonesians reject their neighbor’s hand.  Instead they prefer a feudality 8,000 kilometers distant with a reputation for brutality that’s so bad Jakarta bans citizens working there as maids and labourers.

New research asked: ‘Which country has the closest relationship with President Joko Widodo’s government?’  Indonesian respondents chose Saudi Arabia (47 per cent), followed by China (38 per cent), and the US at six per cent.

Finding Australia in these ranks is like a Where’s Wally? children’s puzzlebook: Just two per cent.

The figures come from the Asian Research Network’s Survey on America’s role in the Indo-Pacific published by the US Study Centre at Sydney University and the Perth USAsia Centre at the University of Western Australia.

 The authors dub it ‘the first major, multi-country survey of public opinion since the 2016 US election … the product of a network of think tanks in the Indo-Pacific - Australia, China, Japan, India, South Korea and Indonesia’.

The survey was run in early March 2017.  It explores ‘the public perception of free trade, foreign investment, national security concerns, the likelihood of conflict, isolationism, military presence, immigration, the influence of US President Donald Trump and US and China relations’.

Between 750 and 908 interviews were run in each country, most self-administered through the Internet though those in India and Indonesia were ‘in-person’. A similar survey last year – minus India - provides a handy baseline.  The absence of Malaysia and Singapore is a curious omission as both are major players in the region.

The results show that the popularity of American values has shrunk. With a new administration in Washington more than half of Australians questioned see American influence negatively, though not to the point where they fear the US won’t ride to the rescue should invaders hit the vast plains of the Great South Land.

Who could those baddies be?  Although Australians and Indonesians reckon chances of a war between them are low, with a clash involving titans China and the US more likely, results are ‘highly asymmetric’.’ Six per cent of Australians but 17 per cent of Indonesians say ‘conflict between their nations is very or extremely likely’.

Isolationism runs deep in Australia; almost half reckon closing the curtains is the right response to spats afar. Meanwhile across the Arafura Sea nationalism surges, as it does in India.

Consistency is not a strength of attitudinal surveys and this one holds to the tradition. When asked: ‘Which country is the most hostile towards Indonesia?’ Indonesians nominated Malaysia (41 per cent), then  Australia (22 per cent) and the US (13 per cent).

Yet elsewhere in the report Malaysia is considered the second friendliest nation after Saudi Arabia. The Southeast Asian federal monarchy is mainly Muslim, so it seems faith drives feeling.

Indonesian section author Dr. Dino Patti Djalal, founder of the Foreign Policy Community of Indonesia, is a former Indonesian Ambassador to the US.  He commented that support for Saudi Arabia is ‘not surprising since Indonesia has the world’s largest Muslim population, many of whom go to Mecca each year’.

The first part of the last sentence helps explain, but not the second. Earlier this year King Salman bin Abdulaziz Al Saud’s visited Indonesia; he was the first Saudi sovereign in almost 50 years to drop by the nation with the highest number of Muslims,

After talks President Widodo revealed he’d won a new haj quota of 221,000 a year.  That’s 0.08 per cent of the population - hardly ‘many’.

What other factors are in play?  They’re unlikely to be financial. After the octogenarian ruler and his 1,500-strong entourage had farewelled the cheering crowds, Indonesians discovered that adding pomp and splendour to a shared religion doesn’t equal cash.

Once out of waving distance the Saudis announced they’ll invest US $65 billion in China, almost ten times the Rp 89 trillion (US $6.71 billion) sum pledged to Indonesia. Widodo said he was  ‘disappointed’ and drily noted that he’d even held a brolly to keep Indonesian rain off the old man’s thawb.

This snub could be a pragmatic view that putting the theocracy’s oil money in a godless socialist one-party nation will be safer and yield more. It could also mean that the Saudis have a poor opinion of democratic Indonesia which is not an Islamic state.  They also know risking riyals in the republic can be hazardous.

On the World Bank’s Ease of Doing Business Index Indonesia ranks 91; New Zealand and Singapore head the list. The same two nations also lead in clean administration measured by Transparency International’s Corruption Perceptions Index. Indonesia comes in at number 90.

Research into the opinions of Saudis towards Indonesia could reveal whether the warmth is reciprocated, and if not, why?  At the same time Australians might ask: Why don’t our neighbors like us?

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First published in Strategic Review 20 June 2017.  See:
http://sr-indonesia.com/web-exclusives/view/indonesia-s-likes-not-its-isolationist-neighbor

WHY WE STILL NEED SBY

Could SBY bridge the divide?                                                    Duncan Graham

People Can Change - but not President Jokowi, as portrayed by executed Australian Myuran Sukumaran

 Late last month a small workshop was held in Perth.  It involved 20 influential Australians and former Indonesian president Dr Susilo Bambang Yudhoyono [SBY] who retired last October.  The Constitution prohibits a president serving more than two five-year terms.

The private chat encouraged more optimism than SBY’s public speech a day later because participants believed their visitor was listening.  However the formal address was not a pathfinder and largely bypassed by the media. 

Here was a chance to refill the tank with high-octane ideas so the coughing and spluttering vehicle carrying his nation and its neighbour into the future might find second gear.  Sadly SBY missed the turn.

This is not to diminish the importance of the house-full event organized by the USAsia think tank, which has made SBY a Senior Fellow. 

Anything said by the previous leader of the world’s third largest democracy deserved an audience.  His 2010 speech as President to the Federal Parliament encouraged belief that both nations could bond better.  SBY scattered goodwill and we loved it, even if his past as a general in a brutal army made us feel a little queasy.

Since then much has gone sour. Australia bugged the phones of its “great friend” and his wife Kristiani – refusing to apologize for what former PM Tony Abbott called “reasonable intelligence-gathering operations”.

Australia ignored regional solution proposals for handling asylum seekers fearing corrupt authorities would make plans unworkable. It then violated territory to turn back Indonesian ferries knowing the Republic’s navy was too weak to react.

There were other insults, enough for a touchy guy to snub the island continent forever.  That SBY has overlooked the contempts shows mettle – a quality Australians respect.

So he’s scaled the high moral ground but so far failed to capitalise on the achievement.  It was the same in 2004 when directly elected with a majority above 60 per cent.

In those brief and blissful moments SBY had the people’s mandate to reform the judiciary, start repairing the nation’s crumbling and congested infrastructure, and reinforce the ideology of Bhinneka Tunggal Ika [Unity in Diversity] by respecting minority rights.

But he dithered, and the opportunities drowned two months later; a tsunami hit Aceh in North Sumatra and all energies rightly focussed on recovery.

Now SBY has another chance.  He’s only 66, but already an eminence grise. He ruled for a decade without using the Army; Indonesia stayed intact while other Muslim-majority nations imploded; poverty was reduced on his watch and the economy strengthened. 

He has a real doctorate, an Order of Australia and shirtfronts of international awards. He’s also a visiting professor at the University of Western Australia.

 He speaks and even sings English. Unlike his successor Joko [Jokowi] Widodo who is reported to be indifferent to foreign affairs and uncomfortable among diplomats, SBY is so cosmopolitan he probably knows the best nasi goring in the world’s capitals. 

Indonesian electors remember him as a pedestrian president, but overseas he has the gravitas absent in the current leader.

SBY used his Perth address to challenge the neighbors to rediscover each other, though news reports emphasised his comments on commerce.

Business is hugely important but canny traders don’t need a retired politician to chant the mantra that Indonesia is big and getting bigger, so more mouths to feed.  Any entrepreneur unaware of this hard-set fact should start Googling Sits Vac.

If Indonesia hopes to lure more than the 265 Australian companies now in the archipelago [there are 360 in tiny Dubai, according to Trade Minister Andrew Robb] it must answer some blunt questions:

When will Indonesia develop a clear and stable policy on commodity imports?  When can foreigners invest knowing disputes will be settled legally, fairly and openly?  When will the corrosion of corruption be confronted with Singaporean resolve?

SBY is no longer leading man but he hasn’t left the stage.  As head of the fading and graft-tainted Democratic Party he knows how the gears grind in Jakarta’s political machine.

This creates an advantage of contacts, and a problem of impartiality.  Smart ex-leaders cut past ties to avoid the silent-phone curse that bedevils the power-famished, like Malaysia’s Mahathir Mohamad.

 Britain’s Tony Blair became a peace envoy in the Middle East while New Zealand’s Helen Clark headed for a top UN post in New York. 

Likewise an important new role awaits SBY away from Jakarta – as an international relationships guidance counsellor. Where better than with Australia where the shouting matches are a constant concern?

SBY’s Perth speech spoke of more people-to-people exchanges, particularly students.  Here he can do something; Australia is willing [more than 10,000 Indonesians are enrolled in secondary and tertiary education] though few Australians have found the right visas to open their tablets in Indonesian tutorials.  It seems Indonesian Immigration has a touch of xenophobia.

In the private meeting SBY was told that “some of Indonesia's smartest young people should be invited to work in Australia with tech start-ups to create innovation jointly between our two countries. Indonesia has some brilliant young minds.”

A splendid idea, with a rider:  “Australians need to understand Indonesia is not an enemy but rather a potential partner.”  To change that perception the Republic has to remove a serious impediment – capital punishment.

For five of SBY’s ten years in office he kept his nation on the right side of history.  When the firing squads reloaded, three of the four victims were murderers.

In April SBY abandoned a visit to Australia after drug traffickers were executed, citing a “disturbed relationship”.  Foreign Minister Julie Bishop described his words as “gracious” and evidence of disquiet among Jakarta’s elite.

So SBY has some moral authority, though tarnished, to champion abolishment.  Now he needs the courage to help Indonesia join the majority of nations that have freed themselves from the evils of primitive punishment.

There’s urgency here:  further shootings are promised.  If these go ahead the bullets will shred more than flesh.  There’ll be deep wounds to reputation and relationships. 

SBY might respectfully point that out to his successor using the most refined Kromo [high-level Javanese].  From his vantage point SBY can see how judicial murder demeans a government, dashes down the positives and nurtures ill-will.

Others have said this before; but the Elder Statesman’s baritone will be heard in the archipelago above any chorus of foreign human rights activists calling for - wishing for, praying for - a compassionate Indonesia.

(First published in New Mandala 9 October 2015)

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