WINNING THE NICKEL ROMANCE - OR IS IT A WAR?

 WRITE-UP TO WRITE DOWN: NICKEL DIVES DEEP

21 workers died in an accident at a Chinese nickel smelter on Sulawesi island.  Most were Indonesians.

Indonesia’s incoming leader, the mercurial and disgraced former army general Prabowo Subianto has  been telling Chinese President Xi Jinping and  Premier Li Qiang on an official visit this month to the PRC their good news: Beijing’s policies and investments in Indonesia are doing well and screwing up Australian mining trade.

Just one problem:  Prabowo is still Defence Minister and has no other portfolio duties.  That’s not an issue for wolf warriors; they’re not waiting for the niceties of Prabowo’s official enthronement in six-months.

 Beijing want to get in Jakarta’s good books way ahead of Washington - and they’re stacking the shelves with invites and visits.

Foreign Affairs Minister Wang Yi has been in Indonesia this week pushing the line: “China is Indonesia’s close partner and has had close bilateral relations, especially in the defense sector, for a long time.” That last bit should be troubling Western watchers.

Does anyone in Canberra know what's happening in Indonesia? This month last year government seers were offering a five-year outlook, bragging that “revenue from Australia's exports of critical minerals like lithium and nickel will nearly equal the current second-biggest export earner coal by 2028.”

Lulled by sirens, critical faculties muted and concerns soothed, the Lucky Country relaxed.  The comfort terms were  E-power future, clean and green.  Now the word is red.  For ink.

Workers and investors got the brutal news in February: BHP's Nickel West, a giant grouping of open-cut and underground diggings plus concentrators, smelters and refineries around Kalgoorlie couldn't compete.  It's writing down assets of  $5.4 billion and is likely to scrap more than 2,000 jobs.

Padlocks snapped shut on the goldfield gates in WA and mines across the country as our friendly neighbour flooded the market to destroy competition, cutting prices by 40 per cent.

The speed of change has caught Australians with mouths as agape as the closed pits.  Yet all was foreseeable.  During his second term (which started in 2019) President Joko  ‘Jokowi’ Widodo seized the market by the throat - then squeezed.

Alerts given the cold shoulder

For decades there'd been warnings that the world's leading nickel producer was selling itself short, relying on returns from digging and exporting when the real money came with processing.  The same message has been long told to miners in Australia and long ignored.

But the Javanese leader listened and soon found Beijing business bankers and foreign friends   holding similar ideas.  Since then more than $21 billion has been spent on the industry in the ore-rich provinces of Central Sulawesi and North Maluku.

By mid-last year 43 smelters were running, 28 were being built and 24 planned. Altogether more than 70,000 workers.  Specialists have come from hina along with the loans and grants.

Coal-fired power plants are used to get the temperature to the 1,450-degree ore melting point negating the claim that the E-industry is in the renewables club.

As part of the Chinese deal, Jokowi also banned exports of unprocessed ore.   The European Union had relied on Indonesian supplies so protested to the World Trade Organisation, an authority of splendid ineffectiveness.

The complaint was upheld, Indonesia appealed but kept doing what it - or China -wanted.  Australian miners floated the notion that their product deserved a premium price because it was clean and the others dirty; the idea rapidly foundered on the dollar rock.

The smelters smoked and polluted; rivers turned red with runoff.  But the fiery streams of pure metal started cooling into ingots forklifted onto pallets to fill factories and warehouses.

What’s on the pay slip?

Prices crashed. Australia is the world’s fifth largest nickel producer and employer of more than 3,000. To see why the glut gutted the industry click on this link.  No degree in economics is required, not even a calculator. Just the basic ability to reason.

It’s an official list of this year’s minimal pay across Indonesia’s 38 provinces. Readily available it shows wage rates at least 17 times lower than those in Australia.

Indonesian workers get paid by the month. The rate in East Java, an industrialised zone particularly around the north-coast port and capital Surabaya is Rp 2,165,244. The exchange rate currently makes this sum a whisker over $207.

The Australian National Minimum Wage is $3,531 a month - that's 17 times more than  Indonesia pays. It will be reviewed on 1 July and will only stay put or go up.

These are basics so wages are higher in both countries where skills are needed. But whatever the job Australia stays far ahead.  Statiticians quote Indonesian HR managers averaging Rp 19 million ($1,817)  a month which is less than a single Australian’s pension.

Software engineers get Rp 12 million ($1,147) while their colleagues Down Under pick up seven times that sum; the gap between salaries is too great to be flicked aside as a statistical blip.

Apologists for the discrepancy finger-wag that living costs in Australia are so high incomes must match.  The COL in Jakarta is also in the clouds if they could be seen. Coughing in the smog and traffic choked metropolis is a misery, making Melbourne rush-hour congestion feel like Shangri-La.

Doing it our way

Wages aren't alone in putting Australia out of business and Indonesia in. The industry next door runs with minimal government interference.  Laws on superannuation, licensing, insurance and environmental controls  add greatly to costs in Australia.  Likewise health and safety.

In December an industrial accident at a Sulawesi smelter killed 21 workers. The plant keeps operating.  There may be an inquiry at some time.  Maybe.

Can we compete?  Last year the government launched a $15 billion National Reconstruction Fund  to “provide finance in the form of debt, equity and guarantees to support Australian projects that drive high-value industry.”

It’s not supposed to be toss-away money. The NRF’s mandate is to “target a rate of return of between two and three per cent above the five-year Australian Government bond rate over the medium to long term.”

This month Albanese spruiked upcoming laws to help factories produce clean goods like E-car batteries; it follows a similar policy in the US with its Inflation Reduction Act.  Made in Australia is a comforting slogan for the nostalgics.

For 70 years we built our own combustion-engined cars (ironically exporting Holdens to Indonesia) but that industry crashed in 2017 when General Motors Holden, Ford and Toyota collided head-on with cheaper imports.

Now many popular models are assembled in Thailand where labour costs are also lower (though slightly higher than in Indonesia) and the vehicles shipped complete.

Jokowi has had similar ideas to Albanese - or maybe the other way around. His boost for the Indonesian economy was called the  2025–45 National Long-Term Development Plan.  This includes downstream processing.

Before we were king-hit by the nickel surfeit  Jokowi was talking about cooperation and selling us E-cars - nickel is a major battery component. There's a free-trade policy in place meaning exports could be tariff-free.

Sleepers awake!

When Australian mines started to close lobbyists dashed into action with the Association of Mining and Exploration Companies hustling Canberra for a ten per cent production tax credit.

WA Premier Roger Cook (his state is the biggest producer), is reported to be considering royalty relief.  The national government is set to put nickel on a “critical minerals” list.

This means  companies will have "access to financing under Australia's $4 billion Critical Minerals Facility which offers low-interest loans, and related grant programmes."

Last year BHP’s “attributal profit” from all operations was almost $20 billion, a 58 per cent drop against 2022.   The share price dipped to $42 when the mine closures were announced but is now back to above $45.

If all goes well for investors the Australian public will end up breaking the corporate code of 'markets rule' by keeping unprofitable business functioning and jobs going.  That's the cost of being 'Made in Australia'.

The moral of this tale?  Boards and lenders should treat government predictions as scribble pads and do their own deep-down,  on-ground research. Also our Embassy in Jakarta might want to tell its Canberra masters about the Chinese diplomats they keep spotting around town.

(All dollars in this story are Australian.)

##

 First published in Michael West Media, 20 April 2024:  https://michaelwest.com.au/future-made-in-australia-china-indonesia-are-listening/

NOW, BACK TO NORMAL

 SO THERE, ALLAH, WE PASSED YOUR TEST                         

There are five major and hundreds of minor religions in the world.  But don’t worry - yours is the right one.  Anon

After Christianity the second biggest globally is Islam.  Indonesia, the nation next door, has a quarter of a billion followers, more than any other international state and  setting Australia’s xenophobic politicians a-trembling in their emptying  pews.

The Republic is supposed to be constitutionally secular but this isn’t the right time for reminders. For last week the majority celebrated the ending of the Ramadan fasting month with huge street prayers drawing tens of thousands.

The crowd-controllers' baggy military-style gear was often far too large for their wiry-frames built from a lifetime of toil. The outfits looked as though they’d come direct from a Gilbert and Sullivan operetta - a camouflage for all seasons and terrains, tropic jungle to arid desert, though the red berets stood out like stuck traffic lights.  

Particularly in this pre-dawn environment, the black bitumen of a closed four-lane highway  where the officials - farmers normally used to ushering ducks quacking for stubble snails - were supposed to be exercising their authority.

The flashlight wavers in the gloom were too old or poorly briefed, unsure whether they were supposed to be redirecting traffic or stopping it. There were no police present.

In Australia, the chaos would have led to calls for cops and shouts of unseemly language, but this was East Java where confusion is a cultural staple, probably invented in the province.  

Elsewhere in the world uniforms encourage obedience or hostility.  Here they're an excuse for ignoring duties for an exchange of smokes, supposedly uninhaled for the past month.  Tell that to the addicted kyai (leaders).

The presence of a kaffir  ('unbeliever' or 'infidel') among the stadium-sized crowds seeming distressed no one. The faithful seemed to be in a good mood;  the men in batik sarongs, the heavily made-up women in brightly coloured blouses and long dresses. As a fashion parade, this was an event for sunshades at six am.

Now and again one in total black, just her eyes showing. Here and there a bare-headed rebel asserting her independence yet causing no strife, for this is  not uptight Malaysia where socks with the word ‘Allah’ presage the onset of Armageddon.

Kids in their hundreds prove the government's birth control programme isn't working as well as the health workers claim.

The spirit of unity was tangible:  We’ve passed the hunger test - we are one. No hint of protest or politics.  A few median-strip trees had Free Palestine posters often in English but these were home-made, A4 photocopies.

The targets have long passed; Indonesia hasn’t recognised Israel since 1948 and despite pressure and inducements from the US has shown no inclination to change, even  before the Gaza War. The last synagogue in the provincial capital Surabaya was demolished this century.  Dutch-era graves in an old Jewish cemetery were  brutally trashed during the Japanese occupation 1942 - 45

The bigger statements in the street of prayer were made by the baccy companies, their giant ads claiming fitness and financial success are all yours at the cost of  three Oz bucks for a pack of  20.

The religious would have attributed the huge turnout to piety, while the KTP (ID card) Muslims (wedding-n-wake in Protestant terminology) were motivated more by carnal desires, knowing the end of the one-month fasting ordeal leads to the Idul Fitri celebrations,  nosh-ups of spectacular proportions.

The seating arrangements were below basic, worshippers squatting cross-legged on the tarps.  The ancient and disabled used the kerbstones.

This was a hard place for a Westerner with an ageing carcass;  your correspondent encountered no hostility but preferred to stay on the sidelines seeking but never finding a spot more comfortable.

The men were gathered at the front - the women far behind.  It was explained this ensured the minds of randy blokes were centred on the preacher and not the glorious ocean of big bottoms revealed when the kneeling ladies touched the road with their foreheads while facing Mecca.

Like Christianity, Islam in Indonesia is split. The laid-back Nahdlatul Ulama (revival of the scholars) is at home here in East Java, the province where the organisation was founded in 1926 in nearby Jombang.

In the cemetery there’s a simple grave holding the remains of an NU leader, the delightful eccentric Abdurrahman Wahid (1940 - 2009).  Also known as Gus Dur, Indonesia's fourth president was a preacher of tolerance and a real friend of Australia.  His daughter Yenny Wahid worked as a press journalist with what is now Nine Entertainment

NU claims about 100 million members, largely because it’s more accepting of traditional pre-Islamic practices than the smaller Muhammadiyah (followers of the prophet Muhammad) with 60 million.  These figures are as suspect as some of the stories explaining beliefs.

Muhammadiyah takes a more literal approach to religion and attracts the intelligentsia, running hospitals and more than 100 universities across the Republic.  Talking to adherents requires the use of  scientific logic, while NU devotees call on spirits, black magic and other challenges to bolster their reasoning.

This year NU recognised Idul Fitri on 10 April by checking sightings of the new moon. Muhammadiyah reckoned it came a day later so celebrated - though more soberly - a day later.  The committed didn't gather in the streets; they favour fields.  Such spaces are rare, and getting harder to find as the population blooms.

Although the night sky of Java is heavily shrouded by the rainy season clouds, the religious scholars can see clearly than lay folk.  Either that or they take a stab at lunar spottings to pronounce the day has come, and with it the joys of arrival at  the feast.

May there be many more.

##

First published on 16 April 2024 in Pearls & Irritations: https://johnmenadue.com/ok-allah-we-passed-your-test/

 

 

 

 

 

BETTER FLY THAN SAIL

 AUSTRALIA’S BORDER FARCE                     

A small group of presumed asylum seekers was reportedly discovered on the Kimberley coast last Friday. If correct then the much-spruiked cooperation between Indonesian naval authorities and the Australian Border Force allegedly protecting our shores has become a farce.  

Ten or more men who stepped onto the sovereign sands of their dream nation are said to have been arrested by a hundred ABF operatives rushed north at the weekend to staunch the invasion.  The prisoners were apparently whisked to Nauru for processing before refugee lawyers could blow in their ears.  

If the unwelcome arrivals are Chinese nationals as believed they'll probably be sent back to their homeland.  Runaways from the Middle Kingdom making it to the Lucky Country are rare. Past risk-takers have come from Iran, Afghanistan, Pakistan, India and Myanmar after spending stateless years in Indonesia, a nation that doesn't settle refugees.

About 12,000 are in this situation mainly hanging around Jakarta and surviving on handouts from the UN High Commission for Refugees.

In Australia there are now over 100,000 asylum seekers according to one report, with “2,000 new arrivals every month.”  These people are coming by air arousing little interest.

This month’s 10 undetected arrivals causing a media meltdown  came by sea - their number 0.05 per cent of those who use planes. The boat people were reported to have been found with no boat in sight  on the seashore near the old Truscott airfield in WA - the site of another landing last year.  It was built in 1944 as a heavy bomber base to raid Japanese positions in the Indonesian archipelago.

The jump-off points, of the alleged asylum seekers are unknown though some of the little marine lay-bys on Roti (sometimes spelt Rote)  Island - around 500 km north of the Kimberley seem likely.

The ABF has been crowing of its intensified aerial searches of the Arafura Sea since arrivals restarted last November, yet has missed three come-and-go ferries across an open ocean.  

This gives the lie to its website boast: 'Australia watches every boat' suggesting it can turn them back.  It can't even see them.

The ABF also claims problems in maintaining its pledge. In a Senate estimates hearing last year, Force Commissioner Michael Outram spoke of pilot shortages, issues with maintenance schedules and having to use Defence facilities in another bid for more money.

The unsubstantiated notion that “the ABF is aware smugglers have recently switched to valuable boats that can travel up to 20 knots” has been floated with favoured media by the ABF to excuse its incompetence.  Even the ABC has nudged the theory and increased the undetected boats to four.

Any speedboat would be expensive, sizeable and a standout at every traditional port around the Indonesian archipelago; most look more like junkyards than safe harbours.  Fast craft would have to be registered so police would know of their presence.  So would the envious local fishers keen to dob-in outsiders.

The unproven theory suggests a costly well-organised operation run by international crime syndicates bypassing, or in league with, Indonesian authorities.  A sophisticated show rather than the ill-planned journeys of the past when boats have broken down, lost their way or run out of food and water.

Formed nine years ago when Tony Abbott was PM by bonding Immigration and Customs under the super-ministry of Home Affairs, the ABF considers itself a smug secret service with a duty of keeping the Australian public blinkered.

The favourite rebuff for  inquiring journos - including your correspondent - is no comment about 'on-water matters' and 'ongoing operations.'  This silly policy meant Australian news outlets reported 10, 12 and 15 intruders jumping off the latest mystery boat. (Ten seems the right figure.)

State police investigating serious crimes are usually far more forthcoming with facts for the press because they rely on public support for information.

The reporter flick-away technique was first used in the Abbott / Morrison era. The policy remains in place under Anthony Albanese allowing the agency and its 6,000 operatives to escape independent media scrutiny.

The reasoning is that publicity will encourage people smugglers to sell passages as though the criminals rely on factual stories rather than hoaxes.  The reality is that the ABF’s failure to spot ferries is a far bigger magnet.

The ABF claims its officials have been working with Indonesian authorities to publish info and running community sessions warnings of the risks facing people smugglers and their cargoes.

Maritime dangers stressed include shipwrecks, drownings, hull leaks and engine breakdowns. Land hazards are prowling crocs, getting lost and perishing through thirst. Penalties for organisers include  time in prisons serving ample food and good health care, conditions far superior to those in Indonesian jails.

In touring the eastern islands closest to Australia, your correspondent has yet to encounter any fisher who says he (Indonesian women rarely work as crew) has attended such sessions known as sosialisasi.

That doesn't mean the info distribution hasn't happened, only that it's had little impact.

The boats haven’t been stopped and more than 60 aliens have made it undetected - probably with the help of Indonesian seafarers - over the past five months suggesting the risks get rewarded.

The Opposition has predictably blamed Albanese for the latest arrivals when the real culprit is the ABF’s inattention. Albanese has responded by saying border control principles established by the Abbott government remain in place.

They shouldn't. It's time the  Government rethought its inheritance and set up a department that can do the job - and treat Australians like adults who can be  told what's happening.  That’s part of being in  a democratic society.

##

 First published in Michael West Media, 12 April 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COURTING DISASTER

 LOSERS WHINGE, WINNERS RULE

From left:  Winner, then losers   Credit Kompas

A tip to take a wee shot at understanding the way of doing politics in Indonesia:  Suspend rationality.  Now imagine PM Anthony Albanese offering Scott Morrison a ministry - choice from five.  Not such a smart move for Down Under but OK for next door.

Come May the Indonesian Constitutional Court should respond to challenges by the two losing candidates following the 14 February national presidential election results.  Cashiered former general Prabowo Subianto won convincingly as president-elect on his third attempt at the top job.

The hearing from a parade of outraged witnesses has been making for good daytime TV during the past fortnight, though now on pause for the Idul Fitri religious holiday.

Debate in court is a great improvement on street reactions to the 2019 election result when the defeat of  Prabowo triggered riots, torched cars, the killing of ten and the wounding of almost 400. Speculation that it was pre-planned has been rife, though the Prabowo camp  denied responsibility.

Readers might imagine this trouncing might have encouraged Prabowo, 72, to slink away from further contests and retire to his equine stud in the hills.  Instead a few months later he was welcomed back into the political ring; the man who thrashed him at the polls Joko 'Jokowi' Widodo made his prancing rival the Minister of Defence.

This gave the disgraced former soldier an arena to keep going in national politics, access  to the public purse and space for another crack at the job he’s long craved. (The Constitution bars a president from more than two terms so Jokowi wasn’t in the circus this year.)

 It also ensured Prabowo and his right-wing Gerindra (Great Indonesia Movement Party) would shut up criticising the Jokowi government.

Pearls & Irritations can announce the Court's most likely decision now:  The plaintiffs' claim will collapse and Prabowo will remain president-elect till he takes over from Jokowi on 20 October.

The near certainty of this result is underpinned by these factual pillars: Prabowo and his running mate Gibran Rakabuming Raka (who by curious chance happens to be Jokowi’s eldest son) won 58.58 per cent of the vote.

Next was former academic and Jakarta Governor Anies Baswedan with 24.95 per cent, then former Central Java Governor Ganjar Pranowo with 16.47 per cent

Even if discrepancies, graft, pork-barreling, nepotism, Jokowi's meddling and a swag of other charges brought by the complainants are proved, the vote for Prabowo was so overwhelming, that the alleged wrongdoings wouldn’t be weighty enough to negate the result.  It would also upset the electorate in no mood for a re-run having made their choice so clearly.

Then there's the timing.  The case opened in the last week of March during the holy fasting month leading to this week’s Idul Fitri celebrations.  Though work officially continues up to the big event on 10 April the reality is that an empty tummy takes its toll.

Cameras have caught court officials nodding in the early afternoon though not because they agree with the evidence.  Speeches drone through the still air along with the mesmerising hum of air conditioners and fans.  Hunger gnaws and nicotine addiction screams.  

In the contest of legal arguments versus the imagined evening break-fast meal there’s just one winner.

Another factor: After Idul Fitri comes a two day plus holiday supposedly for earnest prayer and the mudik ritual; this means returning to distant villages to seek forgiveness from relatives for inattention to family responsibilities.  

The traffic soup is thick - about 194 million are expected on the roads - so ideal for those of different or no faiths to stay home and fix roof leaks - except the hardware shops will be shut and tradies gone.

As the hearing started Ganjar  reportedly  said Prabowo should be disqualified ”on the grounds that the way he registered himself had violated election law in addition to ethical problems resulting from nepotism and a coordinated abuse of power".

This argument pings off last year's dramatic decision by the Constitutional Court to allow Gibran, 36, to run as vice president even though he was four years younger than legally permitted.

But who needs rules and precedents when you’ve got the Chief Justice on side? Anwar Usman, who has since lost his position because he didn’t recuse himself from the case, was Gibran's uncle when the controversial decision was made.  Sticklers for the rule-of-law expected the resolution to be rescinded.  It wasn’t.

 Commented one political newsletter: “This trial (the current Constitutional Court hearing) serves more as a national face-saving exercise for Anies and Ganjar by showing the general public that the odds were against them from the start.

“Moreover, the trial provides these two former candidates with a national platform to segue into a new political direction whatever form that may take.”

Jakarta gossip suggests that might include offers of ministries by the President-elect when the court proceedings are over, following the example set by Jokowi in asking not just Prabowo into government, but also his sidekick.

Seeking the Vice Presidency in the 2019 bitter contest was business tycoon Sandiaga Uno.  He’s now Minister of Tourism and Creative Economy.

Should Anies or Ganjar get similar invites, will either seize the bribe to stay on the public payroll - or will they take an ethical stand and trash any offers ?  

The responses will  determine how far principles remain - or have tumbled down the landslip-prone hill of Indonesian democracy.

##

First published in Pearls & Irritations, 9 April 2024:https://johnmenadue.com/losers-whinge-winners-rule/

THANKS MATE, IT'S FIXED, NO WORRIES

 ANYHOW, HAVE AN ENVELOPE      

     

                                

Hardly noticed except by corporate lawyers and this website comes a shake-up of Australia's crime laws to try and crush corruption overseas. Flaws in the old law meant  only seven individuals and three corporations in Australia have been convicted of foreign bribery in the past 25 years.

The new law has taken seven years’ debate and delay. One legal firm claimed it “represents a fundamental shift in how corporations can be prosecuted for bribery in Australia.”

The change comes with a big stick - a fine of up to $27.5 million.  Attorney General Mark Dreyfus called foreign bribery  a “serious and insidious problem across the world… that  impedes economic development, corrodes good governance and undermines the rule of law.”

According to the Berlin-based organisation Transparency International (TI), there's more to graft than just losing money: It also helps "serious crimes like human trafficking and money laundering."

Good move, poor timing. The get-tough message clashed with yet another plea by Canberra for investors to drop their cash in Indonesia, a country where graft is like eating sticky rice with fingers - messy but the only way to get replete.

Red-bloodied investors in Indonesia thrived last century when corporates were casual and laws slack while President Soeharto - the Republic’s king of corruption - was in total control.

The few savvy and adventurous Australian hustlers who found trusty partners and left envelopes in the right hands did OK - some even better.  The rest turned to tombstones.

When Joko ‘Jokowi’ Widodo became president in 2014, TI’s  Corruption Perception Index (CPI) ranked Indonesia 107 out of 175 nations surveyed.

The new leader, not openly linked to the military, religious or the oligarchs, was seen as Mr Clean.  He promised to back the Komisi Pemberantasan Korupsi (KPK- Corruption Eradication Commission.)

Brewed during the  2003 reformist zeal of starting afresh after the 1998 fall of dictator Soeharto, the independent KPK rapidly made an impact.  It was so efficient it became the nation's most popular bureau applauded in the kampongs though not in the hillside villas squinting down on Jakarta's pollution and overcrowding.  

Within four years the KPK was struggling with a backlog of 16,200 reported cases. Its few well-publicised prosecutions had a 100 per cent success rate, guaranteeing the agency’s downfall.

In 2019 the Parliament withered KPK’s muscle and made staff civil servants. Protests were widespread but went nowhere.

KPK Version Two continued until late last year when chair Firli Bahuri was found guilty of violating ethics by "engaging with a prominent suspect under investigation".

 In the past decade, President Jokowi has had the power and public support to honour his pledge.  Six ministers have faced corruption charges and been sacked. The Wikipedia entry Indonesian politicians convicted of corruption has 44 entries.

Despite these actions, last year the nation’s Republic's CPI rank tumbled from 96 to 110 out of 180 countries surveyed by Transparency International. Commented  The Jakarta Post:

“Unless Jokowi makes a bold move in the coming months, the downward trend will continue in the next few years. While his administration is not seen as corrupt, his policies have facilitated the return of Indonesia’s corrupt ways of the past, or he has turned a blind eye to corruption by people in his inner circle.”

During Soeharto's 32-year autocracy, the unwritten rule was two-thirds investment in a project, though this didn’t preclude ticket-clipping. The other third went to the politicians and bureaucrats to get the show going with the right permits - or scuttle the project.

At the ASEAN Summit in Melbourne this month Canberra found $2 billion  to “provide loans, guarantees and other financial help to investors expanding into Asia.” Does business need such inducements?  In the capitalist ethos, if the project stacks up it does so alone.  Or did.

Australia’s contribution is minuscule. The late kleptocrat Soeharto set the standard for his followers by allegedly stealing up to US$35 billion from the public purse during his 32 years in power. He was never charged.

Ethical investors were wary of Indonesia then and now. Coordinating Minister for Economic Affairs, Airlangga Hartarto, said that Australia's total foreign direct investment in Indonesia had reached US$545.2 million in 2023.

Big?  Not much - the US $1.1 trillion and the UK at $836 billion top the list for Australian investment. Keep it in the family.

Our tiny trade with the archipelago is not in the whiz-bang, high-tech, education and health sectors we like to trumpet.  It's mostly in mining, metals, agriculture, hotels and restaurants, according to  Ambassador Kristiarto Legowo. 

In Melbourne, President Jokowi urged Australians to invest in his country, help society and reap great dividends.  There was no great rush for the fund transfer forms.

The South China Morning Post asked “What’s behind Australian investors’ reluctance to venture into Southeast Asia?” then found John Walker, a former executive at Macquarie Bank, to give answers.

He reportedly said Ozzies with the wherewithal  “just did not understand” Asia and other emerging markets.  They suffered  “fear of the unknown” and preferred “neatly packaged opportunities in jurisdictions with familiar regulatory and financial and political systems”.

He’s right. Boards charged with handling investors’ money wisely are rightly wary of countries with flawed legal systems - and the smarter heads will have done their research.

An infamous casualty of  Indonesia's capricious system was Churchill Mining, a British company with Australian links (Planet Mining) that in 2008 claimed to have found "Indonesia's second largest and the world's seventh largest undeveloped coal resource" - an estimated deposit of 2.8 billion tonnes in the province of East Kalimantan.

All seemed to be going well until Isran Noor, the Regent of East Kutai where the coal was to be mined, revoked Churchill's permits alleging licence forgery and illegal logging.  An Indonesian company then seized the project.

Churchill appealed, lost and was ordered to pay almost US $9.5 million in costs and arbitration fees. David Quinlivan the former executive chairman of Churchill Mining hasn't responded to a request for comment.

Now consider nepotism and the justice system. Last year the Constitutional Court allowed Jokowi's eldest son Gibran Rakabuming, 36,  the right to run as Prabowo Subianto's vice-presidential candidate when the law says the minimum age is 40.  

Chief Justice Anwar Usman, Jokowi’s brother-in-law and Gibran’s uncle sat in on the case. He was found to have committed serious ethics violations. But the sanction didn’t change the situation.

Despite this blatant example of favouritism the decision was allowed to stand. Anwar, though demoted remains on the bench.

If Indonesia and its neighbours in ASEAN want money from credible Western investors they have to clean up their act - in part by following Australia's aggressive lead

Otherwise, they'll have to shake their can in Saudi Arabia and China- but even these big lenders who don't care too much about ethical issues seek security.

If Indonesia wants our money, Jakarta needs to ensure it's safe. Jokowi's successor Prabowo Subianto, a disgraced former general and former son-in-law of Soeharto, takes over the world's fourth-largest nation in October.  He's unlikely to fire on the corrupt - they're his mates.

Australian investors - beware.

##

 First published in Michael West Media, 7 April 2024: https://michaelwest.com.au/how-will-criminal-code-foreign-bribery-amendments-affect-indonesia/