Stuck in the groove
Indonesia-Australia relations remain out of tune
14 October 2017
By: Duncan Graham

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 cliché 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, Australia 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 energizing 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 the 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 10 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 chess masters 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 as 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 the fear that Australia is plotting to fracture the Unitary State by supporting secessionists, and promoting “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 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 A$ 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 A$2.2 trillion overseas last year but only A$1.9 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 PricewaterhouseCoopers.

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 finalized 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 antagonizing 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 defense 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.

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