COLUMN: Australia-Indonesia Dialogue – Exceeded Expectations

PRESIDENT’S COLUMN: Many over-hyped international meetings and reports turn out to be a disappointment, falling far short of expectations. The Indonesia-Australia Dialogue – held at Sydney’s Intercontinental Hotel on Sunday and Monday – did not fall into this category. It was possible to come away from it optimistic. Despite tricky issues often arising between Australia and our closest neighbour, there is the tantalising prospect of closer bonds that could serve both countries well in the Asian century.

The Dialogue, co-chaired by veteran diplomat John McCarthy and Dr Rizal Sukma, who heads the influential Centre for Strategic and International Studies in Jakarta, and is named by Foreign Policy magazine as one of the world’s top 100 global thinkers, owes its success to the quality of the participants and the intensity of their participation. There was none of the drifting in and out that can be a feature of these meetings.

Senator Bob Carr, foreign minister, and Julie Bishop, his Coalition shadow, provided excellent keynote speeches. Space does not permit me to mention the names of all the academics and business leaders who were present, but the involvement of business is crucial on these occasions.

It was also good that senior journalists like ABC managing director Mark Scott; The Australian’s foreign editor, Greg Sheridan, chief editor of the Jakarta Post, Meidyatama Suryadiningratm and Lenore Taylor, in transit from the Sydney Morning Herald to The Guardian were there as full participants.

Senior media figures have a crucial role to play in explaining to the Australian public that our relationship with Indonesia goes far beyond issues like stopping the people smuggling trade, meat processing and convicted drug addicts. ABC Radio National’s Saturday Extra with Geraldine Doogue has already provided programs on Indonesia.

Not only is democracy in Indonesia now well entrenched – the world’s third largest democracy after India and the United States – but its economic performance is spectacular. According to McKinsey, our neighbour now has the world’s 16th largest economy, and is booming because of a combination of domestic consumption and growth in productivity. Unlike China, it is not dependent on exports to the United States.

Its high growth and productivity is forecast by McKinsey to allow it to jump over Australia – and Britain and Germany – to become the world’s 7th largest economy by 2030.

As Senator Carr pointed out a country that was once regarded as poor and fragile last year made a $1 billion loan to the International Monetary Fund last year to help other nations.

By 2030, the Indonesian archipelago with a population of 242 million will have added 90 million people to its middle or consuming class.

This growth provides Australia with enormous opportunities and challenges, much debated at the Dialogue. We have not had a country anywhere near us – let alone on the doorstep – that will have an economy that is stronger than ours. At the same time the availability of 90 million new customers next door offers our service-dominated economy a bonanza – if it can generate and tailor products suitable for the Indonesian environment. There will also be a significant boost to mining, agriculture, education and tourism, though none of these are as important to Australia as services, which, of course, include finance.

Australia will not benefit from this growth if their business communities – and the people – do not take steps to better understand Indonesia. That endeavour is still in its early stages. (We at the AIIA NSW are playing our own small part by organizing a study tour for members next month).

But there are other forces that are at work – and that is the cooperation between the two countries built by people like our member and former DFAT chief Dick Woolcott. Within institutions like the G-20, ASEAN and the East Asia Summit we have common interests with Indonesia.

One of them is to free up trade within ASEAN or through the proposed Trans Pacific Partnership. (Indonesia is already the largest economy in ASEAN.)

While Jakarta will continue to be non-aligned and Australia will remain committed to the US and Japanese alliance, the rise of Indonesia provides the best hope of persuading China and Japan to end their unpleasant current feud through compromise rather than by encouraging virulent nationalism. I explored these issues in an interview with Rodger Baker of the US geopolitical analysis group Stratfor recently. Settling this has to be a priority, and discussion on ways to achieve this formed a useful, if secondary aspect of the Indonesia-Australia Dialogue.

I have not had time in this column to discuss Julie Bishop’s interesting outline of Coalition policy should the September election go Tony Abbott’s way. I’ll return to this next week.

Colin Chapman is the President of the AIIA (NSW).

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