Keynote address to the Indonesia Australia Business Council Conference/Australian Business Asia Regional Business Forum

Pullman Bali Legian Nirwana, Bali

Speech, E&OE, check against delivery

19 November 2011

Australia is in the right place at the right time — in the Asian region in the Asian Century.

Indonesia is a large part of the Asian success story.

Its economy has grown at 5 per cent per annum for a decade.

And if Indonesia continues to grow at the rate used in the IMF's latest five-year forecast, its economy will roughly double in size over the next decade.

This means that from half the size of Australia's economy just three years ago, Indonesia's economy will match Australia's by around 2025.

By 2030, Indonesia will have a place in the Top 10 economies in the world, with private sector projections putting it at between fifth- and eighth-largest in the world.

It's worth contemplating for a moment that by 2030, less than 20 years away, the Indonesian economy is set to be in the Top 10, and somewhere between the fifth- and eighth-largest economy in the world.

If you are contemplating investing in Indonesia, you are making the right decision. Whether you are Indonesian investors or Australian investors, this is the place to be.

It is a giant of an economy, with the fourth-largest population on earth. Australia's nearest neighbour; right here on our doorstep.

And how exciting is that for our two countries, the two biggest economies in the Southeast Asian region?

Australia has no better friend or partner in the Asian region than Indonesia.

We are trading partners with complementary economies.

Australian businesses and consumers benefit from competitively priced imports of Indonesian goods and services, while Indonesians enjoy Australian food exports and rely for growth on Australia's minerals.

As trade grows, our two Governments can help shape an environment that encourages even closer cooperation among our businesses.

A big step towards this was the signing of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) in 2009. And here I pay tribute to my colleague and friend, Simon Crean, who was then the Australian Trade Minister, who did a lot of work and put a lot of energy into completing that agreement.

It is a gold-standard agreement covering a regional population of 620 million people.

Indonesia this week completed its ratification process for this Agreement, and it will enter into force between us on the 10th of January next year.

By the time the accord is fully implemented, 100 per cent of Indonesia's exports to Australia will receive tariff-free entry, compared with 73 per cent now.

Indeed, from the date of entry-into-force, this January, for Indonesia, 99 per cent of its current exports to Australia by value will then be eligible for tariff-free entry.

And those exports cover a very wide range of items: paper, glass and glassware, furniture, electrical equipment, rubber products, machinery and machinery parts, clothing, wood, processed foods, plastic products and iron and steel products.

Many Australian exporters to Indonesia will also benefit from improved access to the Indonesian market.

AANZFTA will lift the proportion of Australia's current merchandise exports that currently enter Indonesia tariff-free from 56 per cent to 92 per cent. And another 5 per cent of Australia's exports will face tariffs of no greater than 5 per cent.

But as good as it is, Australia-Indonesia economic cooperation will not end at AANZFTA.

Australia's Prime Minister Julia Gillard and Indonesia's President Yudhoyono agreed a year ago to work towards an Indonesia-Australia Comprehensive Economic Partnership Agreement, or IA-CEPA for short.

Building on our recent collaboration on AANZFTA, the IA-CEPA is aimed at improving further the trade, investment and regulatory environment in which our businesses operate.

It will be much broader than a traditional trade agreement, encompassing capacity building, services and investment.

The emphasis here is, as Prime Minister Gillard mentioned yesterday, on the "P", the "Partnership" part of the Comprehensive Economic Partnership Agreement.

As partners, Indonesia and Australia have agreed that the initial work on economic cooperation will be in four areas: agriculture, minerals, services and the green economy.

A successful partnership requires business to be confident about the future.

It requires your involvement.

And I appreciate the considerable efforts already made by the Indonesia Australia Business Council and the Australia Indonesia Business Council in supporting and making recommendations for the IA-CEPA.

So let's continue this dialogue.

KADIN and ACCI are also undertaking a joint study, asking both Indonesian and Australian businesses about the impediments to greater trade and investment.

Their report, with recommendations, is expected in the first quarter of next year.

This business report will provide valuable input into the design and negotiation of IA-CEPA.

Through a process of business consultation by both governments, including with business associations such as APINDO, KADIN and HIPMI on the Indonesian side, we are working towards an agreement that brings benefits to all businesses small and large.

And we are keen to support Indonesian business associations, where practicable, in their efforts to socialise the benefits of IA-CEPA through Indonesia.

I want to give an example of this: a pilot economic cooperation project, designed to assist Indonesia in meeting its expanding food production requirements, is already underway.

The three-year beef pilot project seeks to transfer knowledge and develop skills to improve Indonesia's cattle breeding performance.

If farmers are helped to rear cattle for market faster and more efficiently, they will be able to sell an extra animal per year - potentially doubling their incomes.

Some farmers will be able to move from being a manager of other people's cattle to being a producer of their own.

Meat and Livestock Australia/LiveCorp and the Australian Government are jointly funding this activity.

It is through this sort of targeted capacity-building program that the IA-CEPA can enhance trade and investment in basic sectors such as agriculture.

And we do want to collaborate in agriculture because we have relevant expertise built up over a very long period of time, and in an era where food security is going to be an increasingly pressing problem.

We want to work with Indonesia to help solve the pressures associated with food shortages in our region.

And those pressures can be manifested in high prices. And we know that in Indonesia high prices for food cause real difficulties for people on very low incomes.

And here is a wonderful opportunity through IA-CEPA and the collaboration that will occur between our business organisations and our businesses to help Indonesia deal with food security issues over the next 25 years.

I've written some papers on this and speeches back in Australia.

And I'm quite convinced that food security will be one of the defining features of the first quarter of this 21st Century.

And just as Australia in the last 25 years has proven itself to be a reliable supplier of minerals and energy resources in meeting the region's resource security needs, I think we can help do that in relation to food security.

But it doesn't mean simply exporting Australian food to Indonesia.

It means capacity building.

It means lifting the ability of Indonesia to produce its own food for its own people and to have it done by people producing that food and earning the incomes that go along with that.

And that's our commitment to Indonesia as a partner; as a friend.

It is a great humanitarian endeavour but it is also very important as a business endeavour as well.

Because this is the sort of economic opportunity Indonesia has indicated it would like to achieve through IA-CEPA.

Working together, as true "Partners", we will also help nurture a more internationally competitive beef industry in Indonesia that will attract further investment, including from overseas.

Now other possible areas of cooperation are still under discussion.

And we had a discussion at lunch about what you've been talking about here today.

And that is water infrastructure.

Urban and rural water infrastructure.

Again, as a pretty dry continent we've developed some real expertise in water conservation and in water supply systems.

And we'll be very happy to work through our businesses and at the government-to-government level to help again ease the water constraints that confront Indonesia, and including in Indonesia's cities.

Again, I think this is a great example of friendship and cooperation and the utilisation of technical expertise that we have out of necessity assembled over a very long period in our capacity as the driest continent on earth.

So what we are seeking to do through IA-CEPA and the cooperation between our business groups is to make a real difference to the lives of everyday Indonesians.

We must socialise the benefits and spread the benefits to everyday Indonesians so that they become champions of what we're doing.

Because there's something in it for them.

And so that is a very strong commitment. We want regional Indonesian communities to be able to take full advantage of our partnership agreement.

If we work together, combining capacity-building activities with opening up new markets and promoting two-way investment, we'll make a positive and enduring change to the lives of the everyday people in our two countries.

Because we should never forget the basics.

The challenge is to make the "P", in the partnership in IA-CEPA, strong and beneficial to all our people.

Thank you indeed.

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