Minister Robb: Good morning, ladies and gentlemen. Thank you very much Chris and I acknowledge your efforts as president of the Indonesia-Australia Business Council and thank you very much for that. I acknowledge Harold Mitchell the chairman of the board of the Australia-Indonesia Centre and professor Paul Ramadge who's the president of the Australia-Indonesia Centre, based at Monash University in Melbourne.
Also His Excellency Paul Grigson the Australian ambassador here in Indonesia. I also acknowledge Mr Himawan, who is the deputy chair of the Indonesia Investment Coordinating Board. We recently had an investment seminar, organised by the Indonesians, and a culture seminar as well; it was a three day exercise last Friday, Saturday and Sunday in Canberra. Both myself and Mr Himawan spoke, so we’re a bit of a tag team actually, I know what he’s going to say and he knows what I’m likely to say.
I acknowledge what's been going on here for the last 24 hours; I think, after a period of less activity between our two countries, a lot of green shoots are starting to emerge. I did feel that the visit by Prime Minister Turnbull last week, was an exceptional one. Both he and President Widodo had a meeting of the minds in many respects; similar backgrounds, both self-made men with strong business skills and experience, both with sharp minds, both with a passion for innovation.
It's also nice to be here with 360 of my closest friends from Australia; a delegation of business people who will join me tonight in Jakarta. It's the biggest ever business delegation that we've had in Indonesia; we thought it might be 200 but the numbers just kept growing and growing and in the end we had to cap it at 360 because of the venues that had been arranged. But it does build, in a very timely fashion, on the visit last week from Prime Minister Turnbull.
Yesterday I met with Tom Lembong who's my counterpart as the Minister for Trade; we've had two meetings and several conversations since he took over and again I find, like Malcolm Turnbull and President Widodo, it is a meeting of the minds between myself and Tom Lembong.
I had a meeting yesterday in Manila, APEC is underway there. I participated yesterday and it’s going today and I think the leaders all arrive today and they will have their meetings tomorrow.
But Tom and I, amongst other things, agreed that we would immediately reinvigorate negotiations for a Comprehensive Economic Partnership Agreement, which I think had run into the sand somewhat three or four years ago, and our attention was elsewhere in the interim.
But based on the conversation that Prime Minister Turnbull had with President Widodo, there was an agreement between them to reignite that agreement. So immediately in the new year, it will be a high priority for both of us, and we intend to deal with it as quickly as we can, so again we can start to strip away some of the barriers; not just the tariffs but also a lot of the behind the border barriers that often frustrates so much of the business opportunity.
Could I just say it's great to be here in Yogyakarta, because this is my first time here. I've heard a lot about it; it is the education powerhouse in Indonesia and certainly with 20 universities and education institutions, it’s earned that title. It is very much a favourite for a lot of young Australian students; I think there is about 1000 here at the moment, particularly learning the local language.
Of course we've got the New Colombo Plan; there's 37 countries where we will be – within three or four years – sending tens of thousands of students a year, at the Australian government’s expense, into the region. There's 37 countries they can choose from and the thing that really heartened me was that the most popular destination with the first round, was Indonesia, out of 37 countries. So I do feel it just tells you something, that the younger generation are looking forward, and they’re looking at the next ten or twenty years and looking to make an investment in themselves and their future.
I'd like to thank the Indonesia-Australia Business Council and all its members and the efforts that have been made to build a stronger trade and investment relationship. You well-understand the importance of our bilateral relationship, which I think, clearly has not reached anywhere near its potential.
In some ways I do feel as though we've been looking past one another for the last 10 or 15 years. Indonesia currently ranks as our 12th largest trading partner; around $15 billion two-way trade, and two-way investment is a fraction of what it could be at just under $10 billion.
I do feel that Australia to some extent has overlooked Indonesia in the past 15 or 20 years perhaps, concentrating on building trade with the major North Asian economies. Indonesia likewise has been looking north for trade and investment partners, and I think there are good commercial reasons for it. Until now, we've both been largely commodity exporting economies, working somewhat in parallel with the same customers. But things are changing, things have changed.
Today we are seeing unprecedented developments emerging in the region around us and they’re not a flash in the pan; this is an economic phenomenon which is taking place through India, through China and every country in between, including both of ours.
Currently there’s 600 million people in the middle class in those huge countries in the region around us. In 35 years – not 100 years, not 50 years – the OECD expects that 600 million to grow to three billion people in the middle class. It's almost incomprehensible to think how that could happen, but it is happening.
Two years ago we sold 60,000 tonnes of beef to China, they were our 12th biggest beef market. Last year we sold 260,000 tonnes of beef to China; it went from our 12th biggest market to our 3rd biggest market in one year.
100 million people left China last year for a holiday; a million came to Australia. I don't know how many came to Indonesia, but there's enormous scope for that industry with the Chinese government telling me they expect by 2020 – in just five years’ time – 220 million Chinese will leave China for a holiday.
So there are so many things happening; there’s planes leaving Australia every day with huge bladders carrying tens of thousands of litres of liquid milk going to coffee shops all over China where they’re paying $10 or $20 per litre; it's $2 a litre in Australia.
And it’s a good thing that there’s hundreds of millions of people coming out of poverty; it’s a humanitarian miracle as much as it is an economic phenomenon.
Certainly in the two hundred years since the European settlement in Australia, nothing like this has happened; nothing like what we are seeing going on in the region around us; that absolute miracle of people moving out of poverty, and starting to enjoy the quality of life that so many other people around the globe have. It is a wonderful thing to be a part of, and I think we are blessed to have this opportunity, and I only wish I was thirty years younger; I tell my kids you’re going to have a spectacular future and it's not off in the distant future; it's happening. The next ten, the next twenty, the next thirty years, you're going to see all of this, what the OECD are predicting.
Even if we saw half of it, 600 million to 1.5 billion, it would be transformative for the whole region, and in that mix, between our two countries, we’ve now got all sorts of complementarities. Sure we compete on resources and energy, but that boom has come and gone and will come again sometime in the future, but it has come and gone for the moment.
But we've got agriculture, we've got a productive capacity and we need to look smarter at what the opportunities are in order to capitalise and to help the rest of the region realise its potential, and to help Indonesia realise its potential because you're one of the big countries that will contribute so much to that growth over the next twenty, thirty years.
It's a wonderful thing, but to do it we have to work at it and that's what this conference is about, it’s why we’re bringing 360 business people here; they've volunteered to come and paid their own way; they’ve come here because they know that something's happening, they know there are opportunities. When you look logically at it, we are geographically – you could almost throw a stone across the water from Australia to Indonesia – very close neighbours, and I don't think that's going to change. From the point of view of both of our futures, we have to make a relationship as it should, work; we get on as people, we have lots of values that are similar, there are lots of opportunities and it's really quite compelling that we work at it.
This is the largest economy in the ASEAN. There’s potential for as much as $3 trillion in trade growth over the next decade across the Asia Pacific, and this is one third of the trade in the Asia Pacific, so the opportunities are here and it’s really about trying to free-up those opportunities in order to take advantage of the 250 million people, of whom more than 50 per cent are under thirty and tech savvy.
The future is built now on a platform of digital technology, and to have such a significant number of young people in this country tech savvy, it offers unparalleled opportunities.
The government’s focused on seeking to boost business confidence and investment; they’re looking to deregulate, they’re looking to step out corruption; all of these things are critical programs. And there will be two steps forward and one step back because there’s a lot of resistance to change, especially if you are starting to upset the lifestyle and the opportunities and the way in which some people benefit from the system that’s been in existence.
But I do see a sense of great purpose, and the contribution yesterday of Tom and all the APEC trade ministers was very very hopeful about their determination here in Indonesia to wind-back much of the regulation that hadn’t worked. He didn’t mince words; he said it hadn’t worked, and that they wasted so much time on programs that hadn’t worked and they’re going to strip back the regulation and are in the process of looking at how they can do it, and how quickly they can do it.
Everyone was talking about this breath of fresh air, because they look at Indonesia and think how good this country could be if they just unlock a lot of the barriers to doing business, they could take advantage of so much of what is around them, but also contribute in their own way, to the growth and the potential that is seen by everyone in the region; their resources, the land, the people, the education levels, all of those things are seen as pre-conditions of enormous unprecedented opportunity.
I do think that President Widodo’s announcement they're going to try and join the TPP is a big statement and tells everyone here as well as the rest of the world, where the government is trying to take things. It's a very ambitious statement but it's a very important one.
I do think the completion of RCEP which is the Regional Comprehensive Economic Partnership, it is the mirror of TPP if you like, it is the other side of Asia with India and China; there's a lot of common partners, Japan's in there, we're in there in both TPP and RCEP, New Zealand, Malaysia's in both, Vietnam's in both.
But I do feel that if we can finish RCEP this year – that's a significant priority – if we can do that we can then start to try and bring TPP and RCEP together, and I think by 2025 there will be one region across the Asia Pacific, which has a free trade area across the whole region. It will mean one set of rules, which is a big thing; rules around country of origin, paperless trading, all of these boring things but they're at the heart of business frustration; lowering the red tape and cutting through a lot of those restrictions that currently apply in so many countries.
Now all these things are starting to take shape; even though we are in RCEP together, every time you enter into an agreement, you start to break down the resistance in your own country to provisions which are protectionist, which are holding you back, which are costing jobs. In the end this is all about jobs. It is creating, in this country, tens of millions of jobs, and similarly in Australia.
We're doing this for good reason and the evidence is there; Australia was a highly regulated economy for the first 70 years of the last century, enormously regulated. Everything was set: interest rates were set, wage rates were set, you name it; there was a book that big of regulation in every area of activity. Since then, we’ve removed so much of the protection; our average tariff in Australia now, once the China agreement enters into force, is under one per cent, and when we finish RCEP it will be getting close to zero in so many areas.
So we freed-up trade and freed-up so many areas, and now we’ve had 25 years of uninterrupted economic growth; we’re the only country in the developed world that’s been able to achieve that. And we’ve gone through the Asian exchange rate melt-down, we went through the tech-wreck, went through 9/11, went through 2008-2009 – three per cent growth, which is an average growth rate for developed countries.
That convinces me that there’s a lot of proof around that if you free things up, when you get a crisis; we depend heavily on resources and energy like Indonesia does, but also Canada and Brazil – very similar economy to Canada and Brazil – they’re relatively free, especially Canada, but not in the same way as Australia; Canada’s in recession, Brazil’s in recession and they’re still running along close to the top of the growth rate for the developed world at 2.7 because a lot of labour and capital has moved out of resources and energy in the last 12 to 18 months, into other areas of the economy, and that’s what we’re trying to do with all these trade agreements, and that is to diversify.
We’ve got lots of skills in Australia and we’re trying to diversify investment into those areas and Australia and Indonesia can help one another in that respect; we can invest in your strengths and you can invest in our strengths, and we can both be better countries as a consequence.
And it’s not only engaging, it’s about complementarities. We’ve been selling so much wheat since about 1988, and before that Indonesia would not allow any wheat to be bought, but now we provide 50 per cent of the wheat that goes into noodles, biscuits and other high demand products, and they’re a significant export for Indonesia. We have already, over the last 15 years, been engaging heavily in complimentary value adding.
It’s the same with the live cattle trade; we grow them and you fatten them, and the prospects for taking that to another level in combination; there’s so much we can do together. There’s so much evidence that it does work, and it does work on a big scale, not just in bits and pieces; we can do it in education, we can do it in financial services, in health and medical.
I’m seeing it in China; in our free trade agreement with China, they’ve opened their door to our services for the first time, because that’s where the jobs are; jobs are in services. Australia, which is known as a resources and energy country, we’re known as an agriculture and agribusiness country, but 75 per cent of our GDP is services; we export just 17 per cent of our services – that’s the next wave of opportunity for us, especially given what’s happening in the region around us. We can export our services into the region, and those services help those economies, including Indonesia; we can combine with your strengths.
I was in China with a group of Australian CEOs a few weeks ago, and in anticipation of the free trade agreement, there’s all these deals being done, and there’s a series of conglomerates who are putting together joint-ventures with things that China needs. They need health services, they need aged-care services because of the one-child policy, they need jobs in restaurants and hotels, so they’ve opened up all these areas. When the agreement starts, Australians can go in and set up as many hospitals as they like and own them 100 per cent.
What’s happening is the big conglomerates have got the reach and the capital, the scale and the influence in all sorts of areas in the economy. They’re joining forces with some of our hospital groups. One group I met are very close to concluding a deal; the hospital group has 42 hospitals in Australia, and will probably build another two or three or four over the next few years. With this combined joint-venture, they’re looking to build 200 hospitals in the next two years and a lot of those will be in China, some will be in Vietnam, some in Malaysia and some here in Indonesia. This is the sort of opportunity I’m talking about; to combine the strengths of our countries for mutual advantage.
The opportunities can broaden when you think about all the things you need here; you can build stronger health services, stronger education services, stronger financial services, the joint venture opportunities are enormous; you can see with the Telstra-Telkom joint venture – another important service – you get the technology of one country and the scale and reach of another country, put them together and you start to open up other opportunities.
Mining services is another example. Indonesia is our biggest market, and there’s so much more we can do to develop the national resources here in effective and socially responsible ways. They are things we’re good at; you have the resources and we have the skills so when you put them together you turbo-charge the opportunity that exist here, and you take them outside of the country and you help the growing middle-class in region, and you make a contribution.
And if you put people within reach of the standard of living so many of us have got, you add stability in the region, so it’s not just an economic issue, it’s very much about peace and stability. If people have choices, you take away a lot of the angst in the world, certainly in our region.
There are also many opportunities opening up in infrastructure; particularly in Northern Australia. The top 45 per cent of Australia’s land mass has a population of one million people. It’s in the Tropics, it’s very remote, and we develop lots of resources and energy products in the north, but not much else. Most of it is big cattle stations – one beast to ten acres – but there’s 17 million hectares the size of Cambodia, stretching from Western Australia, through the Northern Territory, to Queensland, and it has potential if you add water, for specialist crops, but you have to be able to capture it.
60 per cent of the water that falls in Australia falls in the north, but we only capture 2 per cent of that at the moment. So you can see the opportunities.
Much of this too is for the big operators here. We’ve seen Indonesian purchases of big cattle stations in the last couple of years, and that helps have Indonesian influence, all the way down the supply chain, just in the same way that some of our big cattle operators have got investments in feedlots here. That’s when you get a lot of common understanding about the issues and can lock-in a real partnership.
We've got many more opportunities like that in the north where you can come in with a big investment and also control and participate in that. If we get the projects and the exercise is big enough, if we’ve got 200,000 hectares of specialist crops or horticulture, places that big can run its own power-station; it can run its own abattoir; it can run its own sugar mill; it can contribute to the cost of the railway to the port; all of these things happen and not necessarily with tax payers’ money. A lot of it is private sector money because they're just like a mine; mines are big enough to fund all that sort of activity. We're trying to produce agriculture equivalents to mines, except it will be a renewable resource being mined, not a finite resource.
These are things that I can see in the future and this is not beginning in 20 or 30 years’ time, this is now. We had 250 investors from 20 countries in Darwin, 10 days ago for three days, looking at over 100 investment-ready projects across the north; multi-billion dollar projects in areas like aquaculture, which is again another area that we share a lot of common knowledge and experience. It’s a great opportunity to work together in selling.
We've got one project that's there ready; it’s 10,000 hectares of ponds for tiger prawns, it'll be the biggest prawn operation in the world, it'll produce 100,000 tonnes of prawns a year, and won't touch the sides in terms of the demand.
Think of the opportunities between us in that area; we can bring the science and the expertise, and add it to your science and expertise and local knowledge and do things here, or do things in Australia; the opportunities are there. As someone said, some parts of Australia are much closer to Indonesia than it is to the rest of Australia, so there is no geographical problem.
Education is another big opportunity throughout the whole region; the vocation education. Skills are needed here, skills are needed in India; you go to any country in the region, everyone is looking at their skills so they can become as productive as possible. Again, we can work in tandem on these things. We’ve got the expertise, we just have to put it together with the scale, reach, influence and understanding of local cultures, in a way which the local community will accept and respect and will welcome.
A lot of this has got to be done in partnership. If we do all that, as I said before, the next 30 years are simply going to be absolutely spectacular. I do feel there’s an inevitability about our two countries becoming a machine almost, and a major contributor in a joint fashion, to the realisation of prosperity throughout much of our region.
It's possible, it's not a figment of our imagination, it's real; there's a lot happening already and I look forward to working with all of you to that end.
Thanks very much.
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