Andrew Robb: Well thanks very much Harold and ladies and gentlemen. This document is very timely and a very excellent piece of work. I think it is the most substantial contemporary piece of work which provides a pathway for our relationship in a commercial sense. But if we get the stronger and stronger commercial relationship it also has very significant implications for the wider relationship between our two counties.
At the moment there are 17,000 young Indonesians in Australia and we’ve got 2,000 young Australians in Indonesia under the New Colombo Plan. These provide commercial advantages for both countries, but of course the linkages that occur in a student sense – if they get jobs and work for a year or two after they’ve finished those qualifications in each country – that helps also the long term relationship. So the commercial strength of our two countries and the relationship is fundamental to the much broader relationship that we can and should and must enjoy.
This study focuses on some key sectors of opportunity; areas like food processing, animal products, logistics and textiles and the way in which they’re analysed and the opportunity for cooperative work using the strengths of both countries in regard to these areas.
Take the live cattle trade. We have got some outstanding genetic stocks across Northern Australia and Indonesia has got world class feeding capabilities. I’ve visited in the past some of the feedlots and the food science capability in those feedlots is exceptional - world class. They know what they’re doing; they’re maximising opportunity. But to show you the difference in the genetics, one of the feedlots I visited had 300 Australian Brahmans in the Northern Territory and they had around 300 local cattle.
The Brahmans looked like they were all cloned while the local cattle all looked different; they all had different names. But the key point was, they were both being fed the same amount of feed and the Australian cattle were putting on 1.4 kilograms per day and the local cattle were putting on 0.6 of a kilogram per day.
Now this is a classic example of where we can work together in order to enhance local production. We can introduce our genetics to try and then tailor a lot of the local – about 12 to 14 million - herd of cattle in Indonesia. So it’s this combination, and now we’ve got some of the big feed-lotters here who are just investing in cattle stations in Australia. And again, that helps inform the whole supply chain, where we’re all investing one way or another.
And the other thing is that in time there are opportunities to even export a lot of the fattened animals. The same is true with wheat; that’s developed really in the last 15 years or so. It’s a huge opportunity. Our wheat is white, high quality wheat and is best suited for noodles and biscuits from what I’m told. That’s become a significant and highly demanded series of products in Indonesia. But the Indonesian companies are also exporting to other parts of the region.
So this is what this report is all about; it’s about where we can identify the strengths in both countries, put them together and create – as Harold said - a turbo charge. Of course, with a hybrid you get a better outcome than the two contributors in the first place. So what it does, it takes several products and looks, in a very comprehensive and deep way, at the way in which – in a commercial sense – these things can happen and are happening. Now, that model is true for so many other areas. It’s true for healthcare; it’s true for education; it’s true for so many different services.
And if the doors are open here to Australian services, that will increase investment, because for our service companies to come and participate in joint ventures and all the rest of it, they have to lay down roots, they have to employ locals. So it’s jobs, it’s opportunity, its expertise put together with the expertise in Indonesia, the local knowledge and the capital here in Indonesia, but it is investment from Australia that will make that happen and commitment, it’s a commitment to go and open up another arm of your business in another country, but what this report is showing is that there is this highly complementary sets of strengths between our two countries which in combination can provide deep collaboration for mutual benefit.
So I’m very pleased to formally launch Succeeding Together; a collaboration between the Australia Indonesia Centre; ANZ; Price Waterhouse Coopers; and Harold Mitchell as Chair and contributor; Joe Abraham from ANZ Indonesia, another significant contributor; Andrew Parker from PWC, again, thankyou Andrew; Leonie Lethbridge from ANZ; and of course Paul Ramadge, as well. So the five people with me on the podium here that made a big contribution to this. It will be a great guide for so many businesses and organisations to foster a very significant and well-targeted approach between our two countries in the years ahead.
Question: You mentioned in the other room about the re-animation of the closer economic partnership agreement negotiations. Can you just explain the circumstances of that and possibly indicative timing and who provided the spark – was it Mr Turnbull or was it the Indonesian team?
Andrew Robb: I’m not sure who provided the spark, though I had seen reports that when President Widodo went to the US to talk about getting involved with the TPP, there was also reports of getting involved in other areas too; but there was genuine enthusiasm by both gentlemen, I understand. Malcolm rang me the next morning to report on the meeting, which he thought was a very effective and very strong meeting of the minds between the two leaders.
But on this front, to really drive trade, they were looking for outcomes and jobs are a big issue for both countries. I talked yesterday to my counterpart Tom Lembong and he said that they were ready to re-engage as quickly as possible. So we decided that first thing in the new year both our teams would set a program and we’ll try and complete this. I don’t like to put times on it; there’s been quite a bit of work done on it some time ago, it will all have to be revisited, but we’ve been dealing with others in 12 months, so I can’t see why we won’t deal with this one in 12 months.
Question: So you attach the same level of impetus to this as the previous trade agreements that were resurrected in the early days of this government?
Andrew Robb: I do indeed. You can’t do all things at once, so we have been working as you know on South Korea and Japan and China and the TPP and with India, but Indonesia has been a priority.
I must say, my sense was that we needed to get greater momentum with the commercial relationship. We’ve got 250 Australian companies in Indonesia; it’s unsatisfactory. We’ve got some great companies here that have been here a long time, but it’s the number. I mean, we should have 1000 companies, Australian companies. Not all big companies; there’ll be a lot of small and medium-sized businesses, but the opportunity is now presenting itself with the digital age, with the connectivity of aircraft and the lower prices of connectivity, and the fact we’re in the same time zone.
There are now opportunities SMEs didn’t have even 15 years ago. Lower costs and the effectiveness of the internet and all the rest, the e-commerce, all of these things now mean that the time for SMEs has arrived in terms of actively developing another part of their business in other countries around us in the region. And Indonesia should be a classic opportunity.
There are so many areas that we’ve got expertise in; in medical health, aged care, in financial services, engineering, in architecture, design. Here we are in the town of design, the city of design and there’s so much we can do together in this area. So all of these opportunities are there and a lot of them are SMEs in Australia.
I was hoping we’d get some momentum going and that’s why I’ve got 360 business people with me this week, so that we can have some deeper roots as we develop this trade infrastructure. So I think now the opportunity is right after these couple of years and it will make a significant contribution.
The other deals have done that I’ve got to say. There was an article this morning in your paper (The Australian), showing what’s happened with Korea – since it came into force – across endless items. The percentage increase is in the thousands of per cent in the sales of endless numbers of horticultural products, lots of services, all sorts of areas of the economy. The same can happen with Indonesia, and we’ve got to get on with it.
Question: Can I just ask one final supplementary question; do you expect the free trade, sorry, the economic partnership negotiation, any areas to be hedged off, like merchandising trade like food?
Andrew Robb: I don’t want to be prescriptive at this stage. My approach has been in some of the other agreements, that everyone is different; the strengths and weaknesses of each country and the sensitivities are different.
With the Chinese agreement for instance, we got an outstanding agriculture outcome in a whole lot of areas, but we did put aside rice and sugar and some oil seeds and cotton. They do take quite a lot of those products already, but we put aside any increases because of the sensitivities.
And we said in three years’ time we’ll revisit that. And there were issues that they were requesting which were put aside. So we didn’t let the whole deal, of which the services side is unbelievable; we’re the only country with so many points of access on services.
Ultimately China will give it to another country but we’ve got a first mover advantage. So I’m going to approach this negotiation in the same vein – not leave anything out. If we leave it out it’ll be a clause in the agreement as to when we’re going to revisit it. But I’d rather have 85 per cent outcome first up with a pathway to getting 100 per cent rather than hanging out for years and years as has been the case in so many of these things. We’ve got to get on with it.
Question: I’ve been in the conference for the last two days and despite these complementarities that Australia and Indonesia have and also the close geographic; they’re close to each other. But there have also been complaint over the fact that the business between the two countries is stagnant. How would you explain this? What is behind this? And from the government side, what would you do to help boost trade and investment between the two countries and what would you expect from the Indonesian government side to do the same?
Andrew Robb: My sense is that, as I said earlier, we have been looking past one another for the last 15 or 20 years. I think a lot of that has been due to the fact we’re focused on developing resources and energy projects, which we’re both competing in, and we’ve also been supplying – in some cases – different markets.
But also, if you go back 15 or 20 years, there was a burst of investment in Indonesia, and just some of the local regulations at the time and there were frustrations at the time, and in the early part of this century so many of these other economies started to emerge. And a lot of Australian business – we were only 23 million people – a lot of them headed towards the easiest opportunities I think.
But we’ve reached a point now where everyone is chasing all of those opportunities and we can’t have all our eggs in one basket. So we have put in place structures around most of those countries with trade agreements etc., but now it’s overdue; we’re determined to try and ensure, not just for the commercial opportunities – which I think are enormous – but because of the importance of the relationship between our two countries. We are neighbours and we need to have a close relationship in every sense. We need to have mutual respect and we need to appreciate one another’s cultures and the strengths and weakness of both countries.
If we have that honest, straightforward, respectful relationship, that’s a great thing for the region, in my view. And the commercial opportunities, with the stage both countries are at, we need to expand beyond resources and energy. We’ve got world-class services, but they don’t. We only export 17 per cent of our services, and yet 75 per cent of our GDP are services.
That’s the next frontier for us and it happens to coincide with huge development in Indonesia and in other countries. Many of those countries have not got well-developed services and so we can make a contribution in that way and benefit from it, of course, at the same time.
But we can take that expertise and grow our business outside of Australia in the services areas. The timing is right now, with the level of development of Australia and the level of development of countries around us, but particularly Indonesia; timing is everything.
I think if we make the most now of the opportunities, we can lock in some very enduring and very long-term commercial and broader relationships.
Question: Is it also the reason why you have so many businesses, so many investors?
Andrew Robb: Yes exactly. They brought themselves; we created the opportunity, but they’re paying for it, they’ve nominated themselves. We had to put a cap on it in the end as so many wanted to come. We couldn’t accommodate any more than 360.
Like I said earlier too, with the New Colombo Plan, we advertised as a government for young people to give an expression of interest to go to any one of 37 countries. The biggest number for any one country was Indonesia.
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