Andrew Robb: It’s a pleasure to host the inaugural Australia Indonesia Business Week. It’s an event that we’re looking to make a regular feature. We’re doing it with a couple of other major partners every second year, so at least every second year we’ll look to bring a very significant delegation to Indonesia to foster the commercial relationship between our two countries.
It is the biggest delegation of business people that we’ve brought to Indonesia at any stage – some 360 very forward-looking, innovative companies across a whole range of sectors – in particular the health sector, the education sector, tourism sector, infrastructure; very importantly infrastructure, resources and energy, agriculture and agri-business, premium food and beverages. And it is those areas which we believe are strengths of Australia, which can benefit from partnerships, joint ventures and opportunities and investment into this country, into Indonesia. And similarly we’re looking for business relationships and investments which can come from Indonesia into Australia.
So it’s a two-way thing we’re looking at. But also importantly we’re looking at the opportunities where we can combine our great strengths and develop products for third country markets, for other markets in a region that is so dynamic. In a region that’s now the epicentre of growth in the globe. In a region, for the first time in centuries really, that is the centre of growth in the world. And we’re looking to make a contribution to that growth, but we’re also looking to obviously benefit from that growth.
So it’s a very important visit from our point of view. We do feel that over the last 15 or 20 years that, in a commercial sense, in many ways we’ve been looking past one another as countries. And there are good reasons for that. A lot of the last 15 to 20 years there’s been a very strong focus on resources and energy products. That’s been driving our two economies, certainly in an export sense. And in some ways we’re very similar; we’ve got similar resources in that sense. And we’ve been competing in those markets, often competing or supplying different markets. So we haven’t had the engagement that we could and should as such close neighbours. You can virtually throw a stone from Australia across to Indonesia. And that’s not likely to change.
The thing is that we do think now, with this first occurrence in centuries of the centre of economic and growth activities in the world being in our region, that we’ve got to look at how we can broadly play a part in all of that. We’ve looked at the structure of our economy, we’ve looked at what’s happening.
75 per cent of our GDP is services: financial services, education services, health services, engineering services, design and architecture services, water management services, logistics services; you name it, all these different services and we’re looking to find opportunities in Indonesia, with Indonesian companies, to introduce those world class services into Indonesia to help Indonesia in lots of the areas that are great strength of Indonesia. So it’s an exercise really in identifying where the partnerships and the joint ventures can be.
Now Indonesia as we see it, has 250 million people; it’s our closest large neighbour; it’s growing rapidly; 50 per cent of the population is under 30 and they’re very tech savvy, knowledge-based members of this community. There’s a lot of opportunity between the two of us, but importantly in the region around us; there’s 600 million people at the moment in the middle class between India and China and every country in between, including our two countries.
In 35 years – not 100 years, 35 years – that’s expected to grow to three billion people, including a lot of growth in Indonesia obviously. These are the opportunities, this is such a dynamic time. The next 10, 20, 30 years for both our countries can be spectacular, and it will be even better if are working in unison, if we’re joining forces on a lot of things, to open up other markets in the region.
Both of us have got a great productive capacity in agriculture; we’ve got great resources and energy products; we’ve got increasingly knowledge-based economies. There are great opportunities and we’re well-placed to help and grow our economies by helping the rest of the region.
To that end I met with my counterpart, the Minister for Trade and Investment Tom Lembong, in Manila. We were both at APEC two days ago and we reaffirmed that the negotiations around the Comprehensive Economic Partnership Agreement will be reignited; we’ll re-engage. That ran into the sand three or four years ago, we’re going to re-engage on that immediately in the New Year. And again, we’re looking to have an emphasis on where we can drive major investment from Australia. The investment of lots of services coming in and putting down roots, establishing another arm of their business to grow alongside Indonesian businesses.
At the moment there are 245 Australian companies in Indonesia; it’s not good enough. We’ve got 360 companies in Dubai. Here we have our closest neighbour and all the opportunities and all the incentives really from a future point of view, and we’ve only got 245 companies. There’s no reason we can’t in the foreseeable future, grow beyond a thousand companies from Australia in this market, working, living and cooperating and joining forces in many cases to supply other markets.
I’ll give you one example alone. At the moment we sell a lot of wheat to Indonesia. That wheat is turned into noodles, pasta, biscuits and a lot of those get exported. It’s a classic example again of some of the things we do well – which is broad acre wheat production – and some of the things done here – a lot of the processing of a lot of our raw materials, especially in agriculture. There are real opportunities for value add here in Indonesia, not only to supply this market but then together, supplying other markets.
So we do think the future does revolve significantly around our relationship. Immediately I can see from discussions this morning, the education opportunities; not just higher education, but secondary education and the opportunity to come and partner here in the development of secondary education in the vocational education space.
We’ve got two agreements to witness immediately after this press conference. Both involving the company called Careers Australia. One in terms of the Australia-Indonesia professional training centre that they’re going to jointly set up to train in hospitality. And also, another agreement, [with] the President of the University of Indonesia to provide curriculum for business diplomas. Now these are all the sorts of joint ventures at an educational level where we can introduce our services, employ Indonesians, work with Indonesians and help to give more bandwidth to the education – especially the vocational and secondary education opportunities in Indonesia.
Finally, I’ve got a lunch today with high net worth individuals in Indonesia – I think there’ll be at least $60 billion around the table. We are looking at opportunities where we can introduce major investors from Indonesia into Australia; similar to the exercise last year where the biggest Indonesian importer of live cattle bought two cattle stations in the Northern Territory; bought several hundred square miles of what we call cattle country. This is a very great development.
We’re looking to, where we can, have some of the major processing operators here, of all sorts of food stuffs and other products, if we can have them also investing at the Australian end and getting to understand and building those relationships, it’s all going to help the two countries. Because if we do build a very strong commercial relationship, it will also develop so much of our people-to-people links.
We’ve already got 15,000 or 16,000 Indonesian students in Australia. The Australian Government is now funding Australian students to come to Indonesia, so that our young people learn the culture and develop the linkages. We are very much determined to do what we can to build great linkages between our two countries and that will give us peace and stability in the region as well. Over to you; thank you.
Journalist: When do you think you might be able to wrap up a trade deal with Indonesia?
Andrew Robb: Well, I have to have a detailed discussion with my counterpart. We reached an agreement that it would be a matter of urgency to get on with it because it can help influence the structure of all the things I’ve just talked about – the progress of those. We have been completing trade agreements, you know, in 12 months, 12 to 15 months. I’ll be putting that sort of proposition and seeing how well placed they are here. But I don’t see any reason why it should be much longer than that if not shorter.
Journalist: What do you think the biggest sticking point [inaudible].
Andrew Robb: Well I can’t see many stumbling blocks. The thing is that if the political will is there, these things happen. And I’ve been extraordinarily heartened by a couple of developments; the fact that President Widodo went to the United States and said to President Obama that Indonesia was keen to join the Trans Pacific Partnership, the TPP. Now if Indonesia is to join that agreement, there will have to be some important structural reforms in the economy to do that. Vietnam voted TPP so I don’t see why Indonesia certainly can’t get to that level.
Now if those reforms are made, a bilateral agreement will be even easier for that matter. It is just a question of removing, not just the tariff barriers over time, but it’s removing all the behind the scenes barriers and the red tape and the things that frustrate trade.
Now we can do it both ways, and we need to do it both ways, but I think there is the political will, from what I can see and what is said to me by Tom Lembong, and what the President said last week to Malcolm Turnbull in their meeting which was hugely successful.
So I think we’ve got the circumstances, the realisation about the opportunity in the region around us, and what we both have to do to get there. So the thing is if we have one or two areas of particular sensitivity, I’ll do what I did with the China deal, and that is where there were two or three areas, we built into the agreement that we would defer those for another three years and finalise 88-90 per cent of it. The important point is to get the momentum going and not hang out for the 100 per cent perfect deal and spend another ten years negotiating, which has been one of the problems in the past I think, not just here but in other countries.
Journalist: In the education sector – is there any education partnership or collaboration that is being offered or in discussion?
Andrew Robb: Yes, there has been. There are quite a few discussions taking place but immediately after the press conference we will have these two memorandums of understanding. One is to do with creating a school of hospitality training, and of course tourism in both our countries is a major driver of growth. With the explosion in the middle class in the region around us, we are seeing major growth opportunities in tourism. Last year, 100 million Chinese left China for holidays – a million came to Australia, I don’t know how many came here – but the expectation is by 2020, 220 million people will leave China for a holiday, so the opportunities are enormous. So the training in hospitality and having a joint venture in that is very important. It will be the Australia-Indonesia Professional Training Centre, which we are both going to set up here in Indonesia.
The second one is Careers Australia, who will be providing the curriculum, the course, for business diplomas. They will be provided here, it will be taught here but it will be the Australian curriculum and there will be Australians here also looking to assist with that program. But that’s the start of things, as I said I do think there are opportunities in secondary schools, for Australian schools to come and joint venture here in Indonesia. We are doing it in other countries, it’s been very successful with a very strong English language component to secondary education, and also with vocational education, of course universities and postgraduate work are all areas which I think we can see two-way activity happening.
Journalist: Will you be able to see or observe education in Indonesia and whether there will be more opportunities for student exchange in the future?
Andrew Robb: I believe that one of the great advantages of looking to create joint ventures in Indonesia, and in Australia for that matter for Indonesian education institutions, but one of the things that will happen is that students from Australia will spend some time in the joint venture in Indonesia and Indonesian students will spend some time in Australia in the institution, which is made up of the joint venture.
It is the most significant way of providing students from both countries with opportunities to be educated in both countries. And that will see enormous growth in that travel. Rather than having to commit to three years, a lot of students may go for one year to Australia and Australian students may come for one year here. So you do create that significant movement of students both ways and that will develop linkages which will last a lifetime.
It will develop commercial linkages, it will develop social linkages, it will develop community linkages, which will cement our two communities in the most powerful way.
So in addition to that, as I said, the Australian Government is actually providing 10,000 scholarships a year for students to study in the region, to go and study in different parts of the region. There are 37 countries that students are going to, and it was very heartening to me to see that when we advertised nationally for students who were interested in applying for these scholarships, the country that was the most popular country of all the applicants was Indonesia, out of all 37. So it does suggest to me that young Australian people are certainly seeing the opportunities in the years and decades ahead that will be presented by the relationship between our two countries.
Journalist: Minister, can you explain [inaudible].
Andrew Robb: This is the first as I’ve said and we’ve got very significant numbers. Now what’s happened is we’ve done this with a couple of other major trading partners and we’ve had big numbers go every couple of years. It is very difficult to manage too many of these as it’s a lot of work on our local posts because the 360 here at the moment are meeting with hundreds of Indonesian businesses at the moment that relate to their particular area of interest, so it’s a lot of work to put those things together over a week of activities.
So we’ve decided we can afford and we can manage one every two years in all of our major trading partners, and in between times, as I’m going to all those countries for various reasons, I’m taking smaller delegations. So there’s hardly a trip that I make that I haven’t got at least 15 or 20 or 30 CEOs of different business streams. So that’s all an attempt to maintain the momentum because countries can create the framework and the economic conditions and the visa conditions and all the rest to make it easy for business, but in the end business has to do the job itself.
I must say that we expected about 200 to come on this trip, when it got to 360 we had to cap it as we couldn’t cope with any more. There was a huge amount of interest and again I think that it underscores the fact that Australian business and the broader community is starting to see that instead of looking past one another as we might have done for the last 15 or 20 years in a commercial sense, it’s time that we joined forces and made the most of the great strengths that both our countries have got.
Journalist: Have any Australia companies got any constraints to doing business here? If so, what are they and what would you like to change to smooth the process? And secondly, cattle has been an issue traditionally; do you see a new approach under Minister Tom Lembong to smooth that sector, the imports?
Andrew Robb: I do think there’s an expectation on the last question. There’s a realisation in both countries that stability is critical for the success of business. You know, Australia’s been at fault on occasion and Indonesia has contributed on occasion to stop-start arrangements in the sector. I think both countries have realised this is too big a business and too important and it’s important to the relationship because again, it demonstrates Australia does what it does best, and that is to produce a wonderful standard line of cattle and we can produce them to a certain age, and then Indonesia, what it does best is fatten these cattle and so again it’s a classic example of how our two strengths can combine to give us a great outcome and even give an export outcome in due course.
If we get the stability into the industry, which in all my discussions with Tom Lembong that’s been the key phrase that he uses, so the government, they have increased the numbers back to the long term levels over this quarter – another 200,000 – they are looking at what they do over the longer term, and my sense is that they will move to introduce more stability into the market.
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