Australia-Indonesia Relations: Rare Opportunity for a Bold, Fresh Start

2 May 2019 Ross B. Taylor AM, FDI Associate


Despite the threat of protests and court action by opposition candidate Prabowo Subianto, Indonesia has once again pulled off a remarkably successful election process, involving 193 million voters, with almost no violence or threat to the nation’s democracy.

The official result will not be announced until the end of May but, based on what is known as the “Quick Count”, the likelihood is that the incumbent, Joko (Jokowi) Widodo, will enjoy another five-year term, providing Indonesia with continued stable government for the foreseeable future.

As a result of both countries holding elections little more than one month apart and the eventual ratification of the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) trade deal, there is a rare opportunity for a fresh and bold start in the broader bilateral relationship.


Over the next few months, the president will be absorbed by the inevitable “horse-trading” as factions and fractured coalition parties manoeuvre to grab a slice of the presidential pie. Unlike in Australia, Indonesia’s president can, like his American counterpart, appoint ministers from outside of the parliament, so the spoils can be great for those former politicians and tycoons seeking payback for their support.

Jokowi will also need to give thought to the two main issues confronting him at the start of his next – and final – term in office: religion and the economy.

Having thrown his former deputy, Basuki Tjahaja Purnama, who is known as Ahok, under a bus over blasphemy charges that landed him in jail, Jokowi decided to appoint an ageing Islamic cleric as his vice-presidential running mate. The appointment of the powerful Ma’ruf Amin was a politically pragmatic, yet blatantly political, decision to win over the conservative Muslim vote; it worked.

Jokowi will now, however, have a vice-president with very little interest in, or knowledge of, finance and the economy, and who instead prefers to focus on social and religious issues, including his opposition to gays, same-sex marriage and some ethnic minority groups.

Meanwhile, what will really matter to Indonesia, and what will decide Jokowi’s legacy, is the economy. With 95 million people under the age of 35, the challenges facing the president’s team will be huge. Young Indonesians are now aspirational, technically connected through social media and want a better education along with more secure and better-paid jobs.

Currently the Indonesian economy has “bumbled” along at around five per cent growth; a rate most nations would cheer about, but, in Indonesia it barely ensures that there will be enough quality jobs for those young people. And there is where the opportunity lies for Australia.

The current finance minister Sri Mulyani Indrawati – a former MD of the World Bank – supported by a relatively small team of technocrats, could help steer Indonesia, if allowed, on a pathway to strong growth and much-needed structural change. That would not be easy, as Jokowi, by nature, is a protectionist when it comes to trade, and many Indonesians still hold fears and suspicions about foreign interference of any kind. But the recently signed IA-CEPA trade deal between Australia and Indonesia does provide a positive and solid framework for Australia to “ride-on-the back” of Indonesia’s likely journey towards joining the ranks of the top five economies in the world by 2040. The deal is yet to be ratified by both parliaments, so we should expect further delays and some changes ahead.

It will require a new approach from the current “we sell, they buy” business relationship that Australia has with China, and moving to a “partnership-based” relationship with Indonesia. Numerous small and medium-sized enterprises in Australia have already developed this partnership model to build strong businesses which add value to Australian products in Indonesia and re-export them around the world.

We also need to develop a relationship that addresses the differences in our respective cultures and the distorted perceptions of each other. We should start by asking why the 2016 Australia-Indonesia Centre survey found over that 57 per cent of Australians – including our future business leaders – did not feel any warmth towards Indonesians.

A good starting point is people-to-people relations, by firstly addressing the dreadful decline in the study of the Indonesian language in Australia over the past ten years. Between Indonesia and Malaysia, there are over 300 million people in our neighbourhood who speak (almost) the same language, yet we have ignored the importance of learning their language and, in so doing, of also understanding their culture.

The second action that we could take is to remove the red tape and cost for young Indonesians to experience life in Australia under the Holiday Work visa scheme. The current bureaucratic and expensive tourist visa application process should also be revised because it is confusing, frustrating and pointless, costing Australia millions of dollars every year.

Irrespective of who wins this month’s federal election, we can move to change our business mindset now, while simultaneously implementing the people-to-people initiatives quickly and without breaching our strict border security laws. It would send an early signal to the new Jokowi team that Australia finally does want to get to know and understand its neighbours. It would confirm that Australia, as a sophisticated and educated nation, is well placed to support Indonesia on its journey to becoming an economically powerful and prosperous civil society, while reaping benefits for ourselves along the way.

IA-CEPA provides the platform to do that, especially when combined with the rare opportunity – as a result of elections in both countries occurring within two months of each other – for a fresh and bold start in the broader bilateral relationship.

The question is whether Australia has the vision and courage to actually do it.

About the Author

Mr Taylor is a former WA Government Regional Director to Indonesia and has held senior positions, including National Vice-President, of the Australia-Indonesia Business Council. Ross has also held senior executive roles with Wesfarmers Ltd and Phosphate Resources Limited, and is involved in philanthropy and cancer-charity work throughout the region. Ross is one of Australia’s leading commentators on Indonesia-Australia relations and writes feature articles for The West Australian and The Australian newspapers on a regular basis. He is also the author of three published books.

In 2013, Ross was appointed a Member of the Order of Australia for significant services to Australia-Indonesia relations and to the philanthropic community. Ross was selected by the Indonesian Government to be Australia’s “Presidential Friend of Indonesia 2013”.

Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International.

Published by Future Directions International Pty Ltd.
Suite 5, 202 Hampden Road, Nedlands WA 6009, Australia.