Neighboring nations, stable and flourishing relations, the outlook for 2010 envisions a fair shake of the sauce bottle from Australia, continued cooperation from the Republic of Indonesia, and a broadening and deepening scope of relations with no harsh Durian scent lingering for the future.
Australia and Indonesia enjoy a wide-ranging relationship, encompassing extensive political, security, commercial, development and people-to-people links. These linkages have been expanded and strengthened in recent years, reflecting a shared commitment to advancing cooperation between the two countries.
Since Indonesian independence, Australia and Indonesia have maintained mutual diplomatic relations. They have formalized co-operation, especially in the fields of fisheries conservation, law enforcement, justice cooperation, they have embraced a measure of security co-operation, broadened treaty relationships and have co-participated in several multilateral treaties of significance.
Trade
One way in which the two countries relations can be seen to be flourishing is through their stable trade relations. As of the 1st of January 2010 the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) was put into place. This is the largest Free Trade Agreement that Australia has ever signed. AANZFTA provides for the progressive reduction or, for most products, elimination of tariffs facing Australian goods exports to ASEAN countries over a transition period, and the elimination of all Australian tariffs on imports from AANZFTA Parties.
Australian Ambassador to Indonesia, Mr. Bill Farmer asserts that, “there have been quite significant developments in the trade environment”. Feasibility studies on a bilateral FTA are also underway which would mean a new trade environment opening up with benefits for both countries.
At the same time, both Governments recognize that two-way trade and investment links fall short of their potential relative to Australia’s trade and investment with other ASEAN members. “There is certainly scope for further broadening of relations”, commented Mr. Farmer, “the outlook for 2010 is on the upside”.
Investment
In the investment sphere, studies show that Indonesia-Australia investment levels, though not insubstantial, underperforms relative to growing bilateral trade and Australian investment in some other ASEAN economies.
In an increasingly global market investment companies seek investment climates country by country. Commenting on the lack of Australian investment in Indonesian commodities, the Australian Ambassador to Indonesia, Mr. Bill Farmer put forward that Investment companies “…don’t find here a legal and regulative regime that is conducive to their aspirations, especially as opposed to these environments in other countries”, and that “foreign investors also find significant disadvantages when in competition with national companies”.
There are over 400 Australian companies with investments in Indonesia both small and large. Australian investments in mining, however, have gone down, whereas elsewhere it has grown. The reasons for this is viewed by Australian investors as being dramatic changes in the law, and the difficulty of securing agreement, through in some cases, regulatory bodies and stakeholders in three layers of government; national, regional and local.
It has been recommended that deeper economic integration would strongly complement already close strategic, security and political engagement between the two countries.
Future Apprehensions
There are some minor apprehensions for the future of relations in terms of the reopening of the Balibo Five case and the very fragile subject of terrorism.
There have been concerns that the reopening and probable further legal proceedings of the Balibo 1975 case, may cause tensions in relations between the two countries.
The Australian Federal Police (AFP) started a reinvestigation of the case in August of last year. With a declaration from the New South Wales Coroners Court coming forth in 2007, that the incident did in fact constitute a war crime and that the Indonesian Military (TNI) was involved.
The reopening of the case was a decision made by the AFP and wasn’t an Australian government decision. The Government of Australia doesn’t interfere with decisions made by the AFP for democratic reasons.
The current strong relations between Australian and Indonesian governments facilitates constructive solutions, no one particular issue is likely to upset the ties between the countries broadly. “Australia and Indonesia have a broad ranging relationship which is positive across the board”, said Mr.Farmer.
A subject that cannot be avoided when discussing potential strains on the relations between Australia and Indonesia is Terrorism. Since 2002 a number of terrorist attacks in Indonesia have been directed at Western interests including the Australian embassy in Jakarta and the 2002 and 2005 Bali bombings, which killed a total of 92 Australian nationals. Indonesian diplomatic and consular premises in Australia also received a number of hoax and threat messages in 2005. Both the United States and Australian governments have issued warnings against travel to Indonesia, advising their citizens of a continued risk of attacks. The current travel advisory suggests Australian travelers to reconsider the need to visit Indonesia because of the 'very high threat of terrorist attack'. Although last year, despite terrorism fears, there were a record number of Australian tourists in Indonesia.
Refugees
There are also many issues surrounding the unregulated movement of people that these neighbours are collaborating on. Australian Prime Minister, Kevin Rudd, and Indonesia’s President Susilo Bambang Yudhoyono (SBY) are very positive on continuing to work together on this issue, Mr Farmer commented, “The two countries, being close neighbours, have worked on these issues for a long time, both bilaterally and nationally”.
The cooperation between the two countries appears to be working effectively, with support for and from United Nations High Commissioner for Refugees (UNHCR) processes.
The Sri-Lankan refugees from the Ocean Viking, which have now all departed detention in Indonesia, and were not given “special treatment”, asserted Mr. Farmer. The Australian government came to a suitable agreement with the Republic of Indonesia. The situation was different than those other regular influxes of refugees to the nation. It was a humanitarian exercise performed by Indonesian Authorities, rescuing the refugees at sea.
“There is definitely scope for doing more and implementing different strategies to deal with the unregulated movement of people, amongst other issues”, said Mr. Farmer.
Climate Change
In terms of environmental strategies, whilst many nations are seeking a global solution to climate change, these neighbours have implemented there own initiatives to battle the climate change war. The two nations have agreed to a AUD30 million REDD (Reducing Emissions from Deforestation and forest Degradation) project being implemented in Kalimantan. The governments are also in discussions surrounding a second project. Ausaid assert that ‘Indonesia and Australia share a strong commitment on REDD and are working collaboratively to support an effective outcome under the United Nations Framework Convention on Climate Change (UNFCCC)’.
The Nations are also contributing greatly to the area of disaster prevention with the recent development of the Australian – Indonesian Centre for Disaster Prevention.
Aid
In 2008-09, Indonesia was the largest recipient of Australian aid at a value of AUD462 million. In January 2005, former Prime Minister Mr. John Howard and President Yudhoyono announced the formation of the Australia-Indonesia Partnership for Reconstruction and Development (AIPRD) under which Australia will contribute $1 billion over five years towards reconstruction and development in Aceh and elsewhere in Indonesia.
The development assistance partnership with Indonesia is Australia’s largest—at about $500 million per year—and the most innovative. It is built on a strong foundation of capacity building that will help Indonesia meet the challenges of managing a diverse, decentralised economy of 230 million people where almost 15 per cent still live below the national poverty line.
The long-term goal of Australia's development assistance program with Indonesia is to assist the country to reduce poverty and achieve sustainable development. The Australia Indonesia Partnership reflects Australia's national interest in Indonesia's stability and prosperity by helping Indonesia improve governance, reduce poverty and achieve sustainable development.
The relationship between the neighbouring nations is “at an all time high”, said Ambassador Mr. Farmer, and this has been commented as being so by both nations governments. And there is “a very good understanding of the scope for deepening and broadening the relationship”.
At a political level the relationship is flourishing in a very positive environment and there is keen interest in expanding the cooperation. Some very strong areas of cooperation are law enforcement, defence and development, the Ambassador for Australia in Indonesia believes will certainly grow and expand over time.
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