Debnath Guharoy
AIBC National President

President's Column

Dear Members and Friends,

Those of us who care about this bilateral relationship will be disappointed with the Anti-Dumping Commission's decision to effectively make it impossible to import A4 paper from Indonesia. Coming as it does in the middle of the sensitive negotiations underway for the IA CEPA, the impact of the decision is potentially lethal. It flies in the face of the visiting President's pointed request in Sydney for a fair go on paper and palm oil.

So we can now add Bumf to Boats, Beef and Bali. We unilaterally decide to turn the boats around, stop the exports of live cattle, raise hell over the death penalty and now rollback their paper. Each and every time, we expect the Indonesians to bow to our self-promoted higher standards, our much-touted lofty principles. Those of us who have lived in, worked in or frequently travel to Asia cringe at the disdain with which these proclamations are treated by our neighbours.

I'm no expert but I wonder how many members of the Anti-Dumping Commission travel? I understand that there are two major influencers for their decision: the ban on the export of timber logs and the low "stumping fee" in comparison to a neighbouring country like Malaysia. First, we should note that Indonesia does not ban export of acacia and eucalyptus logs from which paper is made. Second, stumping fees in poorer countries like Cambodia and Laos would probably be even lower, if they had any fees at all.

It isn't enough to proclaim the independence of the ADC. We may not have noticed but the high horse left a long, long time ago. The Indonesian Negotiators could possibly follow suit, metaphorically speaking. This case will head to the WTO, as the effect of "particular market situation" may have consequences beyond Australia. More importantly, from our bilateral perspective, it has put a roadblock in the IA CEPA's way forward. There is only one way out of this impasse: honest and intelligent dialogue.

It is for intelligent dialogue AIBC has accepted the invitation to appear before the Parliamentary Inquiry on the Trading Relationship with Indonesia, May 12 in Canberra. I am pleased that such an Inquiry is indeed being held. We have an unintelligent relationship with our large neighbour and it does warrant examination. But I'm not so sure that the politicians will welcome the candour.

Here's just one example of deep-rooted bureaucracy, begging attention. From ye olde days when we doled out our riches to those poor neighbours who needed our charity, we the "donor" invited the "recipient" to tell us where they would like us to direct our aid. In more recent times, as recent as three years ago, the Coalition Government announced a major shift in policy. "Aid for Trade" we were told. More than two years ago, then Trade Minister Andrew Robb committed another $300 Million over a 10-year period for Infrastructure Development Assistance to Indonesia. Money for Feasibility Studies, Masterplans and the like. But the old mandate remained in place, limiting support to only Road and Water projects. The Japanese are the biggest donors of aid to Indonesia. It is inconceivable that one yen of aid would be made available if the particular project was not delivered by the Japanese from beginning to end. If you were to ask the question how many dollars of trade has been generated directly by the aid we have donated since the shift in policy, you wouldn't get an encouraging answer. Brexit, Trump, Wilders, Le Pen, Hanson... we haven't got the message.

Indonesia is expected to be the 5th largest economy by 2050. At that time, we're expected to be No. 32. There's a message in that prediction too.

What our political masters choose to do with Aid in general is beyond the ken of the AIBC. But our members have every right to ask how the money devoted to the assistance of Indonesia's Infrastructure development is actually being spent. Especially at a time when underemployment at home is running at 30 percent of the workforce. Here's a simple proposition. If the aid was used to create Masterplans and Feasibility Studies using Australian expertise, there would be two positive outcomes. First, thousands of paid manhours would be created in Australia.  Second, our reputation would help Indonesia raise badly needed private sector funding from around the world.  Win-win. No-brainer. But three years later, we're still beating the same old drum.

Frustrated, I took the proposition last month to the "client" in the "recipient" country, Minister for National Development Planning Dr Bambang Brodjonegoro. He was unequivocal. It is Australia's money and if Australia wants to pick and choose how we want to help Indonesia, why would he object? Commonsense. It's what the Japanese have been doing for years. Even ye old Britain is now following suit, around the world.

Because actions speak louder than words, Minister Brodjonegoro readily accepted AIBC's invitation to a Tour of Oz. For the first time ever, a ranking Indonesian Minister will visit five of our capital cities on a whistlestop tour. The Mission: To talk about Indonesia's economic outlook, the opportunities they present and against that backdrop, encourage Australian enterprises to engage. If our Aid were to pay for crucial Feasibility Studies by Australian experts, they will hopefully encourage our businesses to get involved: To help raise capital from around the globe, to invest in the projects, to build them, operate them. For our risk-averse Boards, our bankable studies could well be the catalysts they need. The Minister's tour dates are June 19 to 23, specific details will be available soon.

This is the same proposition I will be taking to Senator Conchetta Ferravianti-Wells at the meeting scheduled for May 17. As Minister for International Development, she is in charge of our Aid dollars. I am hoping that the Donor country's Minister will acknowledge the green light from the Recipient country's "client" Minister. They know each other. I am hoping she will agree that the new mandate should have no limitations to sectors like Roads and Water, that "Private Public Partnerships" should embrace all kinds of infrastructure projects. Most importantly, the prerequisite studies should be conducted by Australian companies, for mutual benefit. Such an agreement between the two countries would go a long way towards changing the transactional nature of our business ties.

By itself, such a change will hardly be a game-changer. Our businesses need to play their role. The first step is exploration. President Jokowi wants to see "ten new Balis" developed across the archipelago. In real terms these are all potentially Tourism-led Infrastructure development projects. From an Australian perspective, this is familiar terrain. From consulting engineers to accountants, bankers to builders, hoteliers to adventure sports operators, just about everybody could get involved. But if Team Australia would like to look at developing a new tourism destination where bikinis and beer will always be welcome, Manado is it. This is where we can get involved from Masterplan and Feasibility Studies, right through to raising capital from across the world, to building and operating just about everything a major new destination would need. The signs of a boom are already visible. I have reason to believe that Japanese, Chinese, and Filipino enterprise would welcome our stewardship. I can say with certainty that several arms of the Indonesian Goverment would love to see us involved from the very outset. The Manado Investment Forum organised by the Investment Coordination Board BKPM is slated for May 22-24. Come take a look. It is the perfect opportunity for Australia  - Business Big and Small, working in tandem with Australian Aid -  to explore what could become a contribution all Indonesians would acknowledge forever. For more details please click here and to register for the forum, please click here.

To state the obvious, AIBC is not a promoter of any project. We urge exploration of opportunities that we believe could be of interest to our Members and the business community at large.

It's been a long and winding road but we're still hoping that meaningful change is around the bend.

Till next month, warm regards.
Debnath

State of the Nation Series: Indonesia

AIBC partnered with Asialink Business and Herbert Smith Freehills embarking on the State of the Nation Series: Indonesia, with over 230 guests attending in each of Queensland, Sydney, Perth and Melbourne during 26 April - 02 May. Attendance at each event was well received and good debate was held on the relationship.

David Dawborn, Partner, Herbert Smith Freehills (Jakarta), Senior International Counsel, Hiswara Bunjamin & Tandjung presented to each of the States the importance of cultural understanding in the Indonesian business environment.  The two legal professionals outlined differences from the common law that business is accustomed to in British heritage jurisdictions.  A significant issue of concern to many Westerners considering business in the Indonesian environment is a different attitude to contracts in Indonesia due to greater willingness to recognize change of circumstances.

Other guest speakers during the series included:

• Helen Brown, formerly ABC Jakarta, now Bisnis Asia;
• Campbell Bridge, SC, Mediator
• Phillip Marriott, Head of Telkomtelstra Australia;
• Rob Delane, Special Adviser Agribusiness Expansion, Department of State Development, WA;
• Suzanne Ardagh, Director Executive Education,
  AIM WA & UWA Business School;
• Garry Johnson, CEO Steel Blue;
• Dean Garvey, Deputy Managing Director, International, Blackmores;
• Amelia Fyfield, Senior Trade Manager - Food & Fibre, Trade Victoria, Department of Economic Development, Jobs, Transport and Resources;
• Khalil Heggarty, Associate Director, ITS Global

AIBC would like to thank all guest speakers, Asialink Business and Herbert Smith Freehills in the collaboration of these events.

David Dawborn addressing the Sydney event.

QLD Update

Business Networking Event with Minister Steven Ciobo

An event was planned with the Minister for Trade Steven Ciobo MP to speak on IA-CEPA: Indonesia Australia – Comprehensive Economic Partnership Agreement. Since the Minister had recently been in Indonesia negotiating the agreement the event was much anticipated.  Unfortunately the stars did not align.  Friday 31st March was outside the planned parliamentary sitting days, but the Government decided to call Parliament together for an additional sitting day.  That meant our much anticipated speaker could not attend the event.

Fortunately we had a guest speaker, Mr Richard Mathews Consul-General in Makassar, who accepted the additional time available to present an absorbing talk on opportunities arising in Eastern Indonesia. Richard described the establishment of the Consulate-General in Makassar and its first 12 months building acceptance in the region.  Notable achievements in that time have included:

• Advocacy leading to the Governor of South Sulawesi leading a delegation of 43 to Perth & Sydney in February 2017 to explore opportunities in cattle, agriculture and education;
• An imminent plan to send 40 teachers to NSW for professional development.  This should lead to model schools and foundation studies courses in Makassar;
• Nine Australian universities or education consortia visited Makassar seeking the assistance of the Consulate-General with student numbers, and research collaboration is increasing;
• In public diplomacy the Consulate-General has hosted a major film festival; contributed to the Makassar Mayor’s F8 Festival; hosted guest lecturers achieving excellent media coverage, and given numerous lectures at universities around Eastern Indonesia;
• The Consulate-General has been established on time and within budget attaining a high and positive profile across the region;

Richard outlined how the Consulate-General is ready to help business through:

• Utilising its well-established network throughout Eastern Indonesia;
• Setting appointments with senior officials, senior business people, university rectors and government agency heads;
• Providing key advice on doing business in Eastern Indonesia;
• ​Introduction to excellent media contacts and know how to manage campaigns.

The presentation by the Consul-General was informative and thought provoking providing a valuable insight into opportunities arising in the eastern provinces of Indonesia.  The session was concluded with a panel discussion with Richard Mathews; Oka Simanjuntak, Queensland Trade Commissioner in Jakarta; and Debnath Guharoy, National President of AIBC forming the panel.
Our thanks to Richard Mathews for his presentation and enthusiastic participation.

The Minister for Trade apologised for his unavoidable withdrawal from the event, and undertook to address an AIBC event in the near future.

Kathleen Turner,
Chairman-Australia Indonesia Business Council (AIBC) QLD
QLDChair@aibc.com.au

VIC Update

Bank Negara Indonesia chooses Melbourne for its Australian Headquarters

On April 24, the Victorian Committee and the Executive Director were invited to join Victoria's State Treasurer Tim Pallas for the announcement of BNI's headquaters opening in Melbourne in 2018.
These operations are set to commence in 2018 once approvals from Australian and Indonesian regulators have been obtained.
BNI is Indonesia's fourth largest bank, with assets worth more than A$40 billion and an established international footprint.

The announcement follows the signing of a Memorandum of Understanding (MoU) witnessed by the  Chairman of Indonesia's Financial Services Authority (OJK), Dr Muliaman Hadad, who has been in discussions with the Victorian Government around ways to encourage greater cooperation in the banking sector between the two jurisdictions.

BNI's presence in Melbourne will help foster further business ties between Indonesia and Victoria.  To read the complete article, please click here.

BKPM Investment Policy Update:  Investment Development in Indonesia Special Economic Zones and Industrial Zones

AIBC VIC recently met with a delegation from BKPM in Jakarta who are keen to facilitate Australian investment in Special Economic Zones and Industrial Zones.  BKPM presented to a cross-section of representatives from the banking, food and fibre, legal and other professional services industries, as well as representatives from DFAT, Austrade and the Victorian government.  Please click here to view BKPM's presentation.
 

Jared Heath
Chairman - Australia Indonesia Business Council (AIBC) VIC
VICChair@aibc.com.au

Upcoming Events

What the Indonesia-Australia Comprehensive Economic Partnership Agreement means for SA Businesses

AIBC SA in collaboration with The University of Adelaide’s Institute for International Trade, invite you to attend a presentation and discussion panel on

Date:     Tuesday, 9th May 2017

Venue:  National Wine Centre, Corner of North Terrace and
              Hackney Road, Adelaide

Time:     7.30am for an 8am start, with breakfast and discussion      
              concluding at 9.30am

Please CLICK HERE to register your attendance.

As the two largest economies in the region, Australia and Indonesia share interests and a common future. Although bilateral investment between Australia and Indonesia reached $9.8 billion in 2015, there is still considerable opportunity for Australia to expand its trade, investment and economic cooperation with Indonesia.

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) promises to build on existing multilateral and regional agreements, providing the framework needed to support a new era of closer economic engagement between Australia and Indonesia.

Speakers

• Professor Christopher Findlay is Executive Director of the Institute for International Trade and Executive Dean of the Faculty of the Professions at The University of Adelaide. Professor Findlay is an economist with expertise in international trade policy and theory, services trade and public policy. He has published extensively on trade liberalisation, Free Trade Agreements and regional integration;
   
• Mr Peter Roberts is Assistant Secretary, Free Trade Agreement Division within the Department of Foreign Affairs and Trade and a lead negotiator on the IA-CEPA;
   
• Mr Steven Baker is Chairman of the SA Branch of the Australia-Indonesia Business Council where he plays a vital leadership and lobbying role in the development of bilateral trade and investment.

For event enquiries, please contact Lisa Hunt via email at lisa.hunt@adelaide.edu.au or on 0421 359 518.

IABC Conference 5-7 November 2017:  Making it Happen - getting trade and investment moving

The Indonesia Australia Business Council is hosting its biennial Business Conference on 5-7 November this year in the business city of Surabaya, the city of the shark and the crocodile. This is the thirty-fifth of such conferences, hosted either in Indonesia, or by our counterparts in Australia.

Theme:

At the time of the conference, it is expected that the IA-CEPA has been all-but finalized, and be almost ready to be signed if not already signed. The agreement is intended to enhance the Indonesia-Australia relationship. The relationship is bigger than any particular agreement. But this agreement, and the atmosphere of cooperation which it will engender, will significantly enhance that relationship.

We must make it happen.

And during the conference we take a general look across the board at the economic and political forces shaping our future and discuss how they are looking, besides of course inviting comment from business.  For further details, please click here.

The 10th World Chambers Congress

The 10th World Chambers Congress will be held in
Sydney 19-21 September, 2017.

The World Chambers Congress gathers an international group of chambers, business and government leaders.

• Provides you with unique trade, investment and business opportunities.

There is already significant interest from many international chambers including Afghanistan, Asia Pacific, Brazil, Colombia, Italy, Japan, Korea, Macedonia, New Zealand, North America, Saudi Arabia, South Africa, South East Asia, Sri Lanka, United Kingdom.

World Chambers Congress 2017 Website

NB: Friday May19, 2017 is the deadline for early bird registration offer. Now is the time to organize flights and accommodation.

Do not hesitate to contact Eddie Reginato, NSW Business Chamber on 0467.524.701 should you have any queries.

Indoview

Asian infrastructure:  lifting private finance and institutional investment:

Infrastructure investment has moved up the political agenda all over the world. Asian governments are increasingly calling for a higher contribution of the private sector in financing infrastructure.

The expectations on institutional investors are particularly high – but are they realistic?

Infrastructure spending has been trending down in the Western developed world, since the 1980s, to a level of about 2.5% of GDP. In contrast, East Asia has taken the lead in building new infrastructure, led first by Japan, and then by China (over 8% of GDP over two decades). Asia is, of course, not a uniform continent in any sense, nor is the state of its infrastructure. There is need for much more investment everywhere to keep pace with economic and demographic growth, urbanization, social change and climate-related action.  To continue reading the article, please click here.
 

Post Jakarta Election - Bisnis Asia Report

There has been considerable focus on the religious element of the Jakarta Governor election. The business community should be mindful that the story is nuanced one. Helen Brown summarises some of the key issues.
 

The election of Anies Baswedan as Governor of Jakarta needs to interpreted very carefully.

The election of Anies Basweden, a former Minister for Education and Culture, as Mayor-Governor of Jakarta, with a very substantial majority, needs to be carefully interpretated.

We should acknowledge that it was always improbable that the acting Mayor, 'Ahok', following Jokowi's election as President,would be elected to the position in which he is acting; even with Jokowi's support.  To continue reading Richard Woolcott's article, please click here.  AIBC thank Indonesia Institute for the use of this article.

Sandiaga Uno has been appointed Deputy Governor-elect of Jakarta.

Australia's International Business Survey 2017

Australia's International Business Survey 2017 (AIBS 2017) is the fourth annual study of Australia's international business activity.

Building on the last three years of AIBS survey results, AIBS 2017 will build our understanding of the international activities of Australian companies with a specific focus on current international business activities and markets, future business outlook, experience with FTAs (including the newer North Asian FTAs), and access to finance.

The survey takes approximately 15-20 minutes to complete.

This year ECA is offering an incentive for Australian companies that complete the AIBS survey – a series of four booklets covering selected ASEAN market FTAs.  These booklets help Australian exporters understand FTA agreements, and contain information on tariff and non-tariff benefits that apply to a range of goods and services under each agreement.

AIBS 2017 is a collaborative project between Export Council of Australia, Austrade, Efic and UTS Business School.