The dangers of rocking the boat from Indonesia

Wednesday, 20 November 2013  Media Alerts

"Is there more to the Australian relationship with Indonesia than just Boats Beef and Bali?" asks the UNSW's Australian school of Business Tim Harcourt. "Yes, of course - it is a huge trade partner. But many Australian's seem unaware of how trade, jobs and the economy could be put at risk if we rock the boat from Indonesia. Far from it - Indonesia is actually 'The Boat that Rocks'."

Relations between Indonesia with Australia have dominated the early days of the Abbott Government, with the recent spying scandal rocking the relationship and causing the recall of the Indonesian Ambassador to Australia.

Tim Harcourt, the J.W.Nevile Fellow in Economics at the Australian School of Business, has just come back from 8 days in Indonesia in Bali, Yogyakarta and West Java. He knows the country well, and said "we have a vital trading relationship. $11.1 billion in good trade, and $3.3 billion in services. There is a strong performance in agribusiness, infrastructure, construction, education professional services - ANZ, Comm Bank, leightons, Orica, TAFE sector - to name just a few. You don't want to turn that boat back to Indonesia."

There are 2584 Australian companies exporting to Indonesia, a number that has remained largely unchanged over the past 5 years despite security incidents.

There are also 150 Australian companies based in Indonesia despite the archipelago averaging 4-6 per cent growth over the past 10 years. There were around 400 before the 1997 IMF crisis.

"Rates of return for Australian companies are 40 per cent higher than in China and India, but with Indonesia's growing middle class, which has increased by 30 million people over the past decade, Australia could do a lot better in Indonesia," he said "So 'the spying game' will put lead in the saddle bags of Australian business already struggling to make head way in the archipelago."

For further comment call Tim Harcourt on 02 9385 3816, 0408 485 479, or Email tim.harcourt@unsw.edu.au

Media contact: Julian Lorkin: 02 9385 9887

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