Rich promise of bilateral relationship with Jakarta

Joko Widodo arrives in Canberra on Sunday, his fourth visit to Australia since becoming President of Indonesia in 2014. In recent years, relations between the heads of government in Canberra and Jakarta have been close. Tony Abbott memorably promised “more Jakarta, less Geneva” in our foreign policy. Malcolm Turnbull, who had a strong friendship with Mr Joko, deserved credit for smoothing the way for Scott Morrison’s first, and successful, overseas trip after he won the top job in August 2018. But a few months later the Prime Minister drew the ire of our largest neighbour when he flagged a move of our embassy in Israel from Tel Aviv to Jerusalem ahead of the by-election for Mr Turnbull’s former seat in Sydney. That spat set back progress in settling the Indonesia-Australia Comprehensive Economic Partnership Agreement, which was eventually signed in Jakarta last March. We now have the potential to deepen economic ties, fight Islamist extremism together and pursue dual strategic interests in a region that is wary about the rise of China — but depends on it.

On the eve of his visit, Mr Joko told Southeast Asia correspondent Amanda Hodge the relationship is the best it’s been. Indonesia’s lower house of parliament provided the green light on Thursday to the IA-CEPA, 10 years in the making; the deal was approved by our parliament last year after trade union intransigence over the entry of temporary workers. The agreement, which could come into force by April, will reduce trade tariffs and barriers for Indonesian goods and Australian agriculture, as well as Australian health, education, mining and tourism services, and encourage the two nations to work together to develop products and services for third-country markets. Up to 4100 young Indonesians a year will be granted working holidays visas here.

Indonesia is a valuable and growing market for our exporters. In 2018-19, two-way trade in goods and services was worth $17.8bn, making Indonesia our 13th largest trading partner. Given Indonesia has 270 million people and could grow to be the world’s fifth largest economy by 2030, our trade and investment relationship is underdone. Mr Joko’s entourage of business leaders and officials will be looking to expand and diversify this budding partnership. Indonesia needs investors for its vast infrastructure program, not least of which is a new capital city, to be 80 per cent privately funded. Mr Joko sees a big role for Australian investors — in health, education and digital innovation — in the building of a new “emissions-free”, electric-vehicle-only capital on the site of old plantation forests in East Kalimantan.

Yet Australian companies and investors have found Indonesia hard to crack. Many jumped into the market three decades ago but were spat out by the 1997-99 Asian financial crisis. There are serious concerns among foreign entities about corruption, transparency and political stability. Mr Joko has allowed the country’s once powerful anti-graft body to be severely weakened. He told Hodge the watchdog needed “supervision” but insisted investor concerns were ill-founded and that the World Bank’s ranking of Indonesia’s “ease of doing business” was up to 73, from 120 (out of 190) in 2015. The President has a huge omnibus reform bill before parliament that he argues will simplify regulation and bureaucracy, and make decisions faster, at every level of government.

On Monday Mr Joko is scheduled to address a joint sitting of parliament, the first Indonesian leader to do so in a decade. Part of his wish list is to end the tough entry requirements for Indonesians seeking to visit Australia and instead offer 30-day visas on arrival, as his country does to our travellers. Canberra fears this could lead to overstayers and give people-smugglers an edge to market their products. With so much emphasis on people-to-people links these days, and broadening the relationship, Jakarta believes fair and reciprocal rights are in order. Australia gets a tiny share of Indonesia’s tourists, less than 2 per cent. Julie Bishop’s New Colombo Plan has seen a jump in young Australians studying in Asia, including Indonesia.

As we have long argued, Australia and Indonesia, the largest Muslim democracy, depend on each other for security and, increasingly, for our living standards. The coronavirus outbreak is a test of health systems and reveals our nations’ economic reliance on China. The trade deal strengthens both countries. Our economies are becoming richer and complementary. Serious bumps in our diplomacy with Indonesia — such as live cattle export bans, successive waves of asylum boats, embassy attacks, Bali bombings, spying revelations and the executions of the Bali Nine’s Andrew Chan and Myuran Sukumaran — are behind us. Leaders are trying to ensure the Wuhan virus fallout is contained, the Regional Comprehensive Economic Partnership of 16 nations is bedded down and cultural ties are promoted. Whenever, however we can, our nation should assist a stable, prosperous and pluralist Indonesia. Australians extend a warm welcome to Mr Joko.