Trade pact can only further cement close bond with Indonesia

Joko Widodo will take the occasion of his visit to Australia to address parliament on Monday.

Joko Widodo in Jakarta on Thursday.

Rarely has a state visit been as well-timed as Indonesian President Joko Widodo’s to Australia this weekend.

Amid an unfolding public health crisis surrounding the coronavirus and its economic fallout, the bushfires catastrophe and the latest sports rorts affair, Widodo lands in Canberra on Saturday night bearing the best news Scott Morrison has had in weeks.

After a decade of negotiations, interrupted at intervals by diplomatic spats, Indonesia’s parliament passed the Indonesia Australia Comprehensive Economic Partnership Agreement late on Thursday, removing the final obstacle for the landmark trade deal to come into force.

Australians may not be used to Indonesia being a good news story but that is increasingly what it has become as the two countries have moved beyond the terrorism and border security conversations that dominated the past relationship.

“Now I think it’s the best relationship it’s been,” Widodo told Inquirer ahead of his three-day visit. “Prime Minister (Malcolm) Turnbull we are very close with. Prime Minister Scott Morrison we are close with.”

The two countries already regularly confer on strategic regional, defence and security matters but the trade deal offers a whole new level of co-operation at a critical juncture.

Lowy Institute’s Southeast Asia program director, Ben Bland, says the economic relationship — routinely described as “underdone” — remains the last big challenge for Indonesia and Australia.

While securing a trade agreement with protectionist Indonesia is a big achievement, it may not be enough to convince the Australian corporate community, which still harbours frustrations about doing business in Indonesia however.

“The IA-CEPA has been passed and is now coming into force, but what does that really get you?” Bland says. “ Will it be enough to step up the business and trade relationship? I am not sure it will be.”

Yet no event in recent times has so clearly illustrated the need for Australia and Indonesia to reduce their overexposure to China — both countries’ largest trading partner — than the present coronavirus outbreak.

Chinese tourism has ground to a halt and critical supply chains are interrupted as the Asian superpower battles to contain a disease that has killed close to 700 people and infected tens of thousands.

Indonesia has yet to confirm coronavirus on its soil, which Widodo told Inquirer was “thanks to God” and strict detection measures.

World Health Organisation officials suggested this week it might be more a result of surveillance and detection issues, underlining the need for investment in the country’s public health system.

Against that backdrop, Morrison and Widodo, known as Jokowi, will be enthusiastically spruiking the broad potential of the deal that presents both countries with an opportunity to diversify their economies.

The IA-CEPA streamlines and prioritises access to the other’s market, removing 99 per cent of tariff barriers to key Australian exports such as beef, grain and horticulture, and boosting Indonesian automotive, textile, timber and palm oil imports.

It opens the door to majority Australian-owned businesses in the mining, health, aged care, vocational training and tourism sectors operating in Indonesia, something Jokowi insists could happen as soon as this year pending the passage of a suite of reform bills through parliament.

It also offers professional exchanges and limited access to Australia’s job market for Indonesians through a rise in annual working holiday visa quotas.

That’s a start for Indonesia, which sees three million young adults enter the employment market every year. Jokowi is under pressure to create jobs and improve the capacity of job-seekers whose education and skills levels rank below those of many neighbouring countries.

But Indonesians hoping to visit Australia have for years faced a difficult and expensive visa regime that tells them they’re not really welcome, and so most don’t bother going.

That has to change, says Jokowi, who will press the issue when he meets Morrison this weekend. “Visa on arrival should be ­reciprocal and fair,” he told Inquirer. “I will discuss this (with Mr Morrison) because it’s very important for us.”

ANU professor of international security and intelligence studies John Blaxland says the present policy was shaped in the past by people-smuggling concerns and suspicions that Indonesians in large numbers would rort a visa-on-arrival system.

But those concerns could be easily addressed if the two countries’ immigration agencies were to match the close collaboration of their national security counterparts, he says.

“Indonesia is a country 10 times our population and only a minuscule number of Indonesian have ever come here,” Blaxland says. “If we are going to develop strategies to reduce our overexposure to China, making it easier for Indonesians to come here has got to be part of it. Why isn’t Darwin an absolute mecca for Indonesian tourists? Why aren’t wealthy Indonesians with educational aspirations flocking to Australian cities?”

While in Australia, Jokowi will also tout for investment in his legacy project — the construction of an emissions-free, electric vehicle-only “forest” capital that is to be 80 per cent privately funded.

He told Inquirer he would “invite Australian investors to join with us in building our new capital city in east Kalimantan” and suggested they could best contribute through investment in the health, education and digital innovation sectors.

Though he staked his first term on building new roads, airports and ports across the archipelago, he seems eager to improve his environmental credentials. Recent catastrophic bushfires in Australia and Brazil, and deadly floods and landslides in West Java, were clearly a consequence of escalating climate change and required immediate redress, he says.

Rather than focusing on transitioning from coal, however, a major Indonesian export, he is pushing for mass reforestation across denuded stretches of ­Indonesia. “Climate change, rising temperatures, we all have felt them,” he said this week as he ­announced stiffer penalties for the deliberately lit forest fires that regularly send a thick smoke haze across Southeast Asia.

Jokowi’s visit follows bad news on the economic front, with new figures showing Indonesia’s growth rate dipped below 5 per cent last quarter for the first time since 2016 as its economy continued to be battered from falling exports and sluggish ­investment because of the US-China trade war. A further slowing of China’s economy as a result of the coronavirus will only add to Indonesia’s woes.

Indonesia suspended live animal imports from China last week and flagged further trade restrictions, drawing threats from Beijing that “exaggerated measures” would bring economic retribution.

Jokowi has deftly managed the China relationship, encouraging trade and investment with Beijing while promoting an Indo-Pacific concept that places ASEAN — not China — at the centre of the region.

But he has also had to take a harder line on escalating tensions with China in Indonesia’s Natuna waters on the southern edge of the South China Sea.

The latest conflict came to a head last month when Jokowi sent eight naval ships and four F-16 fighter jets to confront Chinese coastguard vessels guarding a huge fleet of fishing boats in Indonesian waters. He also flew to the Natuna Islands to reiterate Indonesia’s sovereignty there.

A subsequent analysis of the conflict by the Asia Maritime Transparency Initiative shows the fleet was able to spend longer in Indonesian waters because it was refuelling at new Chinese military installations on the disputed Spratly Islands. The fact Indonesia was targeted showed that even nations that downplay disputes and prioritise positive relations are subject to Chinese coercion and intimidation, the analysis concluded.

Jokowi told Inquirer the Natuna Islands were unequivocally “Indonesian territory because we have a regency there and 81,000 people”, and that to maintain “peace and stability all of us must respect international law”.

“We don’t have any overlapping claims with China. In the ­future Indonesia will strengthen its presence, including through economic activities in Natuna and its EEZ (exclusive economic zone).”

But facing heightened provocation, traditionally non-aligned Jakarta has been trialling new constellations of regional groupings, including a trilateral dialogue with India and Australia.

Asked if Indonesia — an ­enthusiastic backer of the Indo-Pacific concept — was interested in a seat at the Quadrilateral Security Dialogue made up of Australia, India, the US and Japan, Jokowi was cautiously receptive.

“If we can sit together and we can talk about, for example, the Indo-Pacific infrastructure — maybe not only the politics but also the economy,” he said.

Still, Indonesia is unlikely to join any regional effort to ring-fence Beijing, which has pledged billions of dollars for key infrastructure projects through its Belt and Road Initiative.

Jokowi also refuses to engage in the debate over Chinese telecommunications giant Huawei’s bid to build 5G networks, saying only that “there is no decision from our country about that”.

Having weathered a stormy 2019 — beginning with a divisive presidential election campaign, followed by post-election riots, renewed violence in Papua and ending with the biggest student protests since 1998 — he is in no mood for new fights.

The student rallies were a ­response to proposed laws many fear will wind back democratic freedoms, including amendments to the penal code to criminalise sex outside marriage, gay sex and insulting the president.

Jokowi deferred the bill but he insists the amendments — including a “bonk ban” that it was feared could ensnare Australian tourists — were misunderstood.

But he refused to intervene to prevent a still more controversial bill kneecapping the respected anti-corruption committee that his administration viewed as an investment obstacle. Jokowi says the agency required “checks and balances”, and rejects criticism he has presided over a decline in ­Indonesian democracy. “You can check every day in front of this palace. Every day there is a demonstration there,” he says.

Rights groups have nonetheless urged Australian leaders not to ignore the recent “backsliding on human rights in Indonesia” during Jokowi’s visit, which culminates on Monday in his speech to a joint sitting of parliament — the first since former president Susilo Bambang Yudhoyono’s address a decade ago.

“Last year’s protests in Papua left more than 50 people dead and warrant a full independent ­investigation that holds the perpetrators to account,” Human Rights Watch spokeswoman Elaine Pearson said on Friday.

“Since those protests, more than 22 people are in jail facing treason charges for peaceful acts of free expression like raising a flag or joining protests. Despite Jokowi’s promise in February 2018, the government has not ­allowed the UN to visit.”

Lowy’s Ben Bland, who is writing a book on Jokowi’s presidency, says criticism of Jokowi is well-founded, although Indonesia’s transition to democracy has still been more successful than some of its Southeast Asian neighbours such as Thailand and Cam­bodia, where “hard ­authoritarian rule ­remains the norm”.

“Jokowi’s focus is less on the principles of democracy and more on developing the economy and improving ordinary people’s livelihoods,” he says.

And that, it seems, is where Australia comes in.