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PRIME MINISTER
SPEECH BY THE PRIME MINISTER, THE HON P J KEATING MP
EXPANDING HORIZONS AUSTRALIA AND INDONESIA
INTO THE 21 ST CENTURY, JAKARTA, 29 JUNE 1994
Let me say how pleased I am to be here at the opening of this historic event,
and I welcome you all.
Three months ago I launched the Australia Today Indonesia 94 program in
Sydney.
Today we launch the centrepiece of the program this trade. and Investment
forum which in time may well be seen as a turning point in the relationship
between our two countries.
I am particularly pleased to be joined today by Indonesi a' s Co-ordinating
Minister for Industry and Trade, Hartarto. Minister Hartarto has been a great
~ iipporter of expanding economic ties between Indonesia and Australia. The
success of the Australia Today program in Indonesia owes much to his efforts
and I thank him most warmly for that.
We have with us today Ministers and representatives from a number of
Australian State Governments. I welcome them here.
I know how they have worked to develop economic and cultural links between
Australia and Indonesia particularly links with various provincial
governments in Indonesia.
The Australian States have a crucial role to play and there is no doubt that
they are playing ft.
Most of all, I am pleased to see so many Australian and Indonesian business
people here.
The trade mission which my colleague Senator Bob McMullan is leading
includes representatives of over 200 companies.
This Is the largest trade mission ever to leave4ustralia. It Is an outstanding
response -and a measure of interest and jo; pnt among our business
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communities which underlines the force and meaning behind the title-
" Expanding Horizons".
It is useful to bear in mind the reasons for this sudden explosion of interest in
the relationship between Australia and Indonesia.
It is not merely because we are neighbours. We have alay been
neighbours. And far-sighted individuals in each country have been urging the
value of closer links for decades.
The heightened interest flows from a mixture of new circumstances and new
resolve. It derives partly from changes at work in the wider world, and partly from
changes in our two countries.
The end of the Cold War has fundamentally altered the way the international
community operates. Old structures have broken up or loosened. New
options have opened up and new linkages are being formed. Regional ties
are getting stronger. Uncertainties have grown.
At the same time, developments in the global economy technological
change, quicker and easier cammunicati6n, the free and rapid flow of
Investment funds are bringing changes to the patterns of International
commerce and to the role which governments must play.
Developing countries are becoming more important In the global economy.
For example, In the past decade exports from developing countries in Asia
have grown at twice the rate of world exports. And over the same period
these countries have grown two and a half times as fast as the world.
economy. Like any substantial change, this has caused a degree of unease.
Many have found the adjustment difficult; for many It threatens difficulty. Irvr
meetings with some of Europe's leaders-earlier this month I argued that the
developed world should not fearthe products of the developing nations, and.
should not try to stem the tIde of their growth.
Developing countries have the right to expect that their products will be able
to flow to world markets without meeting new protectionist barriers, either
direct or disguised.
And why should they not expect open markets, when the fact is that they can
benefit'all of us at home and abroad?
These changes in the structure of the world and the world economy have run
parallel to internal changes in Australia and Indonesia. To keep up with the
world, we have opened up to the world.-_
It is a difficult, even painful, step. But it is the only sensible one to take.
The clear evidence is that the comforts of protectionism are illusory, that
without the stimulus of competition economies stagnate and structures decay.
In Australia we are now seeing why the hard decisions of the eighties had to
be made. We are seeing some of the rewards.
The Australian economy is growing at five per cent, faster than any other
developed country. Our inflation rate, now around I per cent, is expected to
remain low.
With the floating of the Australian dollar and the abolition of exchange
controls, with the total abolition of quotas and the reduction of the general
rate of tariffs with few exceptions to five per cent or less by 1996, the
Australian economy is now one of the most open in the world.
Australian exporters particularly our manufacturers have embraced the
challenge of competing in world markets.
Our exports grew by more than seven and a half per cent in 1993, faster than
either domestic or world economic growth . And elaborately transformed
manufactures now represent over 20 per cent of our exports, compared with
11 percent In 1983.
The results of Indonesia's liberallsation are similarly clear. GDP growth last
year was more than six per cent.
This, too, is a product of resolve.
Over recent years indeed in recent dM~ the Indonesian Government has
undertaken significant deregulation and reform, removing non-tariff barriers
and reducing tariffs, taking steps to deregulate industry and to create a moreliberal
investment environment
This commitment to reform Is bound to boost the confidence of investors.
That Indonesia continues to reduce Its tariff levels is of course a matter of!
direct interest to Australian exporters. But as Indonesia industrialises, furtherliberallsation
of the Indonesian market will mean more productivity and more
competitive Indonesian exports as well-
Changes In recent global trade arrangements wvill also help our economies.
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At the beginning of the next century the Uruguay Round alone will be adding.
well over $ 400 billion annually to the wqrdd economy. Of that amount, about
$ 120 billion is likely to benefit developing countries such as Indonesia.
Indeed, once all the effects of the Uruguay Round have flowed through,
Indonesia could receive a stimulus to Its real GDP of 7 per cent or more.
Australian research suggests that global tariff barriers on industrial products
exported by Indonesia will fall* by 42 per cent under the Round. Most of
Indonesia's exports will have secure access through bound tariffs in its major
markets. Real exports could Increase by 30 per cent.
Through APEC we can add to that momentum by setting ourselves goals for
free trade; and by harrmonising standards in key areas. The benefits to
Indonesia from further lberalising In concert with other APEC members will be
even greater than those flowing from the Uruguay Round.
It Is one of those cases where you have to be In it to win and all who are In it
will gain.
These are the realities which underpin our new horizons. These are the
reasons we are here. We have all seen the opportunities.
Already, two-way trade between Australia and Indonesia has grown at a trendrate
of 22 per cent in the past five years to reach $ 3 billion in 1993.
Over 180 Australian companies are now operating in Indonesia, and of
course I hope that will rise over the next few days.
Australia is one of the top ten Investors in Indonesia.
And the composition of our trade Is changing. For both of us, manufacturesz,
are an increasing percentage of the total. In 1984 only 7' per cent, of'
Indonesian exports to Australia were elaborately transformed manufactures-.
In 1992, the figure was 25 per cent. For Australia, the figure has risen from-.
19 per cent to 24 per cent In the same period.*
I expect services trade to be an Increasingly strong area of growth in futurez-
Australia is-already the fourth most Important source of tourists to indonesia
And more than 7,500 young Indonesians are already studying in Australia.
All these very welcome developments are no accident And we should not baFshy
about-saying so for they mean the pain of economic reform had: apurpose.
It Is a reminder that common sense and the courage to exercise it have--
rewards. It means that cooperation has rewards.... l1 005
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The rewards, of course, come in the form of jobs, higher standards of living,
greater economic strength and resilience, access to knowledge and
technology, and the satisfaction that comes from nation building for future
generations of our people.
They come in the form of successful enterprises successful companies.
The companies represented at this forum illustrate what is happening to the
relationship. With so many present it is almost invidious to single out a few.
But I want to note the contribution of New Hope Corporation of Australia. and
its local associate the Swabara Group of Indonesia as co-presenters of the
forum. New Hope Corporation's bulk commodity port project in Kalimantan is an
excellent example of Australian design skills, engineering excellence and
financial expertise combining to meet Indonesia's infrastructure needs.
It shows how technologies specifically developed in Australia can be
transferred to Indonesia.
When the first stage of the port is completed in early 1996 at a cost of $ 150
million it will be the only deep water port outside Australia built specially for
buik commodities.
There is a great diversity among the Australian companies now in Indonesia.
The ANZ Banking group is Involved In a joint venture with the Pan Indonesian
BanWo7ffiering financial products to the commercial market. -The AMP Society
and the Panin Group are launching a joint venture which represents the
largest eVer Australian involvement In the Indonesian financial services
sector. Davids' Asia have signed a Technical Assistance Agreement with PT Hero for
the development of a modem warehousing and distribution operation in
Indonesia. BTR Nylex is involved in a joint venture with KCI producing glass packagingfor
a wide range of markets.
ABB Australia is involved in power generation and distribution; Boral Is.
engaged in producing materials for the construction industry.
AWA has provided air navigation and road traffic control systems with its-
Indonesian joint venture partners and Is looking to expand its operations.
Goodman Fielder, with Its partner the Sinar Mas4Goup, is involved In the food.
manufasturing sector. BHP and CRA have major investments in the minerals-'
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sector; Transfield in engineering projects; Lend Lease Corporation in a range
of service industries.
And let me here pay a small tribute to some of the pioneers in this area.
Southcorp Holdings through Rheem Indonesia, established in 1968 what may
well be the oldest Australian investment in Indonesia. Commonwealth
Industrial Gases set up a joint venture with Industrial Gases Indonesia in
1972. The John Holland Group began operations in Indonesia in 1974.
The Snowy Mountains Engineering Corporation has operated in Indonesia for
almost 25 years and its expertise will be in growing demand as Indonesia's
resources are developed.
I could go on, and perhaps I should because it is a roll of honour. But there
are too many to name here.
Governments can significantly help by creating structures for closer ties.
That is why President Soeharto and I agreed during my first visit to Indonesia
to establisif -Fodrrum through which our Ministers could explore the
possibilities for co-operation.
The Ministerial Forum will meet in Canberra for the second time later this
year. Its agenda continues to lengthen.
In the past three years there have been twenty seven visits to Indonesia by
Australian Ministers, three times the number over the preceding three years.
And the Australia Today promotion has brought a further eight Australian,
Ministers here.
These bilateral developments are strengthened by developing regional
structures. One of the most important issues President Soeharto and I discussed.
yesterday was the APEC Leaders' Meeting which he will chair orr
November in Bogor. I believe the Bogor meeting will be as pathbreaking as
the meeting at Bandung was forty years ago.
Both of us see the meeting as critical to consolidating APEC and developing
an open Asia-Pacific region.
Both of us want a region which will be actively involved in liberalising trade;
facilitating commerce, and strengthening economic linkages between a group
of economies which represent half the world's population and more than half
its production. A. a
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As President Soeharto has said our aim is to improve ' the stability, security
and welfare of the people of the Asia-Pacific region under a spirit of united
community'. Australia will be working very closely with Indonesia towards fulfilling that aim.
I also discussed with President Soeharto the proposal we are studying to
promote closer links between the ASEAN Free Trade Area and the Australia
New Zealand agreement on Closer Economic Relations.
With all these things happening, I firmly believe that the conditions global,
regional and bilateral which have caused this new burst of activity in our
relationship will continue to impel us in the same direction.
Because this relationship is not some temporary, take-it-or-leave-it affair.
It is-no transitory fascination; no purely academic interest. It is a deep,
complex and, I might say, exciting relationship which has to work if both
countries are to live up to their potential.
As I said In March, no country is more important to Australia than Indonesia.
I also said then that the job of developing the relationship will not be easy.
We are very different countries with very different societies, we stem from
different cultures, we -are at different stages of development. Indonesia's
population Is ten times ours.
We are an industrialised country; Indonesia is a rapidly developing. one.
So can we sustain a relationship of depth and worth across this divide?
Of course we can.
Of course we must.
But the doing of it requires clear sight and sensitivity. Courage, hard work.
boldness openness.-
I want Australia to be much better known in Indonesia for what it is,. X
sophisticated, technologically-advanced. society with a, diverse, operr and
tolerant people.
It was painful, for example, to learn as part of the research for the Australia
Today promotion that most Indonesians still think Australia has a raciallybased.
Immigration policy.
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In turn, I want Indonesia to be known by Australians for what ft is, in all its
cultural richness and ethnic diversity, with all its challenges, its achievements
and Its aspirations.
That is why the Australia Today promotion goes beyond business and trade,
and offers an insight into Australia's diverse contemporary society.
Next year Indonesia celebrates fifty years since its declaration of
independence from Holland. Just a few years later Australia will celebrate the
centenary of our Federation.
As I said back in March, the relationship between Australia and Indonesia can
be a model for ca-operation between developed and developing countries,
between countries based on Western structures and values and those based
on Asian models.
So my message to all of you in this room, and to the increasing numbers of
people in both our countries who see the great potential in our bilateral
relationship, is that your commitment will be worth it.
I said at the beginning of this address that it was worth bearing in mind where
the new interest in our relationship came from.. I said it came from a mixture
of circumstances and resolve.
It is worth bearing in mind because there is a lesson in the story. The fact is
that people can live side by side forever and never really be neighbours they
only'truly became neighbours w hen they begin to talk to one another, and
cooperate and share an interest In each other's lives, however different those
lives might be.
These relationships do not develop by accident, there is nothing inevitable
about them. They have to be initiated, common ground has to be
established, along with mutual respect for different history, culture and
aspirations. So long as we share the neighbourhood and we always will these efforts
will be necessary and very worthwhile.
So long as we share the neighbourhood, we should share its responsibilities
and its potential.
That is the reason for all this bilateral activity. That is the reason for our
support for APEC. It is why I am here, and why you are here because we
have recognised the widening horizons of our relationship and are determined
to explore them.
I most sincerely thank you for coming and wish you well in your endeavours
of thepcext few days.