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ADDRESS BY THE PRIME MINISTER, THE HON P. J KEATIN, HP
TO THE EAST JAVA CHAMBER OF COMMC] C AND INDUSTRY
SURABAYA, THURSDAY, 23 APRIL 1992
I am very grateful for the opportunity to address you this
evening here in Surdbaya where the great success of
Indonesia's economic transformation is perhaps most obvious.
Where the newly liberalised Indonesian economy is serving to
restore a city to its historic commercial pre-eminence.
Ladies and gentlemen, Australia is also in the process of
transformation.
our perspective on the world is changing.
As never before in our history we recognise that our future
substantially lies in our own region. In Asia and the
Pacific. in Indonesia,
That is where the great opportunity is.
we know that seizing that opportunity will be no easy thing
to do.
It involves something like a revolution in the way we do
things, and the way we think about ourselves and the world.
When you have been for so long a branch office of empire
there is tendency to go on expecting special treatment long
after head office stopped opening the mail.
If this were characteristic of Australia once, it is not
true now.
We do not entertain the notion that someone else will do the
hard things for us.
or to us. we do not accept the idea that we are forever at
the mercy of the major economic powers. I.. r P I V) I IU VI II W
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In 1992 we k~ now that we need a degree of national energy,
inventiveness and purpose which we have not had before In
peacetime. You will see evidence of this emerging attitude in AUStralia
now. In the near future, I believe, you will see evidence of it
in the Asia-Pacific region. You will see evidence of it in
Indonesia especially, perhaps, here in Surabaya.
These days to the majority of Australians the-need to
integrate our economy with that of the region is selfevident.
we long since ceased to believe that we could sustain
ourselves by exporting commodities, and manufacturing for a
tiny market behind tariff walls,
The seventies and the early eighties showed us we had to
change. As a result of the economic policies of thei Australian
Government since 1983, Australia is now a m~ ore efficient,
productive, competitive, and outward-lookipg nation,
It is more geared to exports, more receptive to foreign
investment, and more resilient in the face of external
economiic pressures.
Like Indonesia, Australia reformed its economy in the
eighties. We floated the dollar, and allowed a more competitive
exchange rate to be determined by the market.
We reformea our indmstrial relations, so that we have far
fewer strikes, greater flexibility, and lower labour costs.
We reformed our financial system, so that interest rates and
not quantity controls balance supply and demand for funds#
and moot financial business can be transacted free of
government control.
We reformed spending and taxing, so that we now have one or
the lowest tax regimes and one of the most disciplined
government sectors of any OECD nation.
We adopted industry policies to lower the crippling level of
protection we inherited, so that we are now one of the most
open economies in the world.
The results of reform have been spectacular in Australia, as
they have been here in indonesia.
Over the eighties Australia's economy expanded by more than
one third. Today we export more than twice the quantity of
goods we did at the beginning of the eighties. 4 H p I-' LC , 1,4C j ij i I
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Led by tourism, we have more than tripled exports of
services. We export nearly four times the val~ ue of
manufactures we did in 1980.
The meazures introduced in our One Niation Statement in
February will build upon these earliñ er ref orms and entrench
the trend towards a more open and outward looking economy,
while at thie same time stimulating growth.
Ladies and Gentlemen, the change in your own economy has
been no les3 dramatic or fundamental. The economic
transformation of Indonesia over the last 20 years has been
nothing short of astonishing.
Between 1966 and 1991, your economy expanded 450 per cent.
Over the last few years growth has averaged around 7 per
cent and growth rates of 5 to 6 per cent are expected to the
end of the century.
Indonesia has gone from a commodity-based economy to on6
geared to industrial expansion and manufacturing exports.
Through a sound policy of encouraging foreign investment,
bureaucratic reform, financial deregulation, support for
manufacturing, and lifting of trade barriers, you have
emerged as a dynamic and competitive economic force.
Today, our very different countries are changing in ways
which will enable us to find much more ' common ground the
economies of Australia and Indonesia are beginning to
complement each other.
Certainly, I see the strengthening and broadening economic
relationship between our two countries * as representing the
direction-in which the AuStralian economy must go.
Towards the world. Toward greater diversity in our exports.
Above all, toward stronger connections with our region.
The developing economic relation with Indonesia shows the
way we must go.
our exports to Indonesia are rapidly increasing, as are our
imports from Indonesia.
The trade is also demonstrating greater diversity, with
Indonesia manufactured goods joining timber and petroleum in
sales to Australia, and Australians construction, banking,
telecommunication, engineering and legal services joining
wheat and metals in our exports to Indonesia.
Manufactured goods, machinery, computers, telecommuunications
products, power generation equipment and motor vehicle* have
all grown to form a larger proportion of Australia's exports
to Indonesia. H pf-IlL, : Uv i1o ul I r
I L 4 H I. 1 C * U H i~ J i r
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Ten years ago, Australian exports to Indonesia totalled
$ 356 million.
Today they are worth nearly $ 1.5 billion.
Over the last two years imports from Indonesia have nearly
doubled.
Just as trade has grown in recent years, invest" Ont between
Australia and Indonesia has also diversified and
consolidated. Australia is now the Sth largest foreign investor in
Indonesia, accounting for about billion in assets.
There are more than 120 Australian companies with
Significant interests in Indonesia. In the areas of coal
mining, and to a lesser extent gold mining, Australia is the
dominant source of investment.
The number of companies investing in manufacturing
industries is also rapidly increasing.
In services too, such as business and engineering
consultancy, Australian companies are becoming a significant
presence. Ladies and gentlemen, one area which has enormous economic
potential for both our countries and where Australia is
already making a significant contribution is right here in
East Java.
For many years novr, Australia's development assistance
program in Indonesia has had a strong focus on the special
needs of eastern Indonesia,
East Java is the fastest growing commercial area in
Indonesia. Already home to key agricultural industries, it
is quickly becoming a major industrial and manufacturing
region with activity in petrochemicals, shipbuilding,
cement, metal processing, machine tools, and
pharmaceuticals. The manufacturing sector has already attracted significant
foreign investment, including from Australia. Ready-mix
concrete, plasterboard, roofing tiles and medical products
are areas in which~ Australian companies have existing or
planned investments.
Infrastructure development, such as in natural gas
production and processing and bulk water supply, is also a
major area for investment, and one in which Australian
companies are already or potentially involved.
Tourism 13 a growth area, as is evidenced by the presence of
aQNTAS office here in Surabaya.
24. Apr. 92 16: 09 No. 017
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Now Australian business is beginning to realise the
potential of the area in such fields as dryland farming,
tourism, mining and manufacturing.
Through your introduction of special tax incentives to
encourage foreign investment in eastern Indonesia, this
potential can be more easily realised.
Ladies and gentlemen, as our commercial relationship
continues to grow, institutional arrangements will need to
be developed to manage the relationship at all levels.
On thio visit we have concluded five important bilateral
agreements ranging from taxation to science and technology
collaboration. -I
We have agreed in principle to conclude four other
agreements from investment protection to maritime
boundaries.
And most significantly, we have agreed to explore the idea
of setting up a regular ministerial meeting, chaired by our
foreign ministers, and including economic ministers, which
will give a more coherent framework to the multitude of
ministerial exchanges now taking place.
Just as such institutional arrangements can assist bilateral
commerce, regional institutions can and do play a critical
role in regional economic development.
in the regional sphere, Indonesia's active participation in
ASEAN and APEC have been crucial in ensuring the success of
these forums.
since its formation in 1967, ASEAN has proven its value as a
vehicle for economic growth in the region. The cohesion and
stability it has provided has enabled Australian business to
develop links with the region with confidence.
Today, the fastest area of growth of Australia's exports is
to the ASEAN Group. It has now displaced the EC as our
secon? lairges-t export market after North-East Asia.
As the largest member of ASEAN, Indonesia has played a
pivotal role in providing clear direction and stability
within ASEAN itself.
Jutt as ASEAN has provided the basiS for long-term growth
and stability in South-EaSt Asia, APEC will, I believe, form
the foundation for economic cooperation throughout the Asia
Pacific region. The 15 members of the APEC group accounts
for half the world'a GDP and 40% of world trade.
APEC provides us with the first ever opportunity to harness
and direct the powerful economic forces at work around the
Pacific Rim. TEL
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By bringing Japan and the US, the two most powerful
economies in the Pacific, together with the other economies
of the Pacific Rim, APEC can work to ensure that these
forces develop to the benefit of Us all and to the benefit
of the open, multilateral trading system which has
underpined the economic dynamism of the region.
Indonesia's response to the APEC initiative has been one of
the most positive and construtlv-e of all the APEC nations.
Your strong endorsement of APEC at the recent ASEAN Summit,
and your offer to host the 1994 APEC Ministerial Meeting,
signal your continuing commitment to this very important
initiative. In the multilateral sphere, Indonesia and Australia have
worked together in the Cairns Group in suppbrt of a
successful conclusion of the Uruguay Round of negotiations
in the GATT.
As we have discussed with our Indonesian hosts, Australia
and Indonesia are now concerned that a protracted stalemate
in negotiations may jeopardise a successful outcome of the
Round. The open trading system has been a key factor in the growth
of countries liXe Indonesia and Australia, and it is
important that the major economies continue to work to
strengthen and develop wurld trade.
Ladies and gentlemen, Australia is changing. Our economy is
emerging from a recession in more competitive shape than it
has ever been.
We are casting aside the baggage of the past and directing
our energies towards greater integration with our region.
And within this region we look especially to our
relationship with Indonesia our largest and most important
neighbour as a material and symbolic example of the way
our two countries are resolving themselves for the 21st
century. TnTQ1. P. P*