Indonesia-Australia Dialogue

Speech, E&OE, (check against delivery)

Sydney

4 March 2013

Ladies and Gentlemen.

It is a pleasure for me to attend this opening plenary session of the second Indonesia-Australia Dialogue, the first time it has been held in Australia and in the city of Sydney.

Selamat datang. Welcome to Sydney.

The relationship between Indonesia and Australia is deep and broad.

Stretching back to 1933 when a delegation from the Australian Government and business visited Indonesia on the 'Nieuw Holland' steamship.

And visited His Royal Highness the Sultan of Yogyakarta.

As a result, in 1935, Australia appointed its first Trade Commissioner, Mr C E Critchley, to Batavia, as Jakarta was then known.

Under Doc Evatt, Australia backed the fledgling Indonesian nationalists in their struggle for independence.

We are living through a time of extraordinary industrial, economic, social and political transformation throughout Asia.

Australia and Indonesia are in the right place at the right time.

Indonesia is no longer, as Don Watson once described it, the 'screen door' that blocks Australia from the rest of Asia.

Instead it is a vital partner for Australia across the full range of economic, political and strategic interests.

Indonesia is a regional power and an emerging global power.

Consider Indonesia's economic trajectory over the past 15 years.

At the turn of the century, Indonesia was the 28th largest economy in the world.

Today, it is the fourth largest economy in East Asia and the 16th largest economy in the world.

The McKinsey Global Institute has forecast that if Indonesia can address its development challenges it could be the 7th largest economy in the world by 2030.

Indonesia now has more billionaires than Japan and on a per capita basis has more billionaires than China and India.

And McKinsey estimates that Indonesia could have a consuming class of 135 million people in 2030, up from 45 million today.

Its economy has shown high resilience in testing times, weathering the storm of the Global Financial Crisis and outperforming many of its regional neighbours.

And has maintained a steady rate of economic growth, driven by strong domestic demand and impressive rates of foreign direct investment.

In June last year Indonesia made a USD 1 billion loan to the IMF.

During 2012 foreign direct investment to Indonesia increased by over 26 per cent to a record high of USD 24.6 billion.

Meanwhile, Australia can look back on 21 years of uninterrupted growth. A record unmatched by any other advanced economy over this period.

The Australian economy has been growing faster than most advanced countries benefiting from its trade linkages with Asia.

During the 1980s and 1990s Australia opened its economy to world with a number of bold reforms from floating the dollar to competition policy. Today Australia is the most resilient economy in the OECD.

The bonds that Australia and Indonesia now build will define our partnership during this period of economic convergence.

'Emerging global power Indonesia' and 'transformed Australia' have a tremendous opportunity to take forward the economic partnership.

I am encouraged that the two Business Councils in both countries formed a Business Partnership Group late last year which delivered bold recommendations for the Indonesia-Australia Comprehensive Economic Partnership Agreement.

This is the first time representatives from our countries' peak business bodies jointly developed a position.

Ambitious recommendations were made, including removing all remaining tariffs, all quotas on food and agricultural products and all capital thresholds for business start-ups.

Such bold recommendations will help ensure a dynamic environment for the negotiation of the Economic Partnership in coming months.

And it is creativity like this that is critical if we are to sustain the growth of over 60 per cent in bilateral trade which we have witnessed over the last 10 years.

And if we are to substantially strengthen our two-way investment partnership.

Moving on from our economic common interests, Indonesia and Australia are strong democracies.

Indonesia is one of the world's largest with a home-grown democratic system built on a foundation of tolerance and pluralism.

Despite Indonesia's diversity – a country of 250 million people across17,000 islands and speaking eight major languages – the democratic project in Indonesia post-Suharto has been nothing short of remarkable.

The Bali Democracy Forum, President Yudhoyono's personal initiative which I attended in November, shows the President's great vision as a leader of democracy.

It is testament to Indonesia's commitment to advocating democracy in our region and beyond.

Democracies are better at creating wealth. Democracies are better at alleviating poverty. They respect human rights.

Democracy is an important force for the development of a secure, prosperous and stable international order.

Encouragingly, the bilateral relationship between Australia and Indonesia is at a near historic high. This is a good thing because getting this relationship right is critical for Australia, for Indonesia and for the region we live in.

Our nations work closely together across political, security, commercial, environmental and cultural fields.

In the past five years, there have been more than 120 leader and ministerial visits in both directions.

This reflects how closely our governments work together.

One my first acts as Foreign Minister was to exchange mobile phone numbers with Marty Natelegawa during the Inaugural 2+2 Dialogue of Foreign and Defence Ministers in Canberra last March.

In strategic terms, a stronger Indonesia is a partner with which we can tackle regional challenges.

Indonesia is a valued partner to Australia in negotiating the global agenda in the G20, EAS, WTO and APEC.

And is continuing to demonstrate leadership through the hosting of APEC and the ninth WTO Ministerial Meeting in 2013.

With Australia taking on the role of hosting G20 in 2014, we should explore the opportunities and benefits of collaboration in our respective hosting roles.

It is time to build on our existing partnership to elevate bilateral relations to a higher level.

This effort should not be the exclusive domain of politicians, diplomats and officials.

There are many more people with a stake in the relationship – students, business people, academics, scientists, athletes and artists.

But at the very moment when we – Australia- should be moving closer to Indonesia, our Indonesia 'literacy' has declined.

There are fewer university students studying Bahasa Indonesia today than 20 years ago.

As part of the Australia in the Asian Century White Paper, we are determined to reverse this trend.

Under the AsiaBound scholarships scheme we have committed $37 million over the next three years to assist Australian students to study in Asia.

I want to see them turn up at the great universities in Jogjakarta and Bandung with their Indonesian history books and calculators.

And we will continue our BRIDGE program, which many of you know. BRIDGE is linking Australian and Indonesian educators and schools - more than 100,000 students from both countries. Visiting teachers programs and training on on-line collaborative projects are fostering links between Indonesian and Australian schools.

Last November I had the opportunity to visit a BRIDGE school in Bali. I was impressed by the interactions between a Tasmanian Christian School and the Islamic school I witnessed. The use of the two languages, cultural appreciation and camaraderie between the students was remarkable.

This is the kind of program that we need to expand. It needs more support from the private sector.

Since 2008 the program has been implemented by the Australia Indonesia Institute in partnership with the Asia Education Foundation with funding from AusAID and the Myer Foundation.

In future we need more private sector partners, companies and foundations to help fund and drive these initiatives and create incentives for young people to obtain and sustain Bahasa Indonesia language skills.

It can't just be about government action.

We also need to "bring a change to each other's mind set" as President Yudhoyono said in a speech in Canberra three years ago.

The lack of knowledge between our two societies remains a key challenge.

Polling over the last year by Lowy in Indonesia and Newspoll in Australia on attitudes in each country to the relationship, found that less than half of the Australians polled knew that Indonesia was a democratic country with one of the fastest growing economies or that it was one of the world's 20 largest economies.

Only 14 percent of Indonesians knew that Australia was Indonesia's largest aid partner.

The Lowy poll found that overall Indonesian attitudes towards Australia had warmed from a lukewarm 51 degrees in 2006 to a warmer 62 degrees by last year, but Newspoll found that Australians were only at 51 degrees in their warmth toward Indonesia last year.

So there is a lot to do.

Today's Indonesia Australia Dialogue is a key forum for helping improve knowledge of both countries beyond government, for bringing a sense of purpose and cohesion to the relationship.

At the annual Leaders' meeting in Darwin in July 2012, Prime Minister Gillard and President Yudhoyono indicated that they were looking forward to the recommendations from the Dialogue.

Specifically on ways to promote business and community links between Indonesia and Australia.

And our Asian Century White Paper has committed to work with the Australian community to develop a wide-ranging country strategy on Indonesia to bring a clearer sense of national purpose and cohesion to our relationship.

Australia has an abiding interest in a stable and prosperous Indonesia - an Indonesia that is a strategic partner for us in the region.

I look forward to hearing how we will work to achieve that when you make your recommendations.

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