Analysis: Ignorance limiting RI–Australia trade ties
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Which major developing country has the highest level of consumer confidence? Answer: Indonesia, at 145. Which major developed country has the highest level of consumer confidence? Answer: Australia, at 114. Which major developing economy has the steadiest GDP forecast? Answer: Indonesia, at 6 percent. Which major developed country has the steadiest GDP forecast? Answer: Australia, at 3 percent.
They are two peaceful neighbors who could do so much more for each other. Two countries blessed with much of nature’s bounty, in different stages of economic progress. Considering the potential, they do very little. They don’t rank in each other’s list of Top 10 trading partners. That sobering truth defies logic. Both countries and their citizens are conscious of each other. But the awareness translates into very different perceptions of each other, most of which are based on suspicion, not fact. Ignorance often translates to fear. Fear makes it difficult to do business. That is how I see it, even though it may not be politically correct to say it so plainly. Armed with research data from both countries continuously, often in conversation with businessmen on both sides of the ditch that divides the two countries, I believe ignorance lies at the heart of the problem that limits RI-AUS bilateral trade.
There have been more than 100 ministerial visits between the two countries in the last five years. Every time, the right speeches are made, more agreements are signed. From an Australian perspective, the conversation all too often revolves around how many more holes in the ground Australian miners can dig in Indonesia, how much more cattle can be exported, how many more “boats can be turned around”, how many more terrorist cells can be uprooted. All very important conversations, undoubtedly. But they are the same conversations between the same small group of people on both sides, year after year. Is that all these two neighbors can do with each other, for each other?
At a time when traditional businesses are slowing down around the world, the consumer economy in both the neighboring countries deserves greater attention. Using exactly the same yardstick in both countries, we know that consumers are inclined to favor products manufactured in the home country. But as a preferred “country of manufacture”, Australia ranks No.3 following closely after Japan and China. Almost 30 percent of Indonesians are “more likely to buy products” made in Australia. Where are the Australian products and services taking advantage of the goodwill? Only in recent years have two Australian banks shown real interest in this large developing country. Everywhere you look, the opportunities for Australian business to invest in Indonesia are virtually unlimited. From infrastructure development to healthcare, education to agriculture, transport to logistics, financial services to e-commerce, Indonesia could use more of just about everything. Of all the big populations, it is home to the fastest-growing middle-class in the world. Investments have been pouring in, but not much interest from Australia in new, non-traditional areas.
Not nearly enough. BKPM and KADIN would do well to think outside the box. There is very little to sell to the same old boys, they’ve known what’s in store for decades. Till such time small and medium-sized businesses in both countries forge stronger people-to-people ties, fear and suspicion will keep these culturally neighbors apart.
Other than natural resources, most Indonesian businesses have struggled to find a foothold in Australia. The high cost of entry into the very competitive environment of the Australian marketplace is an obvious hurdle. The fact that Indonesia ranks No.17 in the list of preferred country of manufacture, doesn’t make it easy for Indonesian products to win Australian customers. Indomie is on the shelf in most supermarkets, but there’s a limit to how many packs of instant noodles are going to make it home. New ways need to be considered. For example, the same supermarket chains are steadily expanding their range of “house brand” products. Many international brands are now manufactured in Indonesia for the Asia Pacific market, proof of consistent quality. Indonesian companies manufacturing the wide array of such consumer products would do well to start conversations with Australian retailers to produce “house brand” products, from household detergents to packaged foods. Just one example of a new conversation made possible by the ASEAN-Australia-New Zealand free trade agreement that came into effect earlier this year.
These conclusions are based on Roy Morgan Single Source, the country’s largest syndicated survey. More than 26,000 respondents are interviewed every year, week after week. The data is projected to reflect 87 percent of the population 14 years of age and over.
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