Indonesia and Australia are sitting down at the negotiating table to work out a possible joint venture in the cattle industry '€” a notable thawing coming just months after a spying row drove bilateral ties to a low point.

The Indonesia-Australia Red Meat and Cattle Forum held the first discussion on the joint venture on Thursday, with the Australian government agreeing to A$60 million (US$56 million) in supporting funds to develop Indonesia'€™s cattle industry, according to Investment Coordinating Board (BKPM) deputy head Himawan Hariyoga.

'€œWe are discussing the establishment of a joint venture company with Australia and [...] how to use the funds,'€ said Himawan during the forum, which was created in July last year.

'€œThe joint venture company is hoped to not only fulfill national demand for beef but ultimately also to be able to export to Middle Eastern and other ASEAN countries.'€

He added that Australia had agreed to disburse the funds to finance a 10-year initiative in Indonesia'€™s beef and cattle industry and that the forum covered three key areas, namely cattle breeding technology, capacity building and investment.

Of the total funds, A$50 million would be allocated for official development assistance (ODA) and the remaining for non-ODA funding, he said.

'€œThe funds will be used for, among other things, capacity building for Indonesian farmers, nutritionists, veterinarians, and will also be used to develop cattle breeding technology,'€ Himawan said.

He stressed the importance of investment in the country'€™s cattle industry as right now trade only went one direction, with Indonesia continuing to import live cattle and processed beef from Down Under.

Himawan also said that there were several Australian cattle industry players interested to invest in Indonesia, but he stopped short of mentioning who they were, saying talks were still underway as to where they would operate and how much they would invest.

Trade Ministry director general for foreign trade Bachrul Chairi said the forum would help Indonesia tackle domestic shortages in its red meat supply.

'€œThis is an important development because it'€™s another step closer toward self-sufficiency,'€ he said on the sidelines of the forum.

Bachrul added that the government expected the future joint venture scheme would help Indonesia to fulfill at least 80 percent of its national demand.

National beef demand amounted to 480,000 tons last year, with only a quarter of it met by local producers.

Indonesia has been scrambling to find a way to increase production in order to decrease dependency on beef imports.

The government also said last year that it was seeking to reduce its reliance on beef and cattle from Australia by seeking substitutes from other countries after alleged spying carried out by the neighboring country.

State-owned agribusiness PT Rajawali Nusantara Indonesia, which had earlier said it was allocating around US$30 million for Australian land, also followed suit.

Rajawali Nusantara, which was seeking a company with the capacity to accommodate between 50,000 and 500,000 cattle, said in December last year that it had halted talks on a cattle ranch operation in Australia, and had opened talks with a New Zealand firm as an alternative.

Apart from Rajawali, State-Owned Enterprises Minister Dahlan Iskan had also encouraged state-owned fertilizer producer Pupuk Indonesia to acquire a beef company in Australia. (dwa)

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