First I’d like to take a step back and make a few personal observations about Indonesia, and how different it is from the Indonesia I encountered when I arrived 12 years ago.

Most of you know that I was last in Indonesia as Political Counselor at the Embassy from 1999 to 2002.  Those were days of political and social turmoil across the country.

There may be more cars on the streets these days, but that is much better than having the troops and demonstrators that often blocked the traffic in 1999.

Ten years on, the changes that Indonesia has forged for itself are truly remarkable.  Few would have predicted that this degree of stability could be achieved in such a short time, and under such trying circumstances.

Indonesia has achieved a free and maturing democracy. It’s had three successful direct Presidential elections.

And strengthened some of its key institutions, it has achieved relative stability through its nation-building efforts, and achieved increasing affluence for its people and the reduction of poverty for 16 million people.

It has worked hard to bring about religious and ethnic unity and one of former president Gus Dur’s greatest legacies, in my view, was to allow the acknowledgement of ethnic Chinese identity, and recognition of the huge contribution made by Chinese Indonesians to their country.

Indonesia’s people and its leaders can be rightly proud of its cohesion and unity.

Strategically, Indonesia is a cooperative and responsible global citizen and one that Australia works closely with in many international fora, not least on shared interests such as countering terrorism and people smuggling.

Indonesia’s place on the world stage has been further heightened by its membership of the G20, and this year its Chairmanship of ASEAN and the EAS will further add to its international standing.

Economically, Indonesia’s achievements are significant. GDP per capita is now five times the figure in 1998 (US$540 billion in 2009) and Indonesia’s middle class has grown significantly ­— as anyone who has spent time in Jakarta’s empire of shopping malls will quickly realize! Indonesia’s performance during and since the global financial crisis is well recognized ranking as the third fastest growing economy in Asia after China and India.

This progress has been enabled by Indonesia’s efforts to undertake economic reform and I am confident this country will continue to become more prosperous as Indonesia reforms further, in trade terms, in 2010, Indonesia’s exports are likely to exceed US$150 billion.

For January to September, exports grew by over 38 percent compared to 2009 greater market openness will help boost exports more, as Indonesia takes its place in the global supply chain and through the economic reform process, restrictions on investment in Indonesia have been eased considerably.

All these factors have led to increased interest and confidence among investors and business who want to bring their business to Indonesia, realized investment from January to September this year reached a new record of almost Rp 150 trillion (surpassing the previous record of Rp 143 trillion in 2007) and Australia wants to support further steps in this direction: because more investment in Indonesia and an attractive investment environment means more opportunities for Australians to bring their business here, to employ Indonesians and to contribute to the economic development of both countries.

But Indonesia’s government is, quite rightly, not complacent. Despite the strong macroeconomic picture, there is no illusion that the work is all over.

The government has taken steps to address some of the challenges that we are aware businesses have faced here. This includes plans to improve some of the infrastructure shortfalls, including through a proposed new land acquisition bill; it has taken steps, including in cooperation with Australia, to bring about greater legal and regulatory transparency and accountability – an ongoing problem area where significant improvements would greatly enhance investor confidence; and the Investment Coordination Board has introduced the National Single Window for Investment, or One Stop Shop, to streamline investment processes;

By creating investment opportunities and by further addressing standing constraints to productivity — such as infrastructure, labor laws, and government efficiency — trade will continue to grow. President Yudhoyono himself has identified corruption and lack of transparency as key challenges for the government to tackle;

Australia stands ready to support Indonesia’s reform agenda to facilitate business engagement, to help Indonesia become an engine of greater growth, including through development cooperation, technical assistance and capacity building.

It will come as no surprise when I say to you that a stable, strong and prosperous Indonesia is also vital for Australia’s prosperity and security. Indeed as a neighboring country – Indonesia’s continued stability and unity is a core interest for Australia.

Our bilateral relationship is underscored by cooperation towards shared goals, a point reinforced during the visit to Indonesia by Australia’s Prime Minister, Julia Gillard, in Nov. 2010.  The very fact that she decided to visit so soon after her election is a clear demonstration of the importance and depth of the relationship — and of how far we have come together.

As President Yudhoyono said in March 2010: “Australia and Indonesia have a great future together.
We are not just neighbors, we are not just friends. We are strategic partners.”

Australia greatly appreciates the significant gesture of Indonesia’s contribution of A$1 million to Queensland at this very difficult time.

Historically, our relationship stands on the firmest of foundations:  Australia remains proud of its strong support for Indonesian independence; the government relationship is as strong as it has ever been; including our close cooperation on the Australia Indonesia Partnership, worth A$460 million this financial year, to achieve improvements in education, health, infrastructure and governance, to help bring about a better future for younger generations.


The writer is Australian Ambassador to Indonesia. He has presented his credentials to President Susilo Bambang Yudhoyono on Dec. 3, 2010. This article is excerpted from his speech delivered at the Australia Day Business Luncheon on Jan. 26 hosted by the Indonesia Australia Business Council.

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