Find out why opportunities for trade with Indonesia abound

With Indonesia’s middle class set to number 135 million out of a population of 280 million by 2030, the Indonesian and WA governments have been working to increase bilateral trade.

Indonesian Consul General Dewi Tobing told BP Dig that even though Indonesia is a close neighbour, trade and investment between the two had remained “very low”.

But cooperation between is amping up with the purchasing power of the emerging middle-class creating opportunities for both economies.

The Department of Jobs, Tourism, Science and Innovation has organised an Indonesia business roundtable on December 5 to outline prospects in key sectors.

“To unleash the potential between the two neighbours, Indonesia and Australia particularly Western Australia have to work and collaborate to become the powerful strategic partner in the region,” Dewi Tobing says.

“WA is the source for wheat, cattle and LNG for Indonesia. Having this important trade relations, WA should see Indonesia as not only a market but also a partner and as they complement each other.”

“Indonesia’s innate benefits match with WA’s natural resources, as well as skill and technological advances, so Indonesia could serve as the production base of Australia’s innovative products and become a portal for Western Australia businesses to the world market.”

Dewi Tobing says the top three opportunities for bilateral trade and investment are in the agricultural, mining and education and training sectors.

“Currently under the framework of the East Java-Western Australia Sister State, cooperation in higher education and vocational education and training are being explored. In the agriculture sector, the grain partnership and the red meat cattle partnership are becoming important as a foundation to sustainable cooperation.

“I am happy to note that AEGIC (Australian Export Grains Innovation Centre) and GIWA (Grain Industry Association of WA) have started an initial step through a series of workshops and transfer of technology in improving noodle production and Asian baking using Australian wheat.

“In the mining sectors, we hope WA Australian mining companies with its world-class technology and experience can collaborate with Indonesia companies to build smelter/production facilities to process the natural resources (raw materials).”

With PWC projecting Indonesia will become the fourth economic power behind China, India and the US, Dewi Tobing says the Indonesian Government has started work on improving the business and investment climate by setting a target to half 42,000 regulations by 2019.

Australia Indonesia Business Council National President Phil Turtle says despite recent uncertainty over the signing of the Indonesia -Australia Comprehensive Economic Partnership Agreement (IA-CEPA), businesses should not lose sight of the existing opportunities.

“Having this agreement under development has been a good talking point for us anyway and a reason to get business leaders together to look at where the opportunities and the roadblocks are and with or without an agreement there is an opportunity to work your way through some of those things,” he says.

“There has been some early wins and some pilot projects already underway under the framework of IA-CEPA anyway.”

Turtle says many WA companies already have successful business models that include Indonesia including manufacturing (SteelBlue, Halco Tackle, Caterlink and Gelflex) and services (PWC, EY and KPMG) as well as joint ventures (Telcom-Telstra).

“The model we really want to focus on and push is about collaborations between Indonesia and Australia, not just buying and selling stuff to each other but how we can marry up the WA high tech and IP and all that sort of stuff with Indonesian technology and manufacturing capability to take on markets around the region and globally.”

CCI’s International Trade and Investment Manager Michael Carter says the potential to expand the existing two-way $3.2 billion trade agenda is huge, with opportunities in minerals and petroleum commodities; agribusiness and food; and transnational education.

“The WA Government has a trade office in Jakarta to help WA companies and has been established there for 25 years.”

The Indonesian Roundtable is the first in a series Asia Business Roundtables and will feature representatives from government and industry.

► Experts from CCI’s International Trade and Investment Centre can help you investigate Indonesia and many other international markets. Contact the team here.

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