Trade pact a low priority: Jakarta
The Age, Melbourne
Trade pact a low priority: Jakarta
Dan Harrison
18 September 2006
A free trade agreement between Indonesia and Australia is unlikely in the short term, according to a top Indonesian official.
When Indonesian Trade Minister Mari Pangestu visited Canberra last month for talks with her counterpart, Mark Vaile, they announced plans for a feasibility study on a bilateral deal between the two countries.
But the secretary-general of Indonesia’s Trade Ministry, Hatanto Reksodiputro, in Melbourne last week for a conference on business opportunities in Indonesia, said a deal was a low priority for the two countries, because their trading priorities lay elsewhere.
"Australia is a relatively small market," Mr Reksodiputro told The Age. "It’s a rich country, you have big demand, quality price, but you are small."
Bilateral trade between Australia and Indonesia was worth $8.9 billion last year.
Indonesia ranks 13th among the buyers of Australian exports, while Australia is Indonesia’s 11th largest customer for its products, which include rubber, wood, textiles and footwear.
Mr Reksodiputro said Indonesia was focused on securing a free-trade deal with Japan, its No. 1 trading partner, while Australia was busy negotiating agreement with China, Malaysia and the ASEAN bloc.
Textiles and clothing, and tough Australian quarantine regulations governing the importation of fresh food, would be among the contentious areas if negotiations were to proceed, Mr Reksodiputro said.
Australia might become more interested in Indonesia as its rate of economic growth, now at about 5 per cent a year, started to approach that of China, which is growing at almost double that pace.
"In the next five years Indonesia will go stronger in its reforms, I could see that Australia would be more attracted to Indonesia," he said.
Chris Manning, head of the Australian National University’s Indonesia project, said Indonesia’s limited policy and negotiating resources might be better spent on trying to achieve multilateral trade liberalisation, which promised greater economic benefits than bilateral deals.
"If you divert skilled resources and political attention away from the multilateral processes then there’s less chance of being successful there ... on the other hand, the US has already done it, it’s only got one eye on the multilateral system now," he said.
Dr Manning said Indonesian perceptions of Australia had changed since Australia’s involvement in the US-led invasion of Iraq, but the impact of this on the economic relationship was difficult to measure.
