{"id":23772,"date":"2015-12-08T06:00:29","date_gmt":"2015-12-07T19:00:29","guid":{"rendered":"http:\/\/www.aspistrategist.ru\/?p=23772"},"modified":"2015-12-04T15:39:25","modified_gmt":"2015-12-04T04:39:25","slug":"australia-and-indonesia-investing-in-a-more-secure-future","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/australia-and-indonesia-investing-in-a-more-secure-future\/","title":{"rendered":"Australia and Indonesia: investing in a more secure future"},"content":{"rendered":"

\"\"<\/a>The grand power shifts currently taking place in the Asia\u2013Pacific are likely to gradually draw Indonesia and Australia closer together in order to face common strategic challenges. Elements of the bilateral relationship will probably remain prickly and contested, but the more difficult the broader region becomes\u2014as historical disputes mix with heady power politics and posturing\u2014the more sense it makes for Australia and Indonesia to increase bilateral collaboration.<\/p>\n

Notwithstanding that the duo make the world\u2019s most starkly different neighbours, a positive relationship with Indonesia has the propensity to contribute profoundly<\/a> to Australia\u2019s national security. Along with the rest of the Asia\u2013Pacific, Indonesia is undergoing a significant economic transformation\u2014one that will potentially see the archipelagic nation become the world\u2019s fourth largest economy by 2050<\/a>. It\u2019s important then that Australia makes the most of the goodwill generated by Prime Minister Turnbull\u2019s recent successful visit to Jakarta<\/a> and that Australian policy makers explore additives that will contribute to a stronger partnership over the long term.<\/p>\n

In order to work together to face common security challenges in an evolving Asia\u2013Pacific, it\u2019s important that Indonesia be prepared to increase its focus on international policy issues. Since President Joko Widodo took office in October 2014, Indonesia has focused on domestic affairs like stimulating the economy and upgrading the country\u2019s infrastructure to meet growing demand. In the long run, a strong bilateral partnership will require a joint willingness to act in ways that further our shared objectives.<\/p>\n

But a real opportunity also exists for the two countries to cooperate on infrastructure development in Indonesia. That possibility wasn\u2019t lost on Turnbull in Jakarta, who identified such investment as \u2018crucial\u2019<\/a> to developing a deeper and more positive relationship between the two countries.<\/p>\n

Both foreign and domestic investment in Indonesian infrastructure have been low since the 1997 Asian Financial Crisis. As such, the country has long been hampered by a lack of adequate infrastructure: underdeveloped sea transport facilities, limited amenities to cope with the country\u2019s frequent extreme weather conditions, and the resultant steep logistics costs. According to an Indonesian Foreign Ministry official, the country\u2019s maritime connectivity \u2018remains abysmal<\/a>\u2019, an issue that will need to be addressed to enhance Indonesia\u2019s competitiveness<\/a> in the ASEAN Economic Community. Those deficiencies not only reduce Indonesia\u2019s attractiveness to investors, but also prevent Indonesian economic growth from reaching its full potential<\/a>. With investors wary and the largest drop in exports recorded since August 2012<\/a>, 2015 marked a six-year low<\/a> in GDP growth. With this in mind, we should expect Jokowi to continue to view his engagement with international actors squarely through the lens of domestic politics.<\/p>\n

On his trips abroad this year, Jokowi has actively sought investment opportunities, not foreign aid. While Australia\u2019s 2015\u201316 budget shows Indonesia to be our second largest foreign aid recipient after Papua New Guinea<\/a>, the projected sum of $366.4 million will only account for 0.03% of Indonesia\u2019s GDP<\/a>. If we\u2019re looking to deepen and strengthen our relationship with Indonesia, helping Jokowi with his main priority\u2014investment in infrastructure\u2014would be a good start.<\/p>\n

The Widodo Government\u2019s five-year infrastructure plan is projected to cost a total of approximately A$22 billion per year<\/a>, and will see the creation of 25 dams, 10 airports, and 2,000 km of roads across Indonesia, among many other projects. However, this falls far below the A$500 billion identified by Bappenas<\/a>, Indonesia\u2019s planning ministry, as being essential to help the country reach the World Bank\u2019s middle-income standards<\/a> by 2019.<\/p>\n

Australia\u2019s Trade Minister Andrew Robb recently announced that he\u2019d like to quadruple<\/a> the number of Australian businesses engaged with Indonesia from 250 to 1,000. Australia\u2019s superannuation industry, predicted to reach A$7 trillion by 2035, has also been identified as a potential goldmine<\/a> for Indonesia thanks to companies like Industry Super Australia\u2019s prior experience<\/a> in investing in infrastructure projects. That said, there\u2019s no way that Australia can even come close to narrowing the gap between Indonesia\u2019s actual infrastructure budget and Bappenas\u2019 projected sum.<\/p>\n

Still, Australia\u2019s real value to Indonesia might lie in providing advice on skills and services as the country pursues project planning and implementation on a range of fronts. Indonesia has been hindered<\/a> by lack of coordination between government agencies and advice on financial services, and has faced difficulties when it comes to managing public\u2013private partnerships, leaving infrastructure projects behind schedule, beyond budget or abandoned altogether. Each of those are areas where Australia has proven experience and expertise, as noted by a recent ANZ\u2013PwC report<\/a> (PDF). The report also suggests Australia offer advice to Indonesia in specific areas of infrastructural implementation processes, such as planning for the construction of ports to help Indonesia facilitate trade with its Southeast Asian neighbours.<\/p>\n

Even with an enhanced capacity to deliver infrastructure projects, Indonesia will continue to prioritise domestic policy over foreign policy. It\u2019s unrealistic for Australian policymakers to expect that Jakarta will, as it grows, actively participate in the international realm (particularly in regional forums) in ways Canberra might desire. Even beyond Jokowi\u2019s focus on domestic politics, Indonesia\u2019s engagement with external actors will continue to be guided by its bebas-aktif<\/em> foreign policy, and its strategic culture of nonalignment, both of which prevent it from entering into formal alliances and potentially stunting the level to which it can enjoy mutually beneficial relationships with other states.<\/p>\n

In this context, Australia\u2019s challenges are two-fold. First, it must be willing to support an Indonesia with a stronger sense of self. Second, it must encourage Indonesia to become an even more active regional player, particularly in multilateral forums such as ASEAN\u2014where Indonesia plays a central role to Australia\u2019s diplomacy with Southeast Asian nations\u2014and APEC\u2014where strong relations would be beneficial for multilateral diplomacy. Australia must also support Indonesia in forming its own foreign policy agendas, such as firming up the finer details of the Global Maritime Axis doctrine.<\/p>\n

Indonesia is on track to become a larger, more influential and more powerful player in the Asia\u2013Pacific over the coming decades. That shift will increase our dependence on our northern neighbour to secure our economic, political and security interests in the Asia\u2013Pacific. Australian investment in Indonesian infrastructure, both financially and through the provision of our expert advice, looks like a good way to strengthen an important relationship for both countries well into the future.<\/p>\n","protected":false},"excerpt":{"rendered":"

The grand power shifts currently taking place in the Asia\u2013Pacific are likely to gradually draw Indonesia and Australia closer together in order to face common strategic challenges. Elements of the bilateral relationship will probably remain …<\/p>\n","protected":false},"author":303,"featured_media":23774,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[17,1056,1182,8,475,931],"class_list":["post-23772","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-australia","tag-bilateral-relations","tag-foreign-investment","tag-indonesia","tag-infrastructure","tag-jokowi"],"acf":[],"yoast_head":"\nAustralia and Indonesia: investing in a more secure future | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/australia-and-indonesia-investing-in-a-more-secure-future\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Australia and Indonesia: investing in a more secure future | The Strategist\" \/>\n<meta property=\"og:description\" content=\"The grand power shifts currently taking place in the Asia\u2013Pacific are likely to gradually draw Indonesia and Australia closer together in order to face common strategic challenges. 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