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Tim Harcourt is a professional economist specialising in international trade and labour economic issues in the Asia Pacific region and in the emerging economies. Tim's passion is Australia's engagement with the global economy and the challenges and opportunities it offers business and the Australian community as a whole.

Tim has broad experience in public policy and in communicating international economic issues widely in the community. He has held senior roles in both the public sector and private sector in Australia and internationally and in the community and education sectors. In Australia he has worked for the Reserve Bank of Australia, Fair Work Australia, the Australian Council of Trade Unions (ACTU and the Australian Trade Commission (Austrade).


The Airport EconomistAustralian exporters conquering global markets
Beyond Our ShoresEssays on Australia and the Global Economy By Tim Harcourt, Chief Economist, Australian Trade Commission
Going The DistanceEssays on Australia and the Global Economy: 2004-2008 By Tim Harcourt, Chief Economist, Australian Trade Commission

The Year of living prosperously? Indonesia in 2012

Posted by on June 12th, 2012 · Publications

By Tim Harcourt*

A recent visit by a pop icon can demonstrate the vast cultural diversity of the region we simply lump together as ‘Asia’ despite its amazing mix of ethnicities and cultures. When Lady Gaga visited Japan, she was the first high profile foreign female to visit the country after the twin natural disasters of the Earthquake and the Tsunami. Her visit was considered good for morale for a grieving Japanese public in aftermath of the disasters that shook the community literally and psychologically. In fact, Australian Prime Minister Julia Gillard also visited Japan after the disasters and was the first foreign head of government to spend some time there (then French President Nicholas Sarkozy only touched down briefly).

But Jakarta is not Japan. In Indonesia Lady Gaga was gagged and concerts cancelled. Is this surge of political nationalism related to the upcoming elections and parties jockeying for position? Several foreign observers of Indonesian politics say it isn’t anything to do with elections but just the need to respect the values and mores of the world’s largest Muslim population. And in any case many touring acts come through Indonesia and the rest of South East Asia without incident.

But political nationalism is one thing what about economic nationalism? With elections coming up, Indonesia is no different than any democracy with parties calling for tariff changes and protection of local industry. This is important for the Australia-Indonesian economic relationship too given our strong trade and investment links in Indonesia. I realised how important the bilateral ties were when I was recently the co-host of the the distinguished Australian Alumni Awards in Indonesia with Frida Lidwina, the host of Metro TV in Jakarta, and saw how many Indonesian business and political figures were Australian educated and very close to Australia. In fact, this was at the time of the live cattle issue on Four Corners, and one of Indonesia’s most famous Australian alumni was the Mahendra Siregar, Vice-Minister for Trade (now Finance who went to Monash), and there was plenty a tension in the room. But the Vice Minister was gracious in his remarks and it took a very skilled and professional performance by Australia’s Ambassador to Jakarta, Greg Moriarty to steer us through the issue. If anyone ever wanted to see the skill and professionalism of our diplomatic corps, I’d point to that performance by Ambassador Moriarty and his team in the Embassy in Jakarta as a great example of excellence.

But despite the headlines of Lady Gaga and live cattle, when I interviewed Australian businesses in the country most have found Indonesia to be quite accessible with a prosperous, growth story despite the political economy challenges of dealing with such a massive population on a diverse archipelago. For example, in financial services, according to the ANZ’s Joseph Abraham, the Bank has expanded from “2 to 28 branches in 4 years, which would be harder to do in alternative markets like China and India.” Abraham describes Indonesia as “a good growth story, with high rates of return, estimated to be around 30 per cent higher on average than other markets.”

Justin Collings of Leightons in Jakarta agrees. “Rates of return are healthy in Indonesia, there are risks but you must understand the risks and put a value on it,” he explained. Collings, whose operation with Leightons is 80 per cent in mining, is also building crucial rail and road infrastructure, does refer to changing governance in Indonesia but says that: “Regulations change a lot and are a challenge, but they can be managed effectively and the negative aspects minimised.”

Collins points to strong education levels as important to business practice in Indonesia. “Many of our Indonesian staff are Australian educated, and/or trained in Australia. For managers, the International schools in Jakarta are excellent, including the Australian and New Zealand schools.” Collins says that “they know you are living the life of a contractor because your kids are sick and your furniture is broken, but we’ve has none of those issues here in Indonesia.”

Another Australian executive in Indonesia, Greg Patching, of Orica, also regards education relationship between Australia and Indonesia as crucial to the business expansion that Orica is undertaking in Indonesia. “We regularly send Indonesian staff to Australia for technical and cross cultural career development, they learn a lot there and we certainly learn a lot from them as a result.” Patching, a Fremantle Dockers supporter and currently on the playing list of the Jakarta Bintangs Australian rules football club (a notable fixture of the club was the late Craig Senger, a wonderful Australian trade diplomat in Indonesia and friend of the author), says that “life does have its moments in Indonesia, but it’s nothing like the hardship of following the Fremantle Football Club.”

Speaking of football, another Australian business figure in the region, Andrew Glynn of agricultural company Agspec Asia, has forged a partnership with the world famous Liverpool football club’s International Academy and Soccer Skills to bring sport and recreation to rural Indonesia. Together with the Liverpool Football Club International Academy and Soccer Schools (Indonesia), Agspec has set up a community programme for the kids of farmers in the poor rural parts of West Java. According to Glynn, “I grew up in rural South Australia, near Mount Gambier, so I wanted to do something for farm kids here in Indonesia who really do do it tough. The generosity of the mighty reds – the legendary Liverpool Football Club – is making it possible for these kids to reach their potential.” Indeed, Liverpool legend Bill Shankly would be proud.

So Lady gaga is not in Indonesia, but Liverpool is in, along with many Australian businesses. Given its still only a decade on from the Asian crisis of 1997-99 which saw IMF intervention and real problems for the nation, Indonesia has performed solidly. Indeed, with its new found robust democracy and economic growth rates, Indonesia continues to surprise us on the upside. But cultural sensitivity still matters on the world’s largest Muslim nation. So to think, probably the only thing Lady Gaga had to succeed in Indonesia, which should not have been too much of an effort, was to put on some pants.

A version of this blog post recently appeared in the Australian Financial Review.
*Tim Harcourt is the JW Nevile Fellow in Economics and an adjunct professor in International Business Strategy, at the Australian School of Business, the University of New South Wales (UNSW) & author of The Airport Economist: www.theairporteconomist.com
He recently co-hosted the distinguished Australian Alumni Awards in Indonesia with Frida Lidwina, the host of Metro TV in Jakarta and an Australian graduate in Finance (at Curtin).











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