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Trade and investment focus of President Joko Widodo's trip to Australia

Trade and investment focus of President Joko Widodo’s trip to Australia

Indonesian President Joko Widodo’s ambitious program to develop “10 new Balis” across the archipelago will be among the issues discussed with Malcolm Turnbull this weekend as most Australian tourists continue to only visit the resort island when they visit the country.

Mining will also be on the agenda for talks with an Indonesian senior official pointing to the partnership between Newcrest and Indonesian mining company Aneka Tambang for copper and gold exploration in Indonesia as a “concrete example of economic cooperation”.

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The AustraliaIndonesia relationship

A look back at the turbulent events that have shaped Australia‘s relationship with Indonesia over the past 17 years.

The primary focus of the visit will be economic with Minister of Cabinet Secretary Pramono Anung​ revealing talks will centre around tourism, mining, cyber-security, terrorism and the finalisation of the free trade deal.

Mr Turnbull has also signalled a strong economic focus to the visit, writing in Fairfax Media newspapers on Saturday that “Indonesia‘s potential represents a golden opportunity for Australia“.

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He writes that it is growing stronger but still falls short of its potential, given Australia trades more with Malaysia, Singapore and Thailand, each of which has a much smaller economy than Indonesia.

In an interview with Fairfax Media late last year, President Jokowi emphasised he wanted the trade deal – known as the Comprehensive Economic Partnership Agreement – concluded this year, an aspiration that Mr Turnbull s.

Fairfax Media revealed this week the deal is 70 per cent complete but Australia is pushing for Australian university campuses to be allowed to operate in Indonesia.

The first state visit to Australia by President Jokowi, as he is popularly known, may be a whirlwind – he flies in Saturday and flies back to Jakarta after lunch on Sunday – but insiders say it reflects the high personal regard with which he holds the Australian Prime Minister.

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Indonesia‘s President Joko Widodo will make a flying visit to Australia this weekend. Photo: AP

He is understood to have been keen to make the trip immediately after the gubernatorial elections in mid-February, which were conducted peacefully despite a campaign marred by simmering ethnic and religious tensions.

President Jokowi was forced to cancel an earlier state trip to Australia, planned for last November, after a rally calling for the governor of Jakarta, Basuki “Ahok” Tjahaja Purnama, to be jailed for allegedly insulting Islam turned violent.

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Prime Minister Malcolm Turnbull met with Indonesian President Joko Widodo in Jakarta in 2015. Photo: Andrew Meares

Foreign Minister Retno Marsudi​ said Australia was one of Indonesia‘s most important partners in Asia from the point of view of trade, investment and also tourism.

“The number of tourists coming to Indonesia has exceed 1 million [a year] however they are still concentrated in Bali,” Ms Retno said. “Since we are now developing 10 other tourist destinations, we of course want Australian tourists to go to other tourist destinations in Indonesia.”

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President Widodo delayed a trip to Australia last year after a rally against Jakarta’s Governor Ahok (pictured) turned violent.
 Photo: Jefri Tarigan

The 10 new tourist destinations identified for development is part of a push to lure 20 million foreign tourists a year to Indonesia by 2019. They include the 9th century Buddhist temple at Borobudur in Central Java, Lake Toba in North Sumatra, a volcanic lake which the Indonesian government wants to turn into the “Monaco of Asia“, Lombok, Thousand Islands in North Jakarta and Labuan Bajo in Flores.

“To achieve those plans, however, the government ne to attract investment to areas other than Bali and Jakarta, which have traditionally been the main drivers of the tourism industry,” says Jarryd de Haan in Future Directions International.

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Australian tourists rarely go past Bali and familiar destinations such as Kuta Beach when travelling to Indonesia.
 Photo: iStock

Mr Turnbull said there were “immense” opportunities for Australia businesses with Indonesia set to become one of the world’s largest seven economies by 2030 and its consumer class expected to grow to as many as 135 million people by then.

He said the pair would also discuss working together on infrastructure development, agriculture and food security.

Indonesian Investment Coordinating Board chief Thomas Lembong, who is travelling to Australia with the President, said that mining and investment would also be on the economic agenda.

“Newcrest and Aneka Tambang signed a MOU in November 2016 to allocate $US1billion [$1.2billion] for gold exploration over the next five to seven years,” he said. “This is a concrete example of economic co-operation.”

Indonesia last month introduced new mining rules that relaxed a ban on unprocessed ore exports and allowed exports of nickel ore and bauxite and concentrates of other minerals under certain conditions.

President Jokowi’s visit to Australia comes a month after the discovery of material at an army base in Perth that Indonesia considered offensive, including included an assignment on West Papuan independence and a spoof of the state ideology Pancasila.

The discovery prompted the partial suspension of military ties and a language training course is yet to resume despite Australian Army chief Angus Campbell travelling to Jakarta this month to apologise.

Asked about the continuation of military co-operation with Australia, chief security minister Wiranto said: “There is no drastic change. We solved the small incident. In general there is no problem.”

The AustraliaIndonesia bilateral relationship has been buffeted in recent years by diplomatic fallouts over the executions of the Bali Nine heroin smugglers Myuran Sukumaran​ and Andrew Chan in 2015, the revelation that Australia had tapped the phones of former Indonesian president Susilo Bambang Yudhoyono and his wife and Australia‘s controversial boat turn-back policy.

Aaron Connelly, a research fellow at the Lowy Institute, said the bilateral relationship had seen a “remarkable return to good health” since the executions in April 2015, despite last month’s “storm in a teacup” over the material found at the Perth army base.

“In our last year’s Lowy Institute poll, Australian feelings towards Indonesia registered 54, equalling their highest mark in our 11 years of polling,” he said.

“Over nine out of 10 Australian respondents said they believed the relationship to be important or very important.”

President Jokowi will have a private state dinner with Mr Turnbull on Saturday night followed by a business meeting and bilateral talks on Sunday. He with have lunch with the Governor-General on Sunday and meet with the Indonesian diaspora at the International Convention Centre in Darling Harbour.

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