Malcolm Turnbull was keen to talk up the promise of closer economic ties to Indonesia ahead of his whistle stop trip to visit to Jakarta this week, for talks with the country’s president Joko Widodo.
That’s no surprise as his Trade Minister Andrew F.T.A. Robb has made it clear that free trade agreements with two major Asian nations are next on his ministerial bucket list.
They are India, the only country in Australia’s top eight trading nations we don’t have a free trade agreement with, and Indonesia, the only one of the top four economies in the Association South East Asian with which Australia does not have such as deal.
The reason Australian has, until now, not pursued a deal with Indonesia is that, unlike the north Asian Nation as, Singapore, Malaysia and Thailand, our closest neighbour has a competing, rather than complementary economy.
Like Australia its main exports are minerals and metals and agricultural products. The big competition has been in coal and Indonesia has superceded Australia as number one in the world’s biggest coal exporter and other resources such as bauxite and nickel.
With 250 million people and a growing middle class, two-way trade between Indonesia and Australia was $11.8 billion in 2014, compared with India’s $15 billion and China’s $150 billion.
So more of the same is not going to cut the mustard, Australia must explore new sectors to create more business between two nations. And one can’t imagine that Turnbull will not be rolling out his favourite buzzword of innovation, agility and so on and so forth.
As InnovationAus.com has previously noted, there are enormous opportunities in fintech in Indonesia, which Australia’s big banks already understand.
There are other sectors in Indonesia in dire need of a massive practical tech and innovation upgrade, including its agriculture and mining sectors.
Australia is a world leader in agtech – and it is one of the sectors CSIRO chairman David Thodey has argued that the country should pull focus on.
Since the election of Joko Widodo as President a year ago, self sufficiency in agriculture has emerged as one of his cornerstone policies.
Many of Indonesia’s home grown mining groups would also benefit from the technology based advances that are emerging as the next wave of cost reductions by their Australian competitors.
Still, that’s only scratching the surface of opportunities, with others including the Smart City project in Bandung, a major city in the island of Java that more of the country’s 500 cities are looking at replicating.
And there’s a vibrant start-up scene that has emerged in Jakarta, second only to Singapore in ASEA. Lured by the huge potential customer base of the region’s most populated country, major US and European venture capital groups are tipping countless millions into investments there.
One example is Vela Asia, a Jakarta based “ecommerce Nand fashion” where Australian Bede Moore is a co-founder. In February it sored US$1.5 million in round-two financing.
The visit from Canberra’s Mr Innovation this week, and Andrew Robb’s (typically unwieldy) 300 person trade delegation next month should encourage more to follow Vela’s lead.
*Photo Credit: Getty