Press Conference with Gita Wirjawan, Indonesian Trade Minister

Subjects: Bali commemoration, economic partnership, live cattle trade, tourism, Indonesian economy.

Parliament House

Transcript, E&OE

12 October 2012

CRAIG EMERSON:Well, in many ways of course, this is a sombre day, being the 10th anniversary of the Bali bombing. And we've had a commemoration here in Parliament House, and obviously in Bali as well. The wounds, I think, are healing, but we do extend our sympathies again to the families of those who died in the bombings, and those who were very badly injured.

So against that environment, we've nevertheless had very, very constructive discussions. Gita Wirjawan and I have developed a very close personal relationship and we can take you through some of those discussions, and where we think the relationship is heading.

But I think it's best if I hand over to Gita first, and then I'll make a short summary of the sorts of discussions that we've held.

GITA WIRJAWAN:Thanks, Craig. First of all, I'd like to pay my respects to the families and friends of the victims of the Bali bombing, many of whom are Australians, and on this 10th anniversary.

I was late on my flight; I was supposed to attend earlier a commemoration function this morning. But I thought the discussion went very well with Craig just now. We talked about the good things, and also some of the not so good things, of which we were of the view that, you know, these are things that we're going to be able to, I think, manage and resolve over time, given, I think, the excellent relationship between the two countries at this point, by what the leaderships of the two countries have done in the past few years, but also, you know, succeeding with whatever has been invested prior to that.

So, I think we're comfortably of the view that, you know, going forward, the economic pie for the two countries is only going to expand. It's not just about trade, which in my view is still south of whatever potentially can be achieved, but it also relates to the other elements of the economic pie, be it investments and tourism and what have you.

And these are the things that are actually reflected on in some of the studies that are being done with respect to the Australia-Indonesia Comprehensive Economic Partnership Agreement.

I'll pass right there.

EMERSON:The context for the discussions, I think, is this: that Indonesia's population is now around 250 million people; the Indonesian economy typically grows at more than 6 per cent per annum. Indonesia, sooner rather than later, is likely to be a top 10 economy in the world - and we're neighbours.

And yet, a frank assessment would be that the relationship on the commercial and investment front has been a bit underdone, given the enormity of Indonesia, its incredibly strong economic performance, our strong economic performance, and our closeness as neighbours.

An enabling vehicle for bringing those relationships closer is the Indonesia-Australia Comprehensive Economic Partnership Agreement. And we received a briefing from the two business communities, and indeed an interim report, with the final report due in the next couple of months.

And I want to thank those business groups. Because, to use a term that's very frequently used in Indonesia, they are “socialising” this agreement. They are going around to communities; they're going around the Parliament as champions of the agreement, rather than as opponents of it; they're actually doing the preparations for us, preparing the groundwork. And once that's done, we think that the momentum on the negotiations can only build. We've had our first round of negotiations for that agreement.

The reason that we call it a comprehensive economic partnership is that it contemplates more than bilateral trade; it contemplates the movement of people through our education institutions, which is a great investment for our two countries. It contemplates investment in each other’s countries, and in third countries, and this was a very important emphasis of the business groups - that our economies are complementary.

We could be investing in Indonesia as part of regional value chains, where products are then produced for trade on to other parts of the region. And this is where the business groups are thinking we could make real progress.

And the other defining feature of the framework for the Indonesia-Australia Comprehensive Economic Partnership is capacity-building. We understand, and we've got the message clearly from Indonesia, that the sentiment in Indonesia is that trade agreements, or any agreements, need to be relevant to, and beneficial to the broader population, rather than to a narrow part of that population. Often you can only reach the broader population through capacity-building.

When I was in Indonesia in March of this year, I announced $21 million that is coming from AusAID for an IndoBeef project. And that, again, is to build capacity there, because Gita is a great advocate of Indonesians eating more beef. So, it's not a matter of substituting Australian beef for Indonesian beef - I think the average is two kilograms per annum, and Gita's grand plan is to get that up to 20 …

WIRJAWAN:To 20. It is 20.

EMERSON:Twenty. Now that's a 10-fold increase in the cattle industry business, and there're a lot of small landholders in Indonesia who want to be part of that. That's why we came up with that $21 million. But we see that as a way of being of enormous benefit to the people of Indonesia, and to the cattle producers of Northern Australia.

So, I might stop there, because we're conscious of time constraints, and you will be wanting to ask questions. So fire away.

QUESTION:Minister, last year the Prime Minister and Indonesian President said that with this trade agreement, they want to get an increase in bilateral trade to $15 billion by 2015. Is that still a possibility, or are you aiming higher?

EMERSON:Well, it's always better to aim at a target that you can hit. And if you do better than that, then the media says what terrific people we are. So, we think that there is a lot of potential. And our business communities are working more and more closely together; they're getting to know the communities in the other countries.

They'll end up determining this, it won't be Gita and me, but what we can do is make sure that pathways are cleared, in order to achieve the sorts of results that the Prime Minister and the President were talking about.

QUESTION:So $15 billion's still your target?

EMERSON:Well, we think so, yes.

QUESTION:Just in relation to self-sufficiency, when will Indonesia no longer need live cattle exports from Australia?

WIRJAWAN:I don't think we'll not be needing ever anything from the outside world, including cattle. But judging from the demand side of the game, I think there's a huge upside opportunity here. As Craig was saying about our aspiration to go up from two to 20 kilograms of beef consumption, that's going to take a lot of supply. And the supply I don't think could come just from Indonesia. And that's the long-term view.

The long-term view is that, you know, if we were to want to go from two to 20 kilograms of beef consumption on a per-capita per year basis, at a $7 price tag per kilogram we're talking about a $35 billion business per year here - US dollars. That should make it pretty sexy for anybody that wants to do business in the cattle industry in Indonesia.

So, not only do we have a trade component here, but we also have an investment component. This is where I think we need to socialise a little bit more off to everybody within Indonesia and beyond. And I think Australia has been one of the best experts in the game. And there’s no reason for us not to explore it, especially if you put that in the context of what we want to do in capacity-building and all that.

And let's not forget, Indonesia right now has better fiscal space than it has had in the past, so that we can actually allocate fiscally, money for the right stuff in the right direction. And I think one of these is going to be education. And the more money we put on education, I think the more money … I mean, the more people will be able to understand the directionality of not only Indonesia, but the directionality of the two countries.

QUESTION:Some people within the cattle industry have raised concerns that while the suspension was in place, and since then while the quotas have been down, Indonesia has been slaughtering essentially some of its breeding herd. And now the industry in Australia's also suffering and seems to be shrinking. So what are your concerns about that scenario?

WIRJAWAN:We did talk about that with Craig. This is something that I'm immediately going to raise with the relevant stakeholders in Indonesia, with the view and hope that we can seek a solution; that would be win-win. And again, I think the more people from both sides understand the long-term benefits for the two countries, the easier it becomes to resolve stuff like that.

I'm actually going to be meeting over lunch with many of the cattle industrialist to try to explain how we understand the issue, and how we think we ought to resolve it, but without forgetting the long-term considerations for the two countries.

QUESTION:So what do you think the resolution is from the Indonesian point of view?

WIRJAWAN:Well, we don't know yet because it all depends on how the issue gets interpreted; whether it is interpreted as a regulatory issue or as something that's non-regulatory, in that whatever happens is something that needs to be addressed.

EMERSON:If I can just add there it's easy to think of a zero sum game. That's not the game that is being rolled out here. There's a regional and global issue of food security. And I think we need to move past the idea that one kilogram of product is all that people need, and if Indonesia produces one more then Australia produces one less. There's a great regional and global food supply challenge here, and this is an opportunity to convert our regional parts of Australia into new economy.

I've argued this before and here is a classic example: where you've got the Trade Minister of Indonesia saying it's realistic to think about a 10-fold increase in the demand for beef in Indonesia.

So sure, we understand why Indonesians and the Indonesian Government want to produce more beef in Indonesia. We're actually going to help do that through the IndoBeef project. But that doesn't displace Australian beef production, when you've got an almost unimaginable opportunity for increased beef consumption in a population of 250 million people.

QUESTION:You mentioned earlier that you had discussions that were not so good. Was this issue - the cattle issue and what happened last year - one of those things? And there are now protests building to shut the live export industry in Australia. Are you concerned that Australia might stop supplying beef? Or they don't … like what happened last year: that the temporary ban may happen again?

WIRJAWAN:I'm not - given the conversations and the nature of the conversations I have with people like Craig and many other people in the Government and many other people outside the Government of Australia, and the similar types on our side of the coin. And I think as we explain more and better what's happening and where we want to go, more and more people actually embrace the long-term benefit of the two countries.

I'm certainly not of the view that, you know, Australia, or the people of Australia, are going to react the way you've described - on the contrary. I think the burden of proof is on each other to explain, you know, how the similarities and the complementarities ought to be taken advantage of for the benefit of our generation and the future. And I think there is a lot to be gained here.

QUESTION:On another issue, in Tokyo yesterday the IMF seemed to signal that they're going to have less of a focus on austerity and sort of allow countries who are facing debts and facing problems now to sort of grow a little bit more out of their problem.

Given the history with Indonesia, do you think this is a long overdue or welcome step by the IMF?

WIRJAWAN:Well, people learn from what happened in the past. Certainly, what we went through in 1998 was painful. I lived through that, and hopefully the difficulties we went through could serve as lessons. I'm not here to prescribe any particular economic formula to anybody, but I'm of the view that doing just one thing without doing the other is not the absolute recipe for economic success for anybody.

But one thing's for sure: I mean, what we have done in the last 14 to 15 years is a combination of a few things, one of which is how we have been able to swing the fiscal pendulum from over-relying on debt to being able to be one of the most prudent in the world, with the debt-to-GDP ratio of 23 per cent, and on a continuing declination to potentially less than 20 per cent in the next three years.

Is that something that could be learned from? I think so. And on top of that there's got to be some growth-centric activities from an economic standpoint that I think any country ought to do, because a pure austerity type of approach to revive any particular economy is probably not, you know, the one-for-all solution.

QUESTION:Minister Emerson, it's been … there's been concern raised from Indonesia in the past that it's very difficult for Indonesians to get visas to travel to Australia. I understand that was something that was going to be looked at following the Indonesian President's visit to Australia. Have there been any steps taken to make it easier for Indonesians to get visas to come to Australia?

EMERSON:We didn't discuss it today because we're Trade Ministers. But we are very conscious of this issue. I do talk to Chris Bowen and the Immigration Department about this. Sometimes there are valid reasons. I mean, it's sort of one of those agencies where everyone's frustrated because they say you should let more people in. And then they point out that there are some difficulties.

But we didn't discuss it today. We are conscious of it. It's also going to be quite an emphasis in the Australia in the Asian Century White Paper, because we know that the movement of people, particularly into our education institutions and the other way - increasingly the other way, where Australia has not done well - is really important in building the friendships that Gita and I have been able to build. And the more of that the better, as far as we're concerned.

But we do have to respect the views of the Immigration Department; we don't have to accept them, but they certainly do have, you know, some reasons, sometimes, to impose some limitations as we know. But philosophically, we're in the camp of more is better if that can be done in a managed way.

And more collaboration, friendship-building, people studying in our institutions is probably the single biggest investment we can make in this relationship.

QUESTION:Minister, with the Prime Minister going to India next week, are we likely to see any breakthrough or developments with the nuclear safeguards agreements with India and …

EMERSON:I don't want to pre-empt that. You know that the policy change, the … I think the processes has begun now on, you know, negotiating those safeguards. One of the big achievements of that policy change was the value of it in its own right - and that is, that India wasn't looking around the world desperately trying to find uranium. It did see this as an impediment to the relationship, and that impediment is being removed.

So, I think the value is twofold: one, actually getting Australian uranium to India; but let's not underestimate the value itself of the change in the Australian Government's policy.

QUESTION:Just getting back to Bali, both of you: do you think that the Bali-Australia sort of tourism relationship has fully recovered in those 10 years, or are there still some bumps there?

EMERSON:I think the statistical evidence bears out that it has.

WIRJAWAN:Points in the right direction.

EMERSON:Our Australian dollar helps - the value of the Australian dollar helps. And there was a change in the travel advisories in relation to Bali, Something - and Indonesia more generally - something that had been quite consistently raised with us by the Indonesian Government. And that change has been made. And I think that builds greater confidence on the part of our tourists going to Bali.

WIRJAWAN:We recorded over 700,000 Australian arrivals last year - so that's a pretty robust figure.

QUESTION:Is it still below the figures before …?

WIRJAWAN:I'm not sure. But if we go back two to three years, it's probably the most robust figure that we've had.

QUESTION:Just on the issue of live cattle: are you satisfied that adequate measures are now in place in Indonesia to ensure animal welfare?

WIRJAWAN:Nothing is perfect. I think we're always open-minded about beefing up - sorry to use that word - but beefing up whatever measures needed to perfect whatever needs to be perfect. I think there are still measures that are [inaudible] and undertaken somewhere outside Indonesia that we could learn from, you know, in terms of many things including animal welfare.

But I'm not an animal welfare expert. I'm just, you know, out of intuition I think we could learn from other countries or places in that context.

QUESTION:Are you considering raising the quota of the amount of Australian cattle that you will allow to be exported this year?

WIRJAWAN:We're not close-minded about that. But I think the one thing to underline is, you know - to allude to what Craig was suggesting earlier - that I think it's not just about opening and closing the door on one thing. It's got to be holistic. And this is, I think, reflected in the whole CEPA, or Comprehensive Economic Partnership Agreement. It's got to relate to a bunch of things that will be good for the people on both sides.

I think capacity-building is the key. It's the game-changer for Indonesia. Indonesia, I think, needs a lot of education going forward. And it's just so fortunate that we're going to be able to spend a lot more money than ever in the past. And I think that will be reflected in our discussions. And to the extent that some of these things are actually moving forward constructively, it makes it easier for us to be even a lot more open-minded about anything.

EMERSON:And some of our big pastoral companies, and agricultural businesses, are constructively engaged in exactly this.

WIRJAWAN:Yeah.

EMERSON:Yes, it's capacity-building, it's investing in Indonesia - but it's boosting the overall trade rather than going back to this whole zero sum game that, you know, a kilo of beef from Australia displaces a kilo of beef from Indonesia, when you're going hopefully from two to 20. It's all hands on deck rather than looking at who wins and who loses. There'd be a lot of winners out of this.

But I think we'd better get going because Gita has a function …

QUESTION:Minister, on animal welfare: in terms of what Australia would hope, is the most you can hope for is the Australian animals are in slaughterhouses that have those standards.

You couldn't, I guess, hope to have that across all Indonesia could you?

EMERSON:Well, I think that’s where … it's an export condition, and the export condition is that the procedures in Indonesia comply with OIE standards.

This is not a demand of Indonesia; it's actually a requirement on the part of our exporters. I mean, if there were no Australian cattle going into facilities in some far-flung part of Indonesia - we have no direct interest in that. But where Australian cattle are going into facilities, the supply chain assurance processes we think have worked very well.

And you can actually see if there's a breach every now and again, while that might not be what you're looking for, it does attest to the fact that, overwhelmingly, this system is working, and it's working well, and it couldn't have worked well without a lot of collaboration between the two governments and between the agencies involved here. So we think that Indonesia, the Indonesian response has been fantastic. That's the truth of the matter. That was a challenging period in the relationship.

Someone asked did we discuss that today?

The fact that we didn't, and didn't think to, attests to the fact that we've put in place the right arrangements, and now we're building on those and looking at ways of increasing the total value of beef production in Australia and Indonesia.

Okay.

Thanks very much.

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