Aust, Indon to team up and take on world

Australian and Indonesian businesses should team up in key areas of commercial advantage to jockey for a larger slice of a potential $4 trillion trade prize.


That’s the key message of a new report – Succeeding Together from the Australia-Indonesia Centre, ANZ and PwC – that Trade Minister Andrew Robb is launching in Yogyakarta on Tuesday.

Centre director Paul Ramadge says a multi-trillion dollar opportunity is emerging in the next decade as the world moves into a second phase of the Asian Century, with capital flows from north Asia spreading quickly to the south.

“Fast-moving countries that understand this will be winners,” Mr Ramadge told AAP.

With low commodity prices, Indonesia and Australia needed to diversify competitive advantages away from mining to other sources, he said.

One way to do this was by combining comparative advantages in order to win in third markets such as China.

For Indonesia the shift could stimulate a second manufacturing revolution akin to the one experienced in the late 1980s.

Australia stood to benefit from increase opportunities to value add to physical, biological, intellectual and service-rich resources, the report said.

Food processing, logistics, animal products and textiles/fashion are potential areas for increased co-operation which could help tap into larger regional and global value supply chains.

Examples include:

* Australian and Indonesian fashion industries collaborating on designs to suit western preferences

* Small Australian food processors employing Indonesian techniques for energy efficient production such as methane-recycling in tofu production

* Australian know-how on wool could help Indonesia’s textile manufacturing sector expand product ranges.

The report flags that if wool processing facilities were set up in Indonesia, raw Australian wool could be exported there and then third markets approached.

Mr Ramadge said there was scope for both countries to reduce regulatory red tape and legal hurdles through free-trade deals.

Better literacy about each other’s countries and stronger relationships were critical, he said.

Mr Robb is leading an historic trade mission to Indonesia with 360 business representatives this week.

On the eve of its visit, he acknowledged the huge untapped potential for joint ventures.

“(If you look at) what we’re strong at, what Indonesia’s strong at… we’d be better if we put the two together,” he said.

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