Business opportunities with Indonesia · GDP growth (per cent) Sector 2009 First semester 2010 Key...
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The awakening giant Business opportunities with Indonesia Ian Satchwell Convenor, AIBC Economic Partnership Advisory Committee 5 October 2010
Transcript of Business opportunities with Indonesia · GDP growth (per cent) Sector 2009 First semester 2010 Key...
The awakening giant
Business opportunities with Indonesia
Ian Satchwell
Convenor, AIBC Economic
Partnership Advisory Committee 5 October 2010
Slide 2
Geographically, geo-politically and
economically, Perth is located „In The Zone‟
The time zone(s) shared by Perth hosts • 60 per cent of the world‟s
population
• the growth nations
• many mega cities
• Greater Jakarta >22m
Slide 3
Based on current trends, Asia* will be the
world‟s largest economic region by 2030
0
20
40
60
80
2010 2020 2030
Other Asia India China
Share of world GDPper cent
0
20
40
60
80
100
120
2010 2020 2030
Asia G-7 G-20
GDP$Trillion (2010)
0
10
20
30
1970 1980 1990 2000 2030
Asia
Emerging Asia
World tradeper cent of
World GDPper cent of
Source: IMF* „Asia‟ includes Australia and New Zealand
0
10
20
30
1970 1980 1990 2000 2030
Asia Emerging Asia
Slide 4
0
500
1000
1500
2000
2500
3000
1995 1997 1999 2001 2003 2005 2007 2009
$US
0
50
100
150
200
250
300
2000 2002 2004 2006 2008 2010 2012 2014
Headcount (million)
0 5 10 15 20
Communication, transportation
Electricity, gas, drinking water
Construction
Services
Financial
Mining
Agriculture
Manufacturing
Trade, hotel
Total
GDP growth (per cent)
Sector2009 First semester 2010
Key Indonesian economic indicators are
positive
GDP growth by sector
IMF forecast 2010
GDP per capita
Population247 million
by 2014
IMF forecast
Source: CBS
Slide 5
0
2
4
6
8
10
12
14
16
18
Singapore China Japan USA Malaysia South Korea
Thailand Australia Taiwan Germany
$US billion
2008 2009
-150
-100
-50
0
50
100
150
200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$US billion
Export Import Balance
0
5
10
15
20
25
1994 1996 1998 2000 2002 2004 2006 2008 2010
$US billion
Capital imports First semester 2010
Key Indonesian trade indicators are
positiveForeign trade
Capital imports Major import source
Australia ranks 8th
Source: CBS
Source: CBS
Source: CBS
1st
semester
Slide 60
5
10
15
20
25
30
35
40
45
2002 2003 2004 2005 2006 2007 2008 2009 2010
$US billion
Production Consumption
0%
1%
2%
3%
4%
5%
6%
2005 2006 2007 2008 2009 2010 2011
Indonesia Asia
0
5
10
15
20
25
30
35
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Per cent of GDP
Consumer spending growthInvestment
Key investment indicators are positive
AS
I estim
ate
sCement production and consumption
Revis
ed b
udget
Pro
posed b
udget
Slide 7
Perth is positioned to take advantage of
strong Asian growth…
“Most of the increase in world population and
consumer demand through 2020 will take place in
today‟s developing nations—especially China, India
and Indonesia"
“The “arriviste” powers—China, India, and perhaps
others such as Brazil and Indonesia—could usher
in a new set of international alignments...” (US
National Intelligence Council Mapping the Global
Future)
Data source: IMF World Economic Outlook
…but it’s
not only
about
China and
India0
2
4
6
8
10
12
14
2006 2007 2008 2009 2010 2011 2012 2013
China India Australia
0
2
4
6
8
10
12
14
2006 2007 2008 2009 2010 2011 2012 2013
Indonesia Vietnam Australia
-4
-2
0
2
4
6
8
10
12
14
2006 2007 2008 2009 2010 2011 2012 2013
Malaysia Philippines
Singapore Australia
GDP growthper cent
GDP growthper cent
GDP growthper cent
Slide 8
Negotiation of an Economic Partnership
Agreement with Indonesia is close
www.depdag.go.id
www.dfat.gov.au
Slide 9
Expanding our thinking beyond
trade towards economic integration
• Trade in goods
• Trade in services
– eg, technical services,
professional services, labour
services
• Foreign investment facilitation
• Cross-border, integrated industries
• Sharing of technology and skills
• Cooperative supply chains to other
markets
• Lowering of behind the borders
barriers
• Capacity building in economic
governance, infrastructure and
service delivery
Slide 10
Free trade in goods
• Australia is eliminating 100% of tariffs for AANZFTA nations by 2020
• Indonesia is eliminating 93% of tariffs by 2025
• Opportunity for economic advantages by moving early!
Motor vehicle parts and motor vehicles
Live cattle and meat
Grains, sugar, rice
Vessels
Consumer electronics
Furniture
Textiles, clothing and footwear
Examples
Slide 11
Liberalised trade in services
Legal
Accounting
Architecture
Education
Health
Construction
Mining services
Labour services
Mode 1: cross-border trade
Mode 2: consumption abroad
Mode 3: commercial presence
Mode 4: presence of natural persons
Modes of
service
trade
Examples
Major benefits for both countries
Slide 12
Two-way investment needs to be built
• Lift restrictions on foreign equity
• Lift restrictions on service provision
• Continue micro-economic
reform
• Encourage employment of
skilled Indonesians and
Australians in both countries
Indonesia and Australia need investment
Slide 13
Sharing of technology and skills
• Build two-way investment in
agriculture, mining, manufacturing,
services
• Develop services together
• Enable movement of skilled people
• Harmonise standards and
regulations
• Recognise qualifications
Slide 14
Integrated industries
and joint supply chains
• Beef industry
• Tropical fruits
• Dairy industry
• Construction
• Gas
• Services
banking
professional services
technical services
Slide 15
Engineering across borders
Design, construct, install, operate, maintain
0
5000
10000
15000
20000
25000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Co
mm
en
ced
inve
tsm
en
t pe
r q
ua
rte
r in
millio
n D
olla
rs historic investment
possible investment
probable and committed investment
Previous
WA
investment
peak
Anticipated
peak
investment in
WA
Slide 16
Trade between Australia and Indonesia:
plenty of room for growth!
Source: Australian Bureau of Statistics & CIE FTA Modeling
Indonesian trade
Exports to Australia
Australian trade
Exports to Indonesia
3% 3%
Imports from Indonesia
3%
Imports from Australia
5%
0
10000
20000
30000
40000
50000
60000
70000
1990 1993 1996 1999 2002 2005 2008
$A million
Trade volume Australia - Indonesia
Trade volume Australia - ASEAN
Slide 17
Unlock bilateral foreign direct investment:
mining and services are big opportunities
0
1
2
3
4
5
6
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
Pe
r ce
nt
Indonesia Outward
Australia Inward
0
1
2
3
4
5
6
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
Pe
r ce
nt
Indonesia Inward
Australia Outward
Indonesia FDI in Australia Australian FDI in Indonesia
Bilateral Australia-Indonesia FDI
Source: CIE FTA Modeling Report Jan 2009
Slide 18
Australians do not
understand Indonesia
well
…but a great story is
emerging…
…and we all must tell it
Source: Lowy Institute Poll 2009
Slide 19
Indonesia‟s infrastructure lags behind
Metric relative to developing
Southeast Asia Comment
Energy & power 52 per cent of average energy
production per capita
Indonesia needs to double the capacity in the next 6-7 years
to meet demand in 2018.
Roads 61 per cent of length of average road
kilometres per capita
~ 35 per cent of district roads and ~ 10 per cent of national
roads are “heavily damaged”.
Ports 77 per cent of average port
infrastructure quality
Indonesia only hosts 2 international hub ports; resulting in
congestion at these hubs.
Rails 54 per cent of average railway
kilometres per capita
Accounts for more than 10 per cent of passenger and less
than 1 per cent of freight transport market.
Airports 107 per cent of average number of
airports per capita
Passenger traffic experiences third fastest growth
worldwide; exceeded only by China and India.
Telecoms 80 per cent of average number of
cellular phones per capita
Subscriber base grew by ~ 40 per cent between 2000 and
2007 annually.
Source: McKinsey and Co, Indonesia
Slide 20
The Economic Partnership Agreement will
be different…
so will the negotiations
• Bilateral business workshops to be held in conjunction with IABC and KADIN (and
ACCI) to discuss the desired scope of an EPA
Companies and other industry associations will be invited to participate in the workshops
• Indonesian and Australian business, by sector, to participate in face to face
discussions on specifics of the EPA
Tell Governments what business wants
• AIBC Economic Partnership Advisory Committee will
• Work with State Branches
• Work with members
• Work with other industry associations in Australia and Indonesia
Slide 21
Proposed industry sector groupings for
engagement in consultations and position
development• Agriculture
• Manufacturing
• Education and health services
• Tourism and creative industries
• Resources
• Mining and petroleum services
• Technical services (eg, architecture, engineering)
• Financial services
• Business services (legal, accounting, other business services)
• Plus three cross-sectoral issues
Intellectual property / copyright
Legal certainty and dispute resolution
Competition policy
Slide 22
Additional capacity-building programs that
could be implemented as part of the EPA
• Focus on building economic capacity, and capacity for doing
business with foreign countries
• Help build Australia-Indonesia business relations To overcome underperformance in trade and investment between Indonesia and
other countries
• Improve the investment climate for both foreign and domestic
business
• Develop effective markets in key areas: eg, infrastructure and service provision such as gas, electricity, water,
telecommunications and transport; and in business services
• Develop greater capacity in vocational and tertiary education
opportunities for a new phase of cooperation, co-investment and exchange of
people
Slide 23
Perth
“Australia and Indonesia
have a great future
together. We are not just
neighbours, we are not
just friends; we are
strategic partners. We
are equal stakeholders
in a common future with
much to gain if we get
this relationship right
and much to lose if we
get it wrong…”His Excellency, Dr Susilo Bambang
Yudhoyono, President of the
Republic of Indonesia, 17 March
2010.
“We need to
encourage our
private sector
to do more
business with
one another”
Relationship between Indonesia and
Australia is good but needs to grow
