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The view from Australia

The view from Australia

Is Indonesia leaving us behind?

Cover image of AFA3

This extract is featured in Australian Foreign Affairs 3: Australia and Indonesia. To read the full issue subscribe or buy the issue.

“Flares, flares everywhere, in the flatland darkness, where gabled villas with orange-tiled roofs hid behind crumbling walls, and a dark, drain-like canal moved with evil slowness. On an area of muddy ground beside the highway, the lights from the pasar [market] burned uncertainly: kerosene and gas pressure-lamps set on the counters of many little stalls under tattered awnings … All the brown faces, floating in flatland dark, were theatrically lit from below, by the brazier, by the flares; and all seemed to smile. Young men in white shirts and sarongs walked by hand in hand. Doorless huts gave glimpses of public privacy, frozen in yellow frames: a table with a candle on it; a small, naked girl playing on a straw mat; a middle-aged woman in a sarong and incongruous brassière, heating water in a discarded can over a little fire. The rooms were so small they were little more than boxes, and could not be stood up in: children’s playhouses.”

This is Jakarta as described by C.J. Koch in The Year of Living Dangerously, the most (read: only) well-known Australian book about Indonesia. Koch was writing in 1978 – a time when political tempers and the country’s economy were badly fraying, not yet even halfway through then president Suharto’s long years of autocracy.

Forty years on, and to the extent that Indonesia features in the Australian imagination at all, it is still largely as Koch described it. A poor, hot and hardscrabble place, bedevilled by corruption, beset by violence and natural disaster; a nation of skinny brown foster children who reach out to us with needy hands. According to a poll conducted last year by the Lowy Institute, less than a third of us are even aware it is a democracy.

We couldn’t be more wrong.

Indonesia is very likely Asia’s next big power, another engine of growth that will drag the pole of the world’s economy ever more strongly towards our region. The rise of the Chinese and Indian economies has overshadowed its rapid blooming of wealth, but it has come too far, too fast now, to be ignored.

Australia is not just ill equipped to deal with this scenario; we don’t really even see it. We imagine ourselves as the neighbourhood’s rich benefactors, chucking change to the poor kids while keeping our distance in case they start asking too much of us.

But Indonesia’s rise means our current situation has more in common with the residents of a highway country town when a bypass is going in: there’s a real risk all the action is going to pass us by.

This is because Indonesia does not really need Australia today, and will need us even less in the decades ahead as its wealth and power continue to grow. In engaging with this country, we currently have little of the leverage to call upon that strengthens our other major economic relationships: neither the bonds of history nor the demand for our goods.

If we do not make an effort with Indonesia, there is a risk that it will simply look straight past us, to partners elsewhere in the region and beyond. Far from asking too much of us, we will instead be irrelevant to its progress and bystanders to its prosperity. That would be a grievously missed opportunity for Australia as we look to diversify our economy away from China and protect our own affluence in the years to come.

That effort starts with lifting our noses out of Koch’s pages, and seeing Indonesia as it is today.

The Qantas flight from Sydney to Jakarta gets you in at dusk, when the sky is turning pinky-orange, and traffic haze, charcoal smoke and the keening call to prayer smudge the hard edges off everything. It’s the worst time of day to join the packed elevated highways that swoop from the airport into the business district, unless the city’s famous macet – the terrible congestion that plagues central Jakarta – is what you’ve come to see.

As I drove in on my last trip with a first-time visitor who’d trailed me over there, his astonishment as Jakarta sprawled out before us bordered on comic. Twisting and turning in his seat to take in more of the skyscrapers and over-bright billboards that spilled out in every direction, he breathed: “It’s like a real city!”

A real city, for an increasingly rich country.

For Australians, it is a struggle to get our heads around Indonesia as anything but poor and backward. In 2016 the Australia–Indonesia Centre at Monash University undertook a major survey to understand the perceptions people in these two countries have about ourselves and each other. The study found that while Indonesians are extremely optimistic about their economic fortunes and prospects, less than one in five of the Australians surveyed believe that the country is prosperous or has a strong economy. Highlighting the deep scars of the Bali and Jakarta embassy bombings, there were more Australian participants who perceived Indonesia to be an unsafe place than there were who viewed it as an important trading partner for us. And while people in both countries expressed an interest in developing closer relations, Australians saw the advantages of this primarily in terms of cultural exchange and tourism, not hard economics.

So far, so predictable: many Australians don’t think much about Indonesia except as a cheap place for a beachside holiday. But the survey also contained a telling finding about the way Indonesians perceive us, one that should hover over our thinking about the relationship from here. Fully 70 per cent of Indonesians now believe their country is more important to Australia than ours is to them.

We’ve known this was coming – in 2015 The Jakarta Post published an editorial whose headline gave blunt advice: “Australia needs to figure out its own place in Asia”. One of its authors was a former ambassador to this country; the other was a journalist (and contributor to this publication) who knows both nations well. They argued that our politicians should stop trying to make Indonesia Australia’s most important relationship because:

not only does it make no difference to Indonesia, but it also makes us uncomfortable, since we can never reciprocate the feeling. Australia is barely in the top five of Indonesia’s most important relationships; some may even say that it would be lucky to be in the top 10.

It’s probably fortunate hardly anyone in Australia reads the Indonesian press; there wouldn’t have been enough icepacks in the country to soothe this sick burn to our national ego otherwise.

Of course, Indonesia has long applied a certain belligerence and swagger to its international engagements, going right back to former president Sukarno’s role in mustering small Asian and African states into the Non-Aligned Movement as an up-yours to Western powers in the 1950s. But Indonesia’s current confidence and assertiveness is backed up by an important economic shift: it is now almost as rich as we are in absolute terms, and on track to get much richer.

Scoff if you like, but here are the numbers. In 1998, when Indonesia’s democratic era began, the country’s GDP was just a quarter of Australia’s. Twenty years later, Indonesia is fast closing in on us, with its 2016 GDP more than three-quarters of Australia’s. Over those years it has bounded from thirty-sixth in the world to sixteenth in total GDP terms, just three places behind Australia. It is expected to leapfrog us to join the world’s top ten sometime between 2020 and 2030, depending on which projections you favour.

By way of comparison, Indonesia’s 2016 GDP was larger than Singapore’s, Thailand’s and New Zealand’s combined – three countries that are in our top ten trading partners, while Indonesia isn’t. Although no one would suggest the average Indonesian yet enjoys the wealth or quality of life Australians do, the country’s per capita GDP is almost double India’s, and has risen by 65 per cent over the past decade.

Like China, Indonesia has been making huge strides in winching people out of poverty. At the turn of the century only about 20 per cent of its citizens belonged to the middle class; by 2010 this had surged to more than 56 per cent. Tens of millions more Indonesians are projected to join their ranks by this century’s midpoint. I used to laugh when my work colleagues in Jakarta suggested meeting up at Starbucks; Indonesia produces famously good coffee, and cups of it can be had in cafés across the city for less than a fifth of the price of the chain’s foamy, filthy muck. Yet since 2002 Starbucks has opened 326 stores in twenty-two cities across the country, and they are positively thriving, as the mermaid logo becomes an accessible sign of conspicuous consumption for a growing group of the comfortably off.

Indonesia’s vast reduction in poverty has come about because the country’s economy has been consistently growing by 5 to 6 per cent a year – well above the less than 3 per cent growth we’ve managed in Australia since the end of the mining boom. Something that will help sustain Indonesia’s growth at this rate and move even more people into the middle class is the fact that just over 50 per cent of its current population is under thirty. This gives it a pool of fit and healthy workers that other Asian countries facing exploding dependency ratios and the ballooning costs of ageing, such as Japan, can only envy.

So Indonesia is already on its way to wealth, and getting richer all the time; it’s growing strongly, while growth remains lacklustre elsewhere; and it’s young, in a region where many of the other big players are ageing. Little wonder, then, that more than three-quarters of those Indonesians participating in that Australia–Indonesia Centre survey expected the country’s prosperity and their own standard of living to improve in the next ten years.

Australia cannot properly move forward in its relationship with Indonesia until we acknowledge how far it has come, and how this changes the balance of power we’ve imagined exists between us. If Australia is not the rich benefactor or the aspirational example we’ve long seen ourselves to be, then who, exactly, are we to Indonesia today?


Cover image of AFA3

This is an extract from Australian Foreign Affairs 3: Australia and Indonesia. To read the full issue subscribe or buy the issue.