Indonesia in the Asian Century

Last night Agile Thinking attended a discussion between former Australian Foreign Minister Bob Carr and the former Indonesian Ambassador to the United Nations Dr Marty Natelegawa (right and left respectively in picture). Also in attendence were Asia business specialists from Morningstar, Accenture, KPMG and several academic institutions and NGO's.

Dr Natelegawa was upbeat about the benefits of Indonesia pursuing a larger foreign policy agenda and providing an example to other countries like Egypt transitioning from military rule. In 2012 Indonesia co-sponsored UN resolution 67/19 calling for Palestinian statehood.

Dr Natelegawa raised the issue of "congestion" of free trade agreements in the region including the Trans Pacific Partnership, ASEAN + 3 and numerous bilateral agreements. While greater economic integration and trade liberalisation is beneficial he cautioned against the complexity of negotiating multiple, perhaps duplicate agreements.

In responding to a question on the rise of Islamic State, Dr Natelegawa addressed the need to combat the underlying causes of Islamic extremism within societies championing greater inclusion of ethnic minorities.

Economic and political reforms in Indonesia have seen it become one of the world's fastest and most consistently growing economies. GDP has averaged 5.7 percent over the last 10 years and consumer spending is expected to grow 152 percent over the period 2014-2030. Nevertheless it is still at risk from capital flight and falling commodity prices.

The establishment of the ASEAN free trade agreement in 2015 is expected to add 29.9 percent to member state GDP over the first 5 years (Euromonitor). Eliminating costly fuel subsidies have enabled large-scale investment in infrastructure.

We will see Indonesia increasingly active in foreign policy issues, trade and commercial activities. The rise of Indonesia highlights the importance of Australia's bilateral relationship with Indonesia and the need to develop a less transactional approach to one grounded in shared issues and values. As Dr Natelegawa stated "Common enemies today are issues, not countries".

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