Address to the University of Indonesia

October 1, 2019



Thank you very much Pak Arie and our master of ceremonies Jihan, a very warm welcome, thank you so much.

It really is great to be here at the University of Indonesia, and in these remarkable times defined by economic and social change, unprecedented in history in both scale and in pace.

Our region; the Indo-Pacific, has been both the driver and the beneficiary of that change, experiencing greater prosperity and opportunity than ever before.

But the same technologies that have liberated our economies also pose new challenges. Disruption is the new normal and we must learn to make volatility our friend not allow it to become our foe.

And the best way to do this is to harness the power of change together, to have each other's backs. Indonesia and Australia are natural partners. We’re the only members of the G20 from our region, we’re neighbours, in fact much more than just neighbours; we share the longest maritime border between any two nations on earth. And we share the same values; democracy, freedom, the rule of law, mutual respect - values that are timeless but never more timely than they are today.

We will always be at our best when we work closely together. What happens here in Indonesia is of fundamental importance to Australia and our region and of course what happens in Australia, as all the students of Australian politics here today know, is of fundamental importance to Indonesia. Our destinies are entwined and we must work closer and closer together. 

When President Jokowi and I pulled up outside the Tanah Abang market for a blusukan in November 2015, I knew that it was hot.

‘Shouldn't we take off our coats?’ I asked. ‘No’ said Jokowi, ‘You'll be fine’.

Well he was fine, but after twenty minutes or so the sweat was pouring through my eyes and I had to take off my coat and tie. And to my great relief so did Jokowi and Tom Lembong, who was with us.

Although I have to say, the president did not have a bead of sweat on his face. He's cool in every respect.

At the visit I was really struck by the enthusiasm the people had for the President, the little children who wanted to kiss his hand, the relaxed and humble way the president spoke with them.

It was clear to me that this remarkable nation had a remarkable leader. And it was clear to me that Indonesia today is as full of energy as the Tanah Abang market and the people I had met there when we travelled there on the blusukan.

The President has seized on that energy and translated it into tangible wins, which are turbo-charging Indonesia’s economy and paving a path for more success to come.

He's increased spending on infrastructure - which is the lifeblood of any economy - seven new airports and thousands of kilometres of new roads built in less than four years.

And he's led the charge to open up the economy so that it is more competitive in the region.

He's embraced free trade with partners from Australia and in Europe. As we're fond of saying in Australia, President Jokowi really has declared Indonesia is open for business.

When you look at what is projected for the future of Indonesia, a nation that's already responsible for a third of ASEAN’s total GDP, today Indonesia is the world's 16th largest economy.

It has demographics on its side - demography is destiny as I'm sure you've all learned here - with half of its population under the age of 30.

To the students here you know it will be your talent, your dynamism and your economic power that will drive Indonesia into the world's top 10 economies and into the top five in little more than a decade – well within our lifetimes.

But success is never guaranteed, we need to create it.

Indonesia is currently Australia's 14th largest trading partner and yet the full potential of trade between our two countries has not been reached particularly given the size, the proximity and the increasingly complementary nature of our economies.

The stock of Australian investment in Indonesia in 2018 for example; was 5.6 Billion Australian dollars, the stock of Indonesian investment in Australia; only 1.1billion dollars.

In fact, Indonesia's exports to Australia were just one 1.6 per cent of its total exports in 2018. The truth is that our economic relationship to date has been underdone - compared to Australia's trade and investment with other ASEAN countries.

Both President Jokowi and I recognised that,  and that was why we're committed to working together to build a stronger partnership - a stronger economic partnership.

Of course we have very close relationships on a government to government level. Ambassador Gary Quinlan and his large team here are working to help build roads, establishing a pilot to connect households to water - which is now being developed into a national template and we’re supporting the leveraging of substantial infrastructure loans from the ADB and the World Bank.

And we're working with your own finance department to help with the digitalization of Indonesia's tax system which is a vitally important project for any country's long term prosperity.

This is not an exercise in economic theory. Trade and cooperation of this kind of means jobs, it means jobs in Indonesia, it means jobs in Australia - it's about prosperity and economic opportunity.

And so last year we elevated the formal status of the relationship to a Comprehensive Strategic Partnership. And that gives Australia and Indonesia a secure platform from which to work more closely together.

We also held the Indonesia-Australia Digital Forum. This was a joint initiative of President Jokowi and mine, producing new commercial opportunities for Indonesian and Australian companies and reinforcing our collective reputation as modern, cutting-edge, digital economies. The more cooperation you get; the more productivity, the more innovation you will find.

Indonesia has already developed four digital unicorns; start-ups with a valuation of more than a billion dollars - Gojek,Tokopedia,Traveloka and Bukalapak. I visited Bukalapak on Thursday and met so many graduates of Australian universities there. Some of whom I might say, in defiance of the climate but in devotion to their Australian universities were wearing their Sydney and Melbourne University hoodies - which I thought would have been very warm.

But nonetheless, it was great to see their devotion to the Australian universities. There are also senior managers like Willix Halim and Dr Teddy Oetomo who worked in e-commerce and finance in Australia. There are Australians working in Bukalapak here in Jakarta.

And so you can see that what you're getting is just the practical outcome of close cooperation; Indonesians learning from Australians, Australians learning from Indonesians, producing greater outcomes. That is what cooperation and partnership is all about - that's how networking works.

That's how you get better outcomes and of course it is that, which inspired us to get on moving with the Indonesia Australia Comprehensive Economic Partnership Agreement, or the IA-CEPA which is a free trade agreement in other words.

Now this is very close to my heart because it had been kicking around for a long time, the IA-CEPA, but in 2016 President Jokowi and I decided that we should really get on with it and get it done. It was driven in large part by the strong friendship that was developed between us and indeed between our wives; my wife Lucy and Ibu Iriana.

We all had a very strong interest in urban issues and planning, which of course is as you know is the president's great passion. President Jokowi is one of the most important leaders in the world today. As Indonesia's president, he leads the largest majority Muslim nation in the world. And as he says; demonstrates that democracy, Islam and moderation are compatible.

He is a powerful advocate for those important values.

And in these times of increasing global attention and rising intolerance, his values, Indonesia's values are more important than ever. The president is focussed on delivering the right outcomes for his people.  Every leader has to be and as one great American politician said ‘all politics is local’.

The global significance of your president should never ever be underestimated. He is a powerful advocate for values that are being challenged around the world today.

IA-CEPA represents a shift in the contemporary mindset towards our trade and investment relationship, and it will be an instrument for promoting the sharing of knowledge and skills; the kind I’ve described.

It will cement our places in the expansion of global value chains, and it is a statement of open trade and a bulwark against creeping protectionism, for the benefit of us all. As Ibu Evi announced earlier, one of the things I succeeded in doing was keeping the Trans-Pacific Partnership alive after Donald Trump pulled out.

I am absolutely, passionately committed to free trade and open markets. There is no question that that is what delivers stronger economic growth and more jobs.

Remember what Deng Xiaoping said back in the late 70s when he went south on his great Southern Tour he started to open up China.

He said that in the days when China was open to the world and the days of Zheng He, the great Muslim Chinese navigator who sailed through this archipelago and into the Indian Ocean, he said China was strong and then when it became closed to the world it became weak.

Societies and economies that are open and embrace the world are strong economies. Protectionism is not a ladder to get you out of the low growth trap - it's a shovel to dig it deeper. It is absolutely self-defeating, it's like tariffs.

Donald Trump talks about tariffs and how much the Chinese exporters are paying in additional tariffs. But in fact tariffs are a tax paid by the consumers of the country which imposes them - in that case by Americans

If you take Indonesia's legendary world famous instant noodles – made with Western Australian wheat - and then of course exported as noodles to Australia for Australians, particularly Australian university students who live on instant noodles. That's a great example of complementarity and trade. But let's say Indonesia were to impose a big tariff on that wheat, what does that do? That increases the price of noodles in Indonesia, which reduces the living standards of Indonesians and makes the export of the noodles less competitive in other markets. It is literally a lose-lose.

So the bottom line is that when we reduce tariffs, when we open up trade, we create more jobs.

We've learned that lesson in Australia. We used to have very, very high protection years ago, decades ago, and we woke up to that reality.

One of the reasons why we've had 28 years of economic growth without a recession - which is almost unprecedented in the world - is because of free trade and an open economy.

The IA-CEPA will reduce tariffs on goods, improve administrative procedures which are just as important frankly and remove behind the border barriers to trade and establish high quality modern rules for services, investment and digital trade - and that reduces transaction costs for businesses.

We hope that the IA-CEPA, we expect it to be ratified soon, both by our respective parliaments and so that businesses can start using the agreement and the economic benefits can start to flow.

The next big regional trade deal that Indonesia is a party to, is the RCEP - the Regional Comprehensive Economic Partnership - that covers 16 countries and over a third of the world's population, including China and India.

Again, in some of those countries there are very strong protectionist tendencies which are holding it up.

I hope that in the years to come Indonesia will join the Trans-Pacific Partnership. I hope that one day the United States will come back into it frankly because that is a very high quality free trade agreement.

Let me turn to human capital, given that we are here at this acclaimed university and this is again one of President Jokowi's highest priorities. We've got very strong links in education as you know, there were 20,000 enrolments of Indonesian students in Australian tertiary and technical colleges last year - and I hope that will grow.

And we're also encouraging students from Australia to study in your universities through the New Colombo Plan which Julie Bishop, our former Foreign Minister, my former deputy, started in 2014.  Indonesia is the most popular destination for students under the New Colombo Plan.

We're all well aware of Indonesia's demographic dividend. I talked about demography being destiny. You currently have more people of working age in Indonesia than you do of non-working age. In other words there are more people in the working age bracket than there are children, or older people.

And that's a very big advantage not to be underestimated, compared to many of the world's economies including Japan, Taiwan, South Korea and Singapore just in our region.

Having a large workforce relative to the rest of the population enables you to generate economic growth and the revenues to provide good education for the younger people, good health services and other services for older people - it's absolutely critical but you don't get the benefit of that demographic dividend unless that workforce has the skills to be as productive as possible in a modern economy.

We are working closely with Indonesia on a number of education programs. We have a program which is studying how student learning outcomes and literacy and numeracy can be improved in primary schools and districts including in both cities and in rural areas around Indonesia.

For example, in locations where students and teachers used local languages at home the program is trialling early years teaching in those local languages to improve learning outcomes. And the early results have been very positive. As was mentioned earlier by Pak Arie, we have a large scholarship program for Indonesia under the Australian awards program.

More than 9000 Indonesians have studied at Australian universities on scholarship programs, with many going on to take leadership positions and make a very significant difference, a positive contribution to Indonesia's development.

One of the benefits of the IA-CEPA is that it will allow a majority Australian ownership of technical and vocational training service providers in Indonesia.

Australia has a very good, globally admired vocational training system.

And so there is an opportunity for more vocational training companies and services in Indonesia supported by Australian firms.

So this educational cooperation, of which I guess today is a part, is a critical element in our closer economic relationship. But above all what we need to do is to resist the lure of populism and protectionism.

You know it's rampant everywhere, you see it all around the world in the developed economies and developing economies.

The truth is that the more open we are, the more prosperous we will be.

If look through all of global history - societies that have been open, cities that have been open, that have embraced free trade, that have embraced diversity, that have had respect for people of other backgrounds, other religions, other races - those societies have been the strongest and the most successful.

You can find that whether you're going back several thousands of years into classical history or even looking at the modern day.

So I believe that we've got the foundation to have a stronger and stronger and deeper relationship.

History is important particularly here at the university, my mother used to be a professor of history, among other things.

We have the benefit of being old friends. Our partnership goes back to the origin of Indonesia as an independent nation. I was just talking with the Dean about staying in the Majapahit hotel in Surabaya where the courageous students tore the blue stripe off the Dutch flag - and so it was left flying the red and the white flag of an independent Indonesia.

Australian troops were instrumental in the liberation of the Indonesian archipelago from the Japanese forces in 1945. Australia was one of Indonesia's strongest supporters in its bid for independence. So strong, that president Sukarno chose Australia to represent Indonesia in the United Nations negotiations in the lead up to independence. It was an honour then and remains so today to have been present at the Birth of a Nation.

Now as we move together into the future there's no doubt the world around us is changing. As the Dean said; power centres are shifting and the region in which we live is experiencing profound change.

We confront both uncertainty and ambiguity, but we must take advantage of that.

We have to be an optimist. I am absolutely convinced the opportunities far outweigh the challenges we face. We have the opportunity to ensure that our region; the most dynamic on Earth remains at the centre of this remarkable economic growth which has seen hundreds of millions of people lifted out of poverty.

The future expects a lot of us and this is not a time to be cautious with our ambition. It’s an opportunity for students like yourselves to be at the forefront of this challenge, to harness new technologies and innovation and continue to contribute positively to regional stability and economic growth.

To promote the free and open international rules based order that's been the bedrock of our prosperity over the past 50 years.

And so all of you, Indonesia's future leaders, I encourage you to play your part in enhancing the relationship between Australia and Indonesia for the benefit of both our countries.

I thank you for being a part of it and I wish you all the very best for your futures and for your future careers.

Thank you very much.


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