An international bank has warned Australian businesses they risk missing the boat if they don’t seize investment opportunities in Indonesia.
Prime Minister Tony Abbott told a business forum in Jakarta this week that Australia’s two-way trade with New Zealand – with just four million people – is greater than with Indonesia with its 250 million people.
“Obviously, there’s plenty of room to improve,” he said.
HSBC head of commercial banking in Indonesia Amanda Murphy says it’s significant that the prime minister chose Jakarta as his first official overseas trip.
“Australia is still not in the top five trading partners for Indonesia,” she told a briefing on Wednesday.
Indonesia is one of the five key markets highlighted by the Australia Asian Century taskforce.
Ms Murphy says Indonesia sees infrastructure as a key driver for its economic growth.
“Ports, rail, roads, while they have improved or are improving, all require development to be able to reach its full economic potential,” she said.
At the same time, consumer spending has held up well, even though economic growth is expected to have slipped to five per cent by the end of 2013, down from 6.2 per cent at the the of 2012.
She blamed weaker export values from lower commodity prices for the slower growth, although HSBC expects gross domestic product to recover to six per cent by the end of 2014.
She says as Indonesia’s middle class continues to increase its purchasing power, there will be more money floating around for better health care, education and food.
HSBC head of Australian commercial banking James Hogan says it’s important that Australia embraces these opportunities.
“Given the huge potential for Indonesia and how attractive it is to many countries, if Australia doesn’t engage we can be sure others will,” he said.
He said that while there has been an improved involvement in the country, Australia has “punched below its weight both in terms of investment and trade”.
However, Ms Murphy warned that doing business in Indonesia was different to anywhere else because it is entirely relationship driven.
She said you can’t just go to Indonesia, handover a business card and return home, send emails and think everything will be OK.
“It won’t work,” she said.
“Come often, come more than you thing you ought to, and then come a bit more than that.”