Prospects for Stronger Australia-Indonesia Economic Ties

Abstract

The discordant nature of the political and international relations between Australia and its nearest Asian neighbor in the past can be attributed to the lack of strong economic ties between the two countries. The prospects for strengthening the economic ties between the two countries can be easily identified in the spheres of trade, aid, investment, development cooperation, and industrialization. Unless Australian and Indonesian politicians, bureaucrats, and other decision makers harness these prospects by positive action programs, the stalemate in the relationship between the two countries will persist. Indonesia is a leading partner in ASEAN. A rapprochement with Indonesia is imperative if Australia’s desire to encourage the growth of ASEAN economic cooperation is to transcend the realm of mere rhetoric. Indonesia’s economic development will also continue to be an elusive dream unless its leaders cooperate with the more advanced economies such as Australia and welcome foreign investments and development assistance to eradicate the massive problems of poverty. The approach of countries like Australia will determine whether Indonesia will overcome its vicious circle of poverty and take off to self-sustained growth by benefiting from external stimuli such as trade, aid, and investment. Or alternatively the Indonesian economy could become enmeshed in a syndrome of dependency, underdevelopment, and continuing poverty. Poverty is an ideal breeding ground for radical isms such as communism, which have been the anathema of Australia’s strategic defense planning. Therefore, the best safeguard against such a prospect is the establishment of an economically viable and vibrant Indonesian economy by strengthening the economic ties identified above.