Speech to Export New Zealand and ASEAN-New Zealand Combined Business Council

Selamat pagi. Good afternoon.

It’s a pleasure to be here at this forum and I’d like to acknowledge the organisers – the ASEAN-New Zealand Combined Business Council and Export New Zealand.

As you know, I took a trade delegation to Indonesia earlier this year.

Some of you were on that trip, and I hope you found it valuable.

I had the pleasure of having Trade Minister Gita Wirjawan as my host Minister, meaning we got to spend a lot of time together.

Gita is coming over to New Zealand in October and I’m looking forward to catching up with him again.

For today, I am very pleased that Mr Gusmardi Bustami is able to be here to represent the Indonesian Ministry of Trade.

I understand that Mr Gusmardi has visited New Zealand a number of times in his previous role as Director-General of International Trade.

It is my pleasure to welcome him today, not only in his new role as Director-General for National Export Development, but as a member of the Indonesia-New Zealand Friendship Council.

My visit to Indonesia in April was the first time I’d been back in the country since the late 1990s. There have certainly been many changes.

Indonesia has been growing consistently at over 6 per cent a year, despite the global financial crisis.

It is the fourth-biggest country in the world by population, and is one of the 20 biggest economies in the world.

Democracy is flourishing in Indonesia. The political and economic transformation over the last decade has made many millions of Indonesians better off.

Indonesia is central to the stability and prosperity of Southeast Asia, and to the economic well-being of Asia more generally.

And it’s our nearest neighbour in Asia.

So our relationship with Indonesia is extremely important.

I was very pleased during my visit to Jakarta when President Yudhoyono described our relationship as one of “kawan dekat” or “close friends”.

Our trade links are growing.

And our governments work together very well.

We have a great deal of contact at the highest level through forums such as APEC and the East Asia Summit.

The Indonesian Government last year made a generous contribution of US$500,000 to the Christchurch Earthquake Appeal, for which we are very grateful.

New Zealand, for its part, was a strong supporter of post-tsunami recovery efforts in Aceh, and has contributed to recovery efforts after more recent earthquakes.

And the New Zealand development programme in Indonesia is our biggest outside the Pacific.

But there are plenty of opportunities for New Zealand and Indonesia to develop even closer and deeper ties.

As economies, we have complementary strengths.

There are huge opportunities for New Zealand and Indonesia to increase our two-way trade and to do a great deal more business together.

To help facilitate that trade, I am happy to announce that the Government has appointed a new Trade Commissioner, Tim Anderson, to Indonesia.

Previously, we’ve had one Commissioner covering Malaysia, Indonesia and Brunei.

But given our growing relationship with Indonesia, we felt it was important to have a Trade Commissioner based full-time in Jakarta.

Tim is fluent in Bahasa Indonesia, has previously been a business advisor in Indonesia, and is involved in the Friendship Council.

His appointment is a clear sign that the Government wants to step up our trade engagement with Indonesia, building on the ASEAN–Australia–New Zealand Free Trade Agreement.

This is an FTA of the highest quality.

As I said when I was in Jakarta, I congratulate Indonesia, and the other members of ASEAN, for having the courage and foresight to sign up to such an ambitious agreement.

New Zealand’s experience is that FTAs are mutually beneficial, help foster longstanding business relationships, and lead to increased prosperity for all the countries involved.

The ASEAN FTA offers the prospect of greater commerce between our two countries.

That has certainly been our experience with China.

Since the China FTA was signed in 2008, we have seen trade expand exponentially.

New Zealand’s goods exports to China have trebled in only four years, and China is now our second-largest export market.

It is also now New Zealand’s biggest source of imported goods.

I would be delighted to see this sort of expansion in trade between New Zealand and Indonesia, and between New Zealand and ASEAN more generally.

The rapidly-expanding middle classes in Asia present opportunities for New Zealand businesses producing high quality goods and services.

Our exporters will benefit from the progressive elimination of tariffs by 2020 on 99 per cent of New Zealand’s current exports to ASEAN markets.

Looking forward, the important thing is for businesses in both Indonesia and New Zealand to take advantage of the free trade agreement.

Having an agreement is simply the first step.

Businesses need to put time and effort into understanding each other’s countries.

Many of them already are. We’ve seen that, for example, through participation in the Indonesia-New Zealand Friendship Council.

And we need to ensure that informal, or behind-the-border, trade barriers don’t arise to replace the formal trade barriers we are carefully taking down.

That would be a backward step. The reality is that protectionism of any shade doesn’t help anyone in the longer term, including the industries it aims to protect.

Looking further forward, New Zealand hopes to see the ASEAN FTA used as a benchmark for the new Regional Closer Economic Partnership – an FTA process that Indonesia has been instrumental in getting under way.

It is easy for New Zealanders to think of Indonesia solely in terms of a rapidly-expanding consumer goods market, and the FTA as a way of getting into that market.

But there is much more to our growing economic relationship than that.

We see the FTA as a means of developing, for example, business partnerships, two-way investment, and a vibrant trade in services.

In that sense, New Zealand has a lot to offer Indonesia.

We are a reliable, competitive and high-quality source of food.

We have technical knowledge and expertise that can help Indonesia develop, build infrastructure and add value to the natural resources that Indonesia has in such abundance.

We can continue to work with Indonesia, for example, in harnessing its large geothermal energy resources.

We can contribute in other niche areas like air services.

We can be a high-quality, cost-effective partner in educating the next generation of Indonesian leaders.

And we are a great place to visit, see our wonderful scenery and play a few rounds of golf.

What New Zealand can offer is a good fit with Indonesia’s own aims.

Minister Gita emphasised to me that Indonesia is focusing on food security, energy security and educating its people to ensure they are well-placed to succeed.

So I want to talk about these things in turn.

First, on food security, it is clear that Indonesia has a rapidly-growing population that wants to be fed and, increasingly, wants to be fed well.

We would stress to Indonesia that we see food security there, as for any country, as having two main elements – increasing domestic agriculture production, and securing a reliable and complementary supply of imports.

New Zealand can contribute to both these objectives.

When I was in Jakarta I witnessed the signing of a bilateral agreement on agriculture cooperation.

Among other things, this commits New Zealand to assisting Indonesia with a range of capacity-building activities in dairy, beef, horticulture and quarantine.

But if food security is about more than just the bare minimum for sustenance, it has to also be about trade.

So, for example, Indonesia’s consumption of protein is set to increase strongly in coming years, as incomes continue to rise.

Meeting such demand calls for an increase in domestic dairy and beef production, but also for an increase in dairy and beef imports.

It’s not one or the other, but both.

Minister Gita has said he wants to see Indonesian beef consumption rise from around two kilograms per capita per year, to 20 kilograms per year.

As with dairy, this is as much a development issue as a consumer demand issue.

A society aspiring to better levels of health and nutrition needs more sources of protein.

Availability of beef at an affordable price is an essential element of achieving that objective.

New Zealand can help with that supply.

And imports of New Zealand’s high-quality beef will always complement, not challenge, Indonesia’s own beef production.

The same applies to our other food products, as it does in all our markets.

Even if all New Zealand were turned into farmland, we could only supply a small fraction of the rapidly expanding demand from markets in East Asia and Southeast Asia.

For that reason New Zealand wants to encourage Indonesia, and other ASEAN countries, to keep their markets as open as possible, and to limit any constraints to doing business.

I’m delighted that our senior-level contacts are ramping up after my visit to Jakarta.

In November we hope to host Indonesia’s Minister of Agriculture, and our own Minister of Agriculture, David Carter, will in turn be making a visit to Indonesia later in the same month.

And I’m pleased to see that New Zealand producers, including Fonterra, are making the decision to invest in Indonesia, ensuring they will be part of the Indonesian story.

So there are undoubtedly significant opportunities for both Indonesian and New Zealand businesses to help meet Indonesia’s food security goals and, in particular, for new partnerships between businesses in both countries.

The same can be said in the energy sector.

Through the geothermal industry, New Zealand has a particularly important place in helping Indonesia achieve its aim of energy security.

Together, using New Zealand development funding, we built Indonesia’s first commercial geothermal plant, and we’ve remained closely involved in other geothermal developments since then.

We continue to educate many of Indonesia’s leading geothermal engineers at the Geothermal Institute at the University of Auckland.

There is now a large group of geothermal businesspeople and engineers in Indonesia who are very comfortable working with New Zealand.

This network, and the establishment of Geothermal New Zealand, give us the contacts and the scale to take part in Indonesia’s most significant projects.

We see New Zealand as the natural partner for Indonesia in geothermal development.

That’s why we signed a bilateral Geothermal Cooperation Arrangement during my visit to Jakarta.

As Indonesia scales up its infrastructure, it is also looking to increase the skills of its population.

New Zealand universities and other institutions can offer Indonesian students qualifications that are highly valued and transferable throughout the world.

We are relatively close to Indonesia and we provide a safe and welcoming environment.

We would like to see more Indonesian students come to New Zealand and our new government agency, Education New Zealand, is increasing its focus on Indonesia.

We need to be ambitious. Last year, Australia hosted 17,000 Indonesian students, compared to 600 in New Zealand.

Australia is, of course, a lot closer to Indonesia, which explains a good deal of that difference.

But New Zealand can do better, so we’re working towards a target of attracting 4,000 Indonesian students to study in New Zealand by 2017.

New Zealand can also assist Indonesia in raising the quality of its own institutions.

Our countries can be academic partners. New Zealand tertiary institutions are accelerating their interaction with Indonesian counterparts, looking at joint courses and other programmes.

The number of MOUs between tertiary institutions is increasing. And I’m pleased to hear that no fewer than three New Zealand university delegations led by Vice-Chancellors will be visiting Indonesia in the next two months.

Education and trade benefit, of course, from better connectivity between countries and more people-to-people contact.

Physical connections count. I’m delighted that Air New Zealand restarted its service between Auckland and Bali in June this year, and I understand the service has been very successful.

I look forward to Garuda Indonesia opening a direct link with New Zealand in 2013.

A direct link to Jakarta would be a great boost to business relationships between our two countries.

Needless to say, it would also benefit tourism.

As the number of wealthy and middle-class Indonesians continues to grow, we want to encourage them to holiday here, as well as to trade and study.

For the moment, Indonesia is less of a tourist source than some other countries in the region.

However, in my capacity as Tourism Minister I can see this changing.

The number of Indonesian holiday-makers coming to New Zealand grew 11 per cent in the last year.

Ladies and gentlemen, I am very optimistic about the relationship between New Zealand and Indonesia, on a whole lot of levels.

It’s a relationship that will be characterised by mutual partnership.

And it’s in that vein that New Zealand sees the future of its ties with Indonesia.

I think that the Indonesia-New Zealand Friendship Council, together with the links between the ASEAN-New Zealand Combined Business Council and KADIN, the Indonesian Chamber of Commerce, will keep that relationship prominent in the eyes of the private sector.

A common thread in what I’ve been saying is potential.

The Government has a sound relationship with Indonesia, and many New Zealanders are already doing business with Indonesia.

But we could all be doing a lot more.

We need to be bold in our ambitions and pragmatic and practical about addressing any issues that might arise along the way.

I believe bold ambitions on each side can realise the huge business potential of this relationship.

I wish you an enjoyable and profitable forum.

Thank you.