Professor James J. Fox,
        Professor Ross Garnaut,
        Dr. Ross McLeod,
        Ladies and gentlemen,

I am indeed honored to be able to speak at the launch of the book entitled: 'Business in Indonesia: New Challenges, Old Problems' edited by Mr. Chatib Basri and Mr. Pierre van der Eng, and published by the Institute of Southeast Asian Studies in Singapore in cooperation with the Indonesia Project of the Australian National University.

I also wish to thank the Head of the Indonesia Project, for inviting me to be a part of this special occasion, and at the same time convey my congratulation to the Indonesia Project for the hard work it has put in to make this event possible. Occasions, such as this, have helped us in fostering greater understanding between Australia and Indonesia.

Greater understanding between Australia and Indonesia through knowledge and friendship is essential to solidify the political and economic cooperation of the two countries. The Indonesia Project plays a crucial role in imparting knowledge and skills to the students of today, the generation who will go on to form the Indonesian - Australian relationship of tomorrow.

Ladies and gentlemen,

Indonesia is currently on its way to becoming one of the largest democratic nations in the world, going through a transition period which is full of many formidable challenges. It is indeed extremely risky business where a promising start does not always guarantee a successful finish.

There are too many cases of emerging democracies running out of steam to face an uncertain future. When democratic transition takes place against a backdrop of narrow nationalism, political instability, economic downturn, armed separatist rebellion, and terrorist attacks, the results can be even more uncertain. Combined with the wide-scale effect of globalization, these domestic challenges have sometimes created turbulence in Indonesia's political and social fabrics, which in terms of the democratic cycle, are still vulnerable. Some nations falter and crumble in the face of such overwhelming obstacles, while others survive to emerge stronger than ever before.

Some - be it from within or outside Indonesia - may have wild ideas about the future of the country, I am however absolutely convinced that Indonesia will rise out of the smoke and haze with a stronger and more vibrant democracy. Indonesia cannot afford to fail, for its security and the regional stability are closely intertwined. The challenges it now faces are inevitable side effects of the reform movement currently taking place, and are all part of the process of creating a united, prosperous, democratically governed and investment friendly Indonesia.

To achieve such an objective is indeed difficult a task. Misrepresentation of Indonesia's image - particularly abroad - has frequently stalled our painstaking efforts to rebuild the nation. Economic instability, corruption, and terrorism are words commonly associated with Indonesia. This association has undoubtedly led many to overlook Indonesia's huge potentials such as, inter alia: its gigantic market, and abundant human and natural resources yet to be explored and toiled.

Our resilient and willingness to excel as a nation should not also be underestimated. Despite a number of shocks, including the lingering impact of terrorist bombings in Indonesia and in other parts of the world, the current government has managed to steadily exit from the crisis. Subdued inflation, falling interest rates, and growing foreign exchange reserves all have contributed to an environment conducive to faster growth. The exchange rate of our national currency against the greenback has recently slightly weakened. This is partly due to the external factor and the up-coming direct presidential election in Indonesia.

Better still, the Indonesia's GDP growth exceeded the government's and most analyst's expectations at 4.1% in 2003 and is expected to rise to 4.8% in 2004. Inflation fell substantially from over 10% in 2002 to 5.1% by the end of 2003 and was still at this level in the first quarter of 2004. The even more encouraging signal came from the stock market composite index which recorded at 800 points during the first quarter of 2004 or up over 80% since the end of 2002. These positive outcomes improved international sentiments toward Indonesia, as shown by the world's positive response to the one billion US dollar sovereign bond issued in March 2004.

Ladies and gentlemen,

Not many people are aware that the reform movement has now entered its second wave. This second wave has not produced the same amount of difficulties as the first stage did, for its ultimate objective is to transform the strong national strength and spirit into sound institutions and systems of governance. Relying on the national spirit will definitely help Indonesia progress in the short term. In the longer run, it is the institutions and the quality of governance that will give substance to our democracy and, hence, sustaining it.

The key challenge for this second wave of reform is our ability to link democracy with good governance. As you may be aware, democracy and governance are two completely different things. Democracy does not automatically give us national unity, economic recovery, political stability, or social security. Democracy and reform can only deliver these things if it is furnished with good governance. I am, undoubtedly, certain that any new government in Indonesia as the result of the next presidential election will put this issue on the top of its agenda, for history will judge it by its ability to live up to the expectations of the Indonesian people to deliver the fruits of reform to their daily life.

In this regard, allow me to call on all Australians, especially the business community, to not be misled by the short-lived instability in Indonesia for it does not represent its huge potentials that I previously alluded to. The ability of Australian business operators to see these potentials will enable them to outsmart other competing foreign companies. I feel encouraged by the fact that the Australian business community prosper with us on the peak, and stay by our side in the valley. We want them to continue to be part of our economic progress and to continue investing in Indonesia and, indeed, in our common future. This is entirely consistent with the Australian government's national interests to have a stable, reliable, and prosperous neighbor.

It is against this backdrop that I hope the book that is being launched today, would contribute to widening the horizon of Australia's business operators in Indonesia, for which I wish once again to thank the Indonesia Project for its unrelenting support.

Canberra, 09 June 2004

Imron Cotan

Embassy of the Republic of Indonesia, Canberra - Australia