1.         Relations between Indonesia and Australia have always been dotted with not only opportunities, but also challenges, for the two nations are culturally different while their political orientations, developmental stages and needs are also in sharp contrast.

2.        These differences have inevitably caused difficulties and will continue to color the bilateral relations between the two neighboring countries in the future. It is therefore rather naïve to expect that the ties between Indonesia and Australia would be problem-free. Instead, it is to be expected that problems would emerge from time-to-time over which the political leaders as well as the grass-root people of the two nations are called to seek acceptable solutions.

3.         Since the East Timorese debacle (1999) the two governments have tried their best to put the turbulent times behind and to work towards a sound, sustainable and mature relationship. The culmination of these measures was the visit by President Abdurrahman Wahid to Australia (June 2001) followed by Prime Minister John Howard's visit to Indonesia in August 2001. During these visits both sides underlined the importance of building mutual trust and understanding and of opening dialogue to enhance ties between the two. They also reaffirmed their strong desire to excel relations through continuing practical cooperation in a wide range of fields.

4.        During his second visit to Indonesia in February 2002, PM John Howard reiterated inter alia that Australia stands ready to help Indonesia exit from the economic crisis while also clearly stressing that the Australian government fully supports the Indonesian territorial integrity, thwarting thereby the hope of certain parties to seek Australia's help to secede from the Unitary State of the Republic of Indonesia. Indeed, it would be less than candid to ignore the fact that there are a limited number of people around the world, presumably also in Australia, who wishfully think that Papua - or Aceh for that matter - should be let loose from Indonesia, the political consequences of which may send a chilling effect to the entire region and indeed the world far beyond their imagination.

5.        Indeed, there have been at least two contentious issues recently confronting Indonesia and Australia over which the two tried to find acceptable solutions. First is the issue of combating terrorism over which the two have signed a memorandum of understanding. The memorandum covers intelligence information sharing, reinvigorating the cooperation between the two countries' law agencies, and capacity building. Better still last February, Indonesia and Australia jointly hosted a counter-terrorism regional conference attended by countries in the region. One of the results was the establishment of two centers in Indonesia that respectively mandated to help the countries in the region to devise a legal framework to deal with terrorism, and, to help improve the interested countries' technical capabilities to deal with a situation similar to the Bali bombings.

6.        Another source of tension that has been successfully diverted into mutual cooperation is the illegal migrants' issue. Indonesia and Australia successfully co-sponsored the Regional Ministerial Conference on People Smuggling, Trafficking in Persons and Related Transnational Crime in Bali in February 2002. Similarly encouraging, the two countries have also agreed to find ways and means to rebuild their cooperation in defense and security fields.

7.        It is also to be stressed that apart from those differences, the people-to-people contacts, inter alia in the fields of education, culture, and trade need to be continuously expanded to the fullest, for it significantly contributes to the enhancement of the relationship between the two countries.

8.        In the education sector, there are approximately 25.000 Indonesian students currently studying in Australia, some of whom are Australian scholarship recipients. The self-funded students contributed around A$750 million annually to Australia's economy, whilst the Australian government also provides scholarships for Indonesian students amounting to A$16.25 million. We do hope that these future leaders of ours with their in-depth insights on Australia's internal dynamics would, in turn, help boost the understanding between the two neighboring countries in the future.

9.        It is also worth-noting that that there are approximately 250,000 Australian students studying the Indonesian language (bahasa) as their second language. And, together with that significant number of people already speaking 'bahasa' in Australia, we cannot but hope that mutual understandings between the two peoples would further excel to a much higher stage in the future.

10.      In the field of economic cooperation, being one of the fastest growing economies in the world, Indonesia considers Australia to be an important development partner to help our economy recover from the crisis triggered by the economic turmoil in 1997. In the trade area, there were several positive signals to emerge in the value of two-way trade between Indonesia and Australia in 2003 reaching a record total of around A$6 billion (US$4.46 billion, 11% increase compared to that of 2002). The export value of Indonesia was around A$4.053 billion (US$2.65 billion) and our import value from Australia was A$2.762 billion (US$1.8 billion). Indonesia enjoyed A$1.291 billion (US$846 million) trade surplus with Australia last year.

11.      It is to be noted as well that despite the economic crisis and its aftermath there are still around 400 Australian companies conducting business operations with their Indonesian counterparts and many have brought a considerable amount of investment to Indonesia.

12.      Since the crisis the Indonesian government has put in place a sound and solid free market economy system to gradually overcome the crisis in close cooperation with the world's monetary institutions. Subdued inflation, falling interest rates, and growing foreign exchange reserves have all contributed to an environment conducive to faster growth. The value of our national currency against the greenback has also been stabilized. Better still a few weeks ago President Megawati Soekarnoputri issued a presidential decree authorizing the National Investment Board as the sole authority to issue licenses for foreign companies to operate in Indonesia.

13.      Moreover, 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 was 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 positive response to the one billion US dollar sovereign bond issued in March 2004.

14.      After successfully organizing the parliamentary election last April, on July 5, 2004 we were once again able to peacefully organize the first ever direct presidential elections, the results of which ensured that Megawati Soekarnoputri and Susilo Bambang Yudhoyono will finally contest each other for the top post in a run-off scheduled to take place on September 20, 2004. The outcome is difficult to predict. However, there have been some people who tried to pre-empt the results, fearing that a particular presidential candidate would win the election. It is only fair if we expect one respect the results of a democratically organized election be it in Indonesia or Australia. Indeed, we will surely congratulate the Australian people if they democratically elect the One Nation Party's candidate as their leader.

15.      Former Australian Ambassador for Indonesia Richard Woolcott made an interesting point on the issue. He stated in his recently published article that: 'It is unreasonable to promote the cause of democracy and then oppose its outcomes' (The Age, June 3, 2004).

16.        No matter who wins in the next presidential election, Indonesia will continue to actively pursue its national interests as enshrined in its constitution. The top priorities of the next government will remain the same: first, to solidify our home-grown democracy, including the promotion and protection of human rights; secondly, to further stabilize the economy for the benefit of our people; and, thirdly, to continue to contribute to preserving international peace and security, especially in combating terrorism and other transnational crimes.

Canberra, 22 July 2004

Imron Cotan
Ambassador

Embassy of the Republic of Indonesia, Canberra - Australia