MEDIA RELEASE The Indonesian Coordinating Minister for Production and Distribution, Dr Hartarto, and the Australian Minister for Foreign Affairs, Mr Downer

ON THE LAUNCH OF THE AUSTRALIA-INDONESIA DEVELOPMENT AREA

AMBON, INDONESIA

24 APRIL 1997

1. The Indonesian Coordinating Minister for Production and Distribution, Dr Hartarto, and the Australian Minister for Foreign Affairs, Mr Downer, held their inaugural Ministerial Meeting under the auspices of the Australia-Indonesia Development Area (AIDA) in Ambon, Maluku, Indonesia on 23-24 April and officially launched the AIDA process. They described it as an historic milestone in the bilateral relationship which will create real benefits for the private sectors of both countries and enhance the regional development of member areas.

Objectives

2. The two Ministers agreed that the objective of AIDA was to develop closer economic relations between Australia and the Indonesian provinces of West Kalimantan, Central Kalimantan, East Kalimantan, South Kalimantan, Bali, North Sulawesi, Central Sulawesi, South Sulawesi, Southeast Sulawesi, West Nusatenggara, East Nusatenggara, East Timor, Maluku and Irian Jaya. They noted that Australia was already one of the major investors in AIDA and agreed that there were mutual benefits to be gained by expanding and further deepening the level of economic cooperation within the AIDA region. They agreed that the central aim of AIDA is to improve the enabling environment for private sector trade and investment between Australia and the above-mentioned provinces of Indonesia. They noted that the AIDA region needed to become as attractive to business activity as elsewhere in order to achieve long term results. Dr Hartarto emphasised that Indonesia accorded AIDA equivalent status with the ASEAN sub-regional economic cooperative schemes.

3. The Ministers agreed that AIDA would provide a forum where the private and public sectors could meet to identify challenges, opportunities and impediments to private sector activities and to cooperate to devise solutions. They reiterated the key role of the private sector in the AIDA process - it would be the prime mover of cooperation under AIDA with Governments as facilitators. To this end, they welcomed the participation of business in AIDA's preparatory process and encouraged this to continue. They looked forward to the first sectoral Working Group meetings under the AIDA umbrella. In addition, the Ministers also recognised the substantial contribution made by State/Territory/Provincial Government representatives.

Initial Outcomes

4. Ministers were pleased to announce some initial outcomes based on their discussions in Ambon and the work already undertaken by business sector participants in identifying measures which could improve the enabling environment for private sector activity in the AIDA region.

5. Mr Downer announced:

His intention to open two honorary consulates within the AIDA area in order to facilitate business activity and the movement of people in the region. In this connection, he also announced that a keenly awaited Visitor Visa Agency Agreement had been signed in Ambon to facilitate the issuance of Australian visas. The Agreement has reduced the processing time for a visa to visit Australia from seven days to one and is the third to be signed within the AIDA region. He foreshadowed other such Agreements being signed in the AIDA region.

To assist further activities under AIDA, Australia (through AusAID) would be funding a major study of Eastern Indonesia. This study will focus on identifying the opportunities and challenges to trade and investment in the AIDA area.

In addition, in recognition of the importance of development the local private sector, Australia would contribute to a feasibility study into the establishment in Eastern Indonesia of an office of the World Bank's International Finance Corporation. This office would provide technical assistance to private firms to develop "bankable" investment project proposals.

In two key industries in the AIDA region, the Australian Government, through the Department of Employment, Education, Training and Youth Affairs, is funding a pilot project on mining competency standards to be conducted in conjunction with the Indonesian Mining Industry Training Board, and is also funding the introduction of competency standards for the tourism industry in Indonesia.

A technical and vocational education development assistance initiative aimed at increasing the industry relevance of Indonesia's technical and vocational education providers, the Partnership in Skills Development Program, would directly benefit eastern Indonesia and would begin shortly. In line with the Eastern Indonesia Development Program, the proposed project would take account of the program of manpower training and apprenticeship which will be conducted by the Eastern Indonesia Development Council.

Mr Downer also noted that it was planned to resume air services between Ambon and Darwin; both Ministers hoped that regular flights on this sector would commence during May 1997.

Mr Downer placed particular emphasis on the importance to the Australian business community in Indonesia of relief from fiscal clearance for departures from Indonesia of Australians holding temporary residence permits.

6. Dr Hartarto informed the meeting that the Indonesian President has established a Special Cabinet Session, to meet regularly every three months, for issues of distributional equity and that AIDA and the ASEAN subregional economic cooperation initiatives are key policy instruments for this effort. This demonstrates once again the continuing high priority and serious commitment of the Indonesian Government to AIDA. Improved access to the highest levels of Government will allow the AIDA mechanism for interacting between private and public sector actors to be that much more effective in identifying constraints and solving problems faced by business people.

7. The Coordinating Minister also announced eight specific actions which have already been taken by the Government in direct response to concerns raised by the private sector during the preparatory meetings of the Special Working Group:

First, the Indonesian Government has decided that the relief from fiscal clearance for Indonesians traveling abroad to subregional economic cooperation destinations, which applies in the ASEAN subregional economic cooperation member areas, be extended to substantially cover the AIDA region of Indonesia.

In response to the concerns of the Australian business community as expressed by Mr Downer (Paragraph 5 above), Dr Hartarto informed the Meeting that the Government of Indonesia will explore, as a matter of urgency, the policy changes necessary to cover Australians holding temporary residence permits.

Second, the Minister was pleased to announce that Indonesia undertakes to increase air services between Indonesia and Australia and, in particular, within AIDA and to explore the development of new air routes by airlines of Indonesia and Australia.

Third, he invited Australian investors to take advantage of the fiscal incentives available for investment in Growth Node Areas (Kapet) located throughout the Provinces which are member areas of AIDA.

Fourth, he announced that the Government has given its approval in principle to provide computerised customs services at certain AIDA ports which experience heavy international trade loads in order to improve efficiency of service.

Fifth, the Government has decided to allow greater market access for commercially driven education and training activities. He encouraged private sector business people involved in this area to provide information about exactly what problems they face and which regulations or policies are constraining their activities.

Sixth, the Minister announced that he is engaged in discussions with the relevant agency to review Indonesian policy and procedures on expatriate work permits in order to find ways to attract qualified Australians to assist private sector business cooperation activities in the AIDA area.

Seventh, he announced that visa-free short-term entry to Indonesia for foreigners from specific countries, including Australia, will soon be extended to all AIDA international ports and airports.

Finally, he underlined the importance of facilitating investment, including the need to expedite approvals. There were several proposals at hand for establishing the appropriate institutional mechanism to provide assistance in these areas and he announced that he was coordinating discussions on this topic. He emphasised that these discussions would be aided by concrete information from private sector business people who were facing constraints to investment.

Structure

8. The Ministers agreed that AIDA would have a three-tiered structure of meetings - sectoral Working Groups, which would provide input to periodic meetings of Senior Officials, which in turn would report to an annual Ministerial Meeting. Business representatives will participate at all three levels. The three tiers of meetings would provide the widest possible opportunity for Government - private sector interfacing. The Ministers agreed that they would work to resolve any problems that could not be solved at lower levels.

9. The Ministers endorsed the establishment of six sectoral Working Groups in the priority sectors of agriculture, fisheries and animal husbandry; education and training; mining and energy; tourism; transport; and trade and industry. They were encouraged by the preliminary work done by these Working Groups in the short time to date and they encouraged the private sector to examine the challenges to business activity in those sectors with officials and to look for solutions. They also encouraged the private sector to be creative in identifying possible areas of cooperative activity in the AIDA region.

The Way Ahead

10. The Ministers expressed a firm commitment from both Governments to making AIDA a success. They noted future sectoral Working Group programs for AIDA as elaborated and agreed by the sectoral Working Groups during the two meetings of the Special Working Group. The Ministers directed the Working Groups to give early attention to the issues set out in their work programs and to report progress to the next meeting of AIDA Senior Officials.

11. The Ministers agreed to hold their next meeting back-to-back with the Australia-Indonesia Ministerial Forum Meeting due to take place in 1998 in Australia.