Friday 17 Aug 2018 | 09:14 | SYDNEY
Friday 17 Aug 2018 | 09:14 | SYDNEY

Reader riposte: What Indonesia means to Australia


Sam Roggeveen


29 July 2008 09:42

Peter McCawley writes:

Stephen Grenville, drawing on the OECD report on Indonesia released last week, notes that Indonesia has been making steady progress in recent years but that the progress has 'gone largely unreported in the world press'.  Both of these things are significant for Australia.

The steady progress in Indonesia is important. As Grenville points out in his article in the AFR, economic growth has accelerated to over 6% per annum after being stuck in the doldrums of 3-4% for a prolonged period after the Asian Crisis of 1997-98. Grenville even mentions the possibility that Indonesia might aim for 8% growth. There would be many benefits for both Indonesia and the region if growth in Indonesia accelerated in this way.

But what is worrying is that it is possible that growth will slow in Indonesia in the next few years. For one thing, like Australia, Indonesia has recently benefited from a large boost in the terms of trade. The resulting stimulus might soon come to an end.  Further, severe bottlenecks to growth are now emerging in Indonesia. Government subsidies for fuel and electricity have grown to fully 20% of government spending. And acute pressures on existing facilities are beginning the strain the infrastructure sector.

All of this has 'gone largely unreported in the world press.' Does this matter? It's hard to say how much attention the global media should give to Indonesia but it would seem to matter for Australia. There is relatively little thoughtful coverage of key events in Indonesia in the Australian media, and even less about events in smaller countries such as Papua New Guinea. Adequate coverage in the Australian media of developments in neighbouring countries is surely needed because it is in our own self-interest.