A key moment to strengthen NZ-RI ties

A traditional Maori performance [Credit: The Daily Mail]

New Zealand’s Prime Minister, John Key, is in Jakarta for a two-day visit to bolster political and economic ties with Indonesia. The visit marks Key’s first since 2012, when he brought a 60-member delegation to the Southeast Asian giant. In the four years that have since passed, Key and his Indonesian counterpart, President Joko “Jokowi” Widodo, may reflect on the improvements in Indonesia-New Zealand relations, as well as explore which areas could be improved upon.

Certainly, when their predecessors, Susilo Bambang Yudhoyono and Helen Clark — the latter is incidentally running for the position of UN Secretary General — met in 2005, it was acknowledged that bilateral relations were “way below potential”, despite the early good start in the history of the two nations.

For example, politically, New Zealand was one of the first countries to immediately recognize the newly independent republic following the transfer of sovereignty from the Netherlands in December 1949, with New Zealand’s minister for external affairs visiting then-president Sukarno a month later. Despite this, there was a significant period before the two countries exchanged ambassadors.

In some ways, this reflected what one academic described as the “uneasy” and “shallow” partnership that existed between the two countries. Indeed, during Indonesia’s confrontation with Malaysia, New Zealand military units were deployed on the island of Borneo in support of Malaysia and against Indonesia. When then-Indonesian president Abdurrahman Wahid made a state visit to New Zealand in 2001, it was the first by an Indonesian head of state since 1972. It can also be noted that New Zealand suspended military cooperation with Indonesia’s armed forces in 1999 and only resumed that cooperation in 2006.

Despite this uneasy past, recent years have seen a renewed appreciation of the Indonesia-New Zealand relationship. On the part of Indonesia, Jakarta is eager to strengthen relations with New Zealand and at the same time has spoken of its desire to “stand and grow together with New Zealand in peace and prosperity”.

On the part of New Zealand, there is acknowledgement of Indonesia’s “fundamental importance” by virtue of the latter’s size, strategic location and natural resources. Indonesia’s reformation has been hailed by New Zealand as “one of the great achievements of the last decade”, with Wellington citing its “common interests as democracies and neighbors in the Asia-Pacific region”.

In terms of the economy, Indonesia and New Zealand enjoy strong and growing trade. By the end of June 2015, total two-way trade stood at NZ$1.75 billion (US$1.26 billion), with Indonesia’s imports from New Zealand amounting to NZ$927 million and Indonesia’s exports to New Zealand amounting to NZ$827 million.

As such, Indonesia stood as New Zealand’s 12th largest trading partner in 2015, an improvement on previous years when it was listed in 13th place. Significantly, Indonesia-New Zealand trade is seen to be complementary and largely non-competitive. While 90% of New Zealand’s exports to Indonesia are primary products, such as dairy products, wood products and meat, Indonesia’s export to New Zealand consists of petroleum oil, coal, natural rubber, textiles, clothing and footwear.

However, while these facts may seem impressive, a closer look reveals that, among the ASEAN member-states, Indonesia is only the fourth largest trading partner, behind Singapore, Malaysia and Thailand. This is despite the fact that Indonesia makes up ASEAN’s largest economy, contributing 38% of the region’s combined gross domestic product (gdp).

It is also notable that while ASEAN and New Zealand (together with Australia) signed the ASEAN-Australia and New Zealand Free Trade Agreement (AANZFTA) on Feb. 27, 2009, Indonesia did not join the other parties in implementing the agreement on its commencement date of Jan. 1, 2010. Indonesia was the last to participate in AANZFTA, with the Indonesian government not ratifying the agreement until 2012. As such, Indonesia lagged behind countries such as Cambodia, Laos, Myanmar and Vietnam in taking part in the free trade agreement, raising some questions about Indonesia’s commitment to the Indonesia-New Zealand relationship.

At the same time, there was acknowledgement by the two governments that the Indonesia-New Zealand trade profile had not changed much in the past two decades.

The then-New Zealand prime minister, Helen Clark, once remarked that, “We need to update the perceptions around New Zealand and Indonesian businesses and the state of each other’s economies […] We’re probably in something of a time warp in the ways that we see each other.”

In this sense, the fact that Key’s entourage will include Trade Minister Todd McClay and a senior business delegation should go some way in addressing this time warp and be warmly welcomed by Jokowi.

Clearly, despite the good start in Indonesia-New Zealand relations, the “uneasy” and “shallow” period should serve as a reminder that the current state of warm ties between the two nations must not be taken for granted. This is especially so given the aforementioned gaps that remain in the bilateral relationship. It is thus hoped that the visit of Key to Indonesia will be fully utilized by both sides to strengthen the relationship toward a more stable, deeper and prosperous direction.

[This article was first published in The Jakarta Post on 19th July 2016 and can be found at: https://www.thejakartapost.com/academia/2016/07/19/a-key-moment-to-strengthen-nz-ri-ties.html]