Grainne McCarthy, Jakarta – The drastic deterioration in relations between Indonesia and Australia over East Timor threatens to damage trade and investment between the two countries, business executives say.
Members of the large Australian community in Jakarta say the outrage in Australia over Indonesia's handling of sustained violence in the half-island will lead to lost trade and investment for both countries.
"What has taken more than 30 years to build has been almost destroyed over the past [two weeks]," says Sabam Siagian, head of the Indonesia-Australia Business Council, a private trade association.
The IABC, in a statement published in Jakarta newspapers Saturday, said, "Escalation of anti-Australian sentiments in Indonesia could be very damaging to Australian business in the nation and could place future foreign investment projects in the country in jeopardy."
Any Australians "who were considering investment in Indonesia, now won't consider it for some time," says Wilfred Schultz, an Australian citizen and technical adviser in Jakarta with accounting firm Grant Thornton LLP.
Relations between the neighbors and former close allies have plummeted since East Timor voted convincingly for independence last month. In the weeks surrounding the vote, anti-independence militias have beaten and killed people, and looted and destroyed property.
Burning of Indonesian flag provokes anger
Many Indonesians resent Australia's criticism of Indonesia's handling of the crisis, and of what Indonesians perceive as excessive zeal to send troops to East Timor.
Anthony Lewis, an Australian citizen and a senior partner at Arthur Andersen in Jakarta, says tactics used in Australia to demonstrate anger at Indonesia – such as burning the Indonesian flag – are perceived as a direct insult by many Indonesians, who have scant experience with democratic political expression.
"We're pretty certain the people demonstrating in Australia have got no idea what it's like to be in a country where law and order is fragile," Lewis says. Indonesians are venting their outrage in scattered demonstrations around the country.
A scuffle with local protesters in the port town of Balikpapan in Kalimantan led Australian resource companies Broken Hill Proprietary Co. (BHP) and Rio Tinto Ltd. (RTP) to start pulling staff and dependents out last week.
Two Australian citizens in Balikpapan were threatened by a crowd and forced to surrender their passports to Indonesian immigration authorities. They have since received their passports.
Noke Kiroyan, president of Rio Tinto Indonesia, says the protesters wanted Australian companies to "publicly apologize for the flag burnings and for what they see as Australian interference in Indonesia's internal affairs."
Kiroyan doesn't rule out extracting more of its staff, depending on what happens after Australian troops enter East Timor Monday as peacekeepers.
Trade was picking up
A blockade last week of Indonesia-bound cargo at Australian ports already has hurt trade between the neighbors. Maritime Union of Australia had refused since September 10 to work on cargoes bound to or from Indonesia, affecting shipments of wheat, paper pulp and other items.
According to news reports, the union ended the ban Saturday, but said they won't hesitate to impose it again if Indonesia fails to uphold its commitment to the UN to cooperate with peacekeeping forces.
It's too early to tell what lasting damage the cargo ban has done, but businessmen say it is worrying that the ban came amid signs that exports from Australia to Indonesia were picking up.
After a slump last year, Australia's exports to Indonesia jumped 21% in the three months ended June 30, from the same period a year ago.
Saul Eslake, chief economist for Australia and New Zealand Bank, based in Melbourne, says East Timor faullout could hurt Australian grain and live cattle exports to Indonesia. Other major Australian exports to Indonesia include cotton and manufacturing equipment, particularly for the mining industry.
Widjaja Sugarda, a former Indonesian consul general to Sydney, says Australian trade with Indonesia wasn't affected after the 1991 massacre at the Santa Cruz cemetery in East Timor, in which Indonesian security forces killed as many as 200 people, causing outrage in Australia. "Now with 4,500 [Australian] troops going in, trade will be affected," he says.