
Opening
I would like to thank the Australian National University, and particularly the Indonesia Project, for inviting me to speak tonight at this 60th anniversary gala dinner.
I acknowledge the Traditional Custodians of the land on which we are meeting, the Ngunnawal people, and I acknowledge their ongoing connection to Country.
I pay my respects to their Elders – past and present – and extend my respect to any First Nations people who are with us tonight.
As we gather here tonight, it may seem obvious to us that there should be an Indonesia Project and that it should be based in Canberra – for it has made such an enormous contribution and grown into the largest such centre outside Indonesia.
But this was not a foregone conclusion. It took great courage and vision to establish the Indonesia Project, and many years of hard work to build it into what it is today.
Indeed, when Heinz Arndt set about his project 60 years ago, he noted: ‘Everyone, almost everyone, I consulted advised against the effort.’1
It’s true that in 1965 the Indonesian economy was in turmoil and the political situation would make research and fieldwork difficult.
One observer called it a ‘remarkable, brilliant, crazy thing to do’2 – as perhaps only the very best ideas can be described.
But Arndt’s fundamental assessment was correct: that Indonesia was of immense significance to Australia, and therefore the study of its economy was a worthwhile project and one of national importance.
The ensuing 60 years have only served to validate this assessment, as Indonesia’s significance – both to Australia and in its own right globally – has grown ever stronger.
As all of us here know, Indonesia is the fourth most populous country on earth, the third largest democracy, the largest Muslim population and the largest archipelagic state.
That alone is justification for an Indonesia Project, but it often goes underappreciated on the world stage and in the broader community.
Indonesia is now the only $1 trillion economy in our immediate region and sits alongside Australia in the Group of 20 major, systemically important economies.
This is the result of a remarkable growth story – after the Project started in 1965, Indonesia averaged more than 6 per cent growth for the first 30 years and then, following the Asian Financial Crisis, around 5 per cent – still a very healthy rate.
In fact, the ANU’s Paul Burke has shown, in his 2019 Survey, that Indonesia had the world’s most stable growth rate over the two decades before Covid.3 As Paul said, one would have found it hard to imagine, coming out of the Asian Financial Crisis, that Indonesia would take the mantle of the world’s most stable growth rate for such a sustained period.
Interestingly, the second most stable growth rate over this period was Australia’s. What an amazing thing to share in common!
But it hasn’t and won’t always be a straightforward path, so tonight I’d like to focus on:
- The contribution of the Indonesia Project to Indonesia and Australia – both individually and jointly; and
- The importance of economic ties between our two countries in a time of rising tension and global uncertainty.
Long-term investment in Australia-Indonesia relations
In assessing the Indonesia Project’s contribution, who could be better placed than Sri Mulyani Indrawati.
She’s now been Indonesia’s Finance Minister for almost 15 years in total (more than half the Reformasi period) and worked intimately with the Project’s members, associates and collaborators. Indeed many of her staff are ANU alumni.
At its 50th anniversary, she called the Project’s work ‘a contribution to the study of the Indonesian economy that is unparalleled anywhere in the world.’4
I think it’s safe to say this high praise is still valid 10 years later, at the 60th.
The Indonesia Project has carried out its core objectives – of high-quality academic research, institutional capacity building, public information and networking – with great success.
Its academic research continues to be guided by what Heinz Arndt called ‘analytically interesting and preferably policy-relevant questions’5 – as a public servant, I can say this is much appreciated by my colleagues across Canberra (and beyond).
Its public reach has grown too. I understand last year’s Indonesia Update had a record audience, with 750 in person, 4000 online and a subsequent 10,000 views on YouTube, demonstrating the huge advances in technology since Heinz Arndt would, in early decades, carbon copy and xerox three versions of his Survey to give to a few trusted friends.
But it’s in institutional capacity building and networking that I personally have seen the greatest benefits and achievements.
When then-Prime Ministers Rudd and subsequently Abbott visited Indonesia in 2013 to meet President Susilo Bambang Yudhoyono, SBY was able to open with the line – gently teasing, but amusing and affectionate all the same:
‘Mr Prime Minister, you will see that I have more Australian PhDs in my cabinet than you have in yours.’
And it was true – for sitting next to him were no less than four ministers with ANU degrees or strong connections to the Indonesia Project, including the Vice President, Foreign Minister and two of our esteemed guests here tonight: Mari Pangestu and Chatib Basri, who are still central to the action in Jakarta as members of the National Economic Council.
As an ANU graduate myself, I have been pleased to call them friends and colleagues.
But I should also say, it’s not just Indonesia that has benefited from this remarkable network; so has Australia. Some of our country’s top economists have come through or been associated with the Indonesia Project, including Heinz Arndt himself, but also people like Ross Garnaut, Stephen Grenville and Peter McCawley, who was honoured earlier today.
Peter was prescient when he called the Project ‘a long-term investment in good Australia-Indonesia relations because these young graduate students will almost certainly rise to occupy senior positions in Indonesian universities or the Indonesian bureaucracy’.6
Again, I think it’s safe to say this investment has paid off. After all, it’s the networks and deep connections between people – like all of those here tonight – that have underpinned the strength of our relationship for decades.
Economic relations in an uncertain world
This was evident when Prime Minister Albanese visited Jakarta in May – his fourth visit to Indonesia as PM, and (again) his first bilateral visit, just two weeks after being re-elected.
In his remarks, the Prime Minister said he was proud of the enduring friendship between Indonesia and Australia, and called it a ‘vital’ and ‘indispensable’ partnership.7
Those words – vital and indispensable – are apposite in today’s world of rising tensions and uncertainty. It’s often said we can’t choose our neighbours; we also can’t do without them.
We are facing a more contested, more fragmented and more challenging global environment, including in our own region – this is a reality for both Indonesia and Australia.
But as I argued in a speech last year in my previous role, turning inwards would ultimately be self-defeating.
While trade is increasingly seen as a vulnerability as much as an opportunity, I’m glad Indonesia and Australia have recognised the benefits of our trading relationship.
Not only that, we have committed to deepening it. Already in the five years since the Indonesia-Australia Comprehensive Economic Partnership (IA-CEPA) entered into force, the value of two-way trade has doubled to $35 billion. We are now top 10 trading partners for each other.
During their Annual Leaders’ Meeting, the Prime Minister and President launched a review of IA-CEPA, which will aim to bolster our economic integration and, importantly, our economic resilience.8
Resilience has been a particular focus on the Australian Government in recent years – certainly through the Covid period and now again as we face renewed trade disruptions. And I know it’s an important consideration for the Indonesian Government too.
While neither Australia nor Indonesia has a large direct trade exposure to the United States (exports being only around 1 and 2 per cent of our respective GDPs) both of us certainly have a significant interest in maintaining an open, free and fair global trading system.
As Hal Hill once wrote, ‘Openness is not, of course, without its challenges’, but there are also great benefits to be derived from it.9 That’s why Australia is also supporting Indonesia’s bid to join both the OECD and the CPTPP trade agreement.
For countries like Australia and Indonesia, strength is to be found in removing barriers, increasing diversification, and ultimately raising the productive capacity of our respective economies through reform.
All of these are things we can and are striving to do together.
The Prime Minister also noted recently that while deepening our trade and investment relationship might be natural and vital, it is not inevitable. He encouraged us all – government, business, civil society, academia – to demonstrate even greater ambition.10
That’s why he commissioned Nicholas Moore AO, one of the nation’s most respected business figures, to develop Australia’s Southeast Asia Economic Strategy, Invested. It was no accident that the Prime Minister launched that strategy in Jakarta.
Since then, his Business Champion for Indonesia, Jennifer Westacott AC, has already travelled to Indonesia five times in the role, including in February with Australia’s largest-ever investor mission to the region.
All of this is part of the effort, to use the Prime Minister’s words, to convert the extraordinary potential of our relationship into concrete progress – an effort to which he is personally committed.
Conclusion
Returning to my theme of resilience – the ability to absorb, adapt and transform to ongoing change – this is also an apt descriptor for the relationship between Indonesia and Australia
A relationship that is vital to the security and prosperity of our region at a time of great uncertainty and change.
And one that has always withstood the periodic challenges which neighbours will inevitably have to work through together.
Our ability to get through those moments and to continue on an ever-stronger trajectory is in no small part thanks to the Indonesia Project. As the late Mohammad Sadli called it: ‘part of our comfort blanket system’.11
Dare I say, the Indonesia Project itself has demonstrated resilience in its 60 years of existence – from the very beginning when Heinz Arndt was advised against the effort, to leadership changes, fundraising and generational renewal.
Heinz said of his first visit to Indonesia that ‘I came away … determined to go ahead with a major project on the Indonesian economy, whatever the difficulties presented by increasing political tensions and economic disorder.’12
We are thankful he did, and for the vigour and rigour with which it has been pursued ever since. It has been a project not just of academic interest, but of national interest.
You should all be proud of the Indonesia Project at its 60th anniversary, and I look forward to its continued contribution in the years to come.
References
* I would like to express my appreciation to Cosimo Thawley for his assistance in preparing this address.
- H W Arndt (1985). A Course Through Life: Memoirs of an Australian Economist, ANU, Canberra, 52. Return to footnote 1 ↩
- C Brown (2015). Australia’s Indonesia Project: 50 Years of Engagement, Bobby Graham, Canberra, 11. Return to footnote 2 ↩
- P Burke and M Siyaranmual (2019). ‘Survey of Recent Developments’, Bulletin of Indonesian Economic Studies, 55:3, 275-276. Return to footnote 3 ↩
- S M Indrawati, Foreword, to Brown, Australia’s Indonesia Project, vii. Return to footnote 4 ↩
- Arndt, A Course Through Life, 60. Return to footnote 5 ↩
- Brown, Australia’s Indonesia Project, 50. Return to footnote 6 ↩
- Prime Minister Albanese, Investing in the Australia-Indonesia Relationship, 15 May 2025. Return to footnote 7 ↩
- Prime Minister Albanese and President Prabowo, Annual Leaders’ Meeting Joint Communique, 15 May 2025. Return to footnote 8 ↩
- H Hill (1998). ‘An Overview of the Issues’, ASEAN Economic Bulletin, 15:3, 262. Return to footnote 9 ↩
- Prime Minister Albanese, Media Statement, Jakarta, 15 May 2025. Return to footnote 10 ↩
- P McCawley (2002. ‘Heinz Arndt: An Appreciation’, Bulletin of Indonesian Economic Studies, 38:2, 173. Return to footnote 11 ↩
- Arndt, A Course Through Life, 54. Return to footnote 12 ↩