When all is said and done, language is key to a better neighbourhood
Charlie has dug up the figures and says, "There is a lot at stake." For two such close neighbours, Australia and Indonesia are poles apart on two measures. First, Muslim-dominated Indonesia, ranks 4 (23 million). Second, Australia is in the top 10 in GDP per capita while Indonesia ranks 125. But a great convergence is well under way. In GDP, Indonesia is growing more than twice as quickly at 5.5 per cent compared with Australia's 2.4 per cent. While Australia's economy is currently 70 per cent bigger than Indonesia's, it seems likely we will be equals some time between 2030 and 2040.
Over some decades our neighbourly relations have worked well for both of us. Australia's foreign aid budget contributed more than $540 million to Indonesia last year and was responsible for greatly improved education services.
Like all good relationships the benefits have flowed both ways with Australia gaining $309 million worth of tourism in 2012 plus $581 million for our education services: significantly more than we spent on aid. But our biggest export was wheat, valued at $1.3 billion. Altogether our exports to Indonesia were worth nearly $5 billion.
Given Indonesia's vast population and rising incomes, future growth in food, education, tourism, and health exports seem assured, we need to overcome some worrying attitudes if we are to realise the full potential of this relationship.
Lowy Institute polls since 2006 show the wariness with which Australians and Indonesians regard each other. People smuggling, terrorism and our long-standing uneasiness with Asians going back to the goldfields of the 1850s has resulted in only a slight majority of Australians (54 per cent) believing Indonesia "acts as a good neighbour". This needs to improve and there are two practical ways do it.
The first is to take advantage of what we have. Few in this weekend's touring party would know the National Gallery of Australia has the greatest collection of Indonesian textiles outside Indonesia. Nothing builds understanding quicker than respect for a country's culture. A visit to the National Gallery for any Indonesian leader would be just as important as appointments at Parliament House.
The second is to reverse the decline in Indonesian language teaching. Six Australian universities have closed their Bahasa Indonesian courses since 2004 and there has been a 40 per cent decline in the number of Australians studying Indonesian over the past decade.
In a submission to the Asian Century White Paper the point was made: "A child who starts Indonesian in lower primary school now will emerge into the workforce by 2030. By that time the Indonesian economy is estimated to be one of the top 10 in the world."
The Lowy Institute's most recent research shows that 70 per cent of Australians don't trust Muslim people.
Yet, I can tell you from my experience, Indonesians are good people, and good neighbours. We need to grow a new generation of understanding and language is the key.
Twenty years ago I heard Bill Clinton at a dinner in Melbourne tell us we needed to increase our understanding of Islam and Indonesian culture. He was right and we have been too slow in accepting his advice.
As my son, who has spoken Bahasa from his teens, says, if we get it right, life will be bagus (Bahasa for good) for both countries.
Frequently Asked Questions about this Article…
Indonesia's GDP has been growing at about 5.5% versus Australia's roughly 2.4% in the article's data. For everyday investors, faster growth in Indonesia suggests expanding markets and rising consumer demand — meaning potential opportunities in sectors tied to domestic consumption and services as incomes rise.
The article notes Australia’s economy is currently about 70% larger than Indonesia’s but predicts convergence, with parity likely sometime between 2030 and 2040. For long‑term investors, that timeline highlights the importance of positioning for structural growth in Indonesia over the next decade.
Existing strong exports to Indonesia include wheat (about $1.3 billion) and broader exports worth nearly $5 billion. The article suggests food, education, tourism and health exports are well placed to grow as Indonesia’s vast population and rising incomes increase demand.
Trade and people flows are already meaningful: Australia earned roughly $309 million from tourism and $581 million from education services in Indonesia in the data cited. These revenue streams, combined with growing bilateral trade, point to ongoing opportunities for investors in travel, education services and related industries.
The article states Australia’s foreign aid budget contributed more than $540 million to Indonesia last year, helping improve education and services. While aid is not an investment return, it supports capacity building that can create more stable, long‑term markets for Australian businesses and exporters.
The piece highlights cultural respect — for example, Australia’s National Gallery has a major collection of Indonesian textiles — and warns that declining Bahasa Indonesian teaching limits mutual understanding. For investors, better language skills and cultural awareness can improve dealmaking, partnerships and consumer engagement in Indonesia.
Yes. Since 2004 six Australian universities have closed Bahasa Indonesian courses and there has been about a 40% drop in Australians studying Indonesian over the past decade. Investors should care because fewer language skills can weaken business networks and reduce Australia’s ability to capitalise on Indonesia’s growing economy.
The article points to lingering wariness between the countries — Lowy Institute polls show only a slight majority of Australians view Indonesia as a good neighbour, and it mentions concerns like people‑smuggling and terrorism. These social and political perceptions can affect bilateral relations and should be factored into risk assessments by investors.
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