David T. Hill AM

Australia’s bilateral relationship with Indonesia is arguably our most important. With a population of approximately 240 million, Indonesia is the world’s third largest democracy, fourth most populous nation, and is home to both a rapidly expanding middle class and the largest Muslim community of any country in the world. Given Australia’s proximity to Indonesia and our environmental and security inter-dependence, a healthy working relationship with our northern neighbour is vital to both our present and future national interest. By some measures the relationship between Australia and Indonesia is strong. Jakarta hosts Australia’s largest embassy, our second largest defence representation and a substantial Australian Federal Police presence. Trade between the two countries has, historically, been modest – $12.9 billion in 2010 – with Indonesia ranking as only our thirteenth largest trading partner. However, it is a trade relationship that has been showing recent signs of vibrancy. Since 2006 two-way trade between the two countries has grown by an average of 9.7 per cent p.a. and, given Indonesia’s maintenance of respectable real GDP growth (6.1 per cent in 2010), trade between Australia and Indonesia is likely to continue to intensify in the years ahead. The International Monetary Fund projects Indonesia will achieve one of the fastest growth rates of the world’s 18 largest economies during 2009-2015, outstripping even the powerhouse economies of Brazil, Russia, India and China.