Jakarta visit is big gesture, but is it the right one?

Executive Summary

Malcolm Turnbull's visit to Jakarta this week is an effort to turn a new page with Australia's most important neighbour. Tony Abbott's meetings with Indonesian President Joko Widodo were awkward, and the two failed to establish a rapport. No doubt Turnbull believes he can do better.

But it is not clear what a visit now by Turnbull will accomplish. The truth is, the bilateral relationship is bigger than any two leaders, and had already dramatically improved from its low point following the executions in April.

The bilateral relationship has been beset by tensions over the past two years, first due to revelations of Australian eavesdropping on Indonesian officials in October 2013, and then as a result of the executions of Australians Andrew Chan and Myuran Sukumaran in April.

But co-operation across dozens of programs quietly continued after the executions, and in recent months Canberra and Jakarta expanded their efforts to new areas.

Australian and Indonesian naval vessels participated in a co-ordinated patrol of the Timor Sea together in June, the first in two years, which focused on fisheries law enforcement, a top priority for Jokowi.

Ministerial visits resumed in August, and later this month, Jokowi's most trusted minister (security, economics and politics minister Luhut Panjaitan) and his most popular minister (maritime and fisheries minister Susi Pudjistuti) will visit Australia to discuss two other key issues for both governments, the fight against terrorism financing and infrastructure investment.

These initiatives have been successful in part because they have been focused on areas of common interest and executed with little fanfare. Without resorting to soaring platitudes about the importance of the relationship - which can make Indonesian officials uncomfortable because they cannot reciprocate those feelings - Australian officials and their counterparts have simply gone about the business of developing an important relationship.

Both Abbott and Turnbull's cabinets have also signalled a priority on trade and investment as they seek to rebuild ties, seeking to take advantage of Jokowi's single-minded focus on developing the country's economy.

The hope is that by boosting the amount of business the two countries do with each other, a constituency will slowly emerge in Jakarta with an interest in a strong relationship.

Australia does more trade with New Zealand, a country of 4 million, than with Indonesia, a country of 250 million, so there is room for improvement.

The effort to improve trade ties might have met a chilly reception during Jokowi's first nine months in office, in which his team introduced new tariffs and dozens of protectionist non-tariff barriers to trade. The markets responded accordingly, with the Indonesian currency, the rupiah, falling to levels not seen since the Asian financial crisis. The sharemarket returned the previous year's gains and bond yields were rising.

Following a cabinet reshuffle in Jakarta in August, which brought in several energetic reformers, things look somewhat brighter. Indonesia's new Trade Minister, the 44-year-old Tom Lembong, is an experienced investor who made news on his first day in office by declaring that "protectionism always backfires in the end".

Jokowi's recent announcement in Washington that Indonesia would join the Trans-Pacific Partnership, the 12-country trade pact that includes Australia and seeks in particular to regulate behind-the-border barriers to trade, is another signal that Indonesia is seeking to throw off its reputation for protectionism and the damage it was doing to Jokowi's economic agenda. To the extent Australia's economic outreach can take advantage of Jokowi's newly liberal rhetoric, it could reduce some of the volatility common to the relationship.

But despite the big talk, thus far Jokowi has yet to show a willingness to take on Indonesia's biggest economic challenges, and in fact has done little more than tinker with existing regulations.

On matters unrelated to economics, Jokowi continues to show an aversion to diplomatic activities, and make stridently nationalist statements.

Moreover, on many decisions, Jokowi is beholden to the oligarchs who control his coalition. Any future push for serious economic reform will face considerable opposition from across the spectrum of Indonesian politics. Before Jokowi even returned from Washington, his own Vice-President, Jusuf Kalla, was walking back his announcement that Indonesia would join the TPP.

It is these figures who will make or break the drive for a better relationship, and these figures on which Australian diplomacy should continue to focus, through regular, workmanlike ministerial consultations.

Turnbull and Jokowi share a background in business and a capacity for considerable charm. Perhaps a visit by the new prime minister to a president himself struggling to begin anew will become a foundation for a strong personal relationship that will help ease further turbulence in the relationship.

But at this stage, Turnbull and his government would be wise to concentrate their energies on developing businesslike ties at the ministerial level rather than seeking to elevate the relationship through traditional summitry.

Aaron L. Connelly is a research fellow in the East Asia Program at the Lowy Institute for International Policy.