The Jakarta bombing is another human tragedy. The terrorist attack has caused immense suffering to the families of victims, most of who where innocent Indonesian bystanders. The shock of another terrorist incident in Indonesia – so soon after the horrors of Bali – shows why Australia needs to support Indonesia as a people and in terms of economic security.
Our economic and security links with Asia are now more important not less. Indonesia is Australia’s 10th largest trading partner, and Aussie exports to Indonesia are worth over $3 billion. There are an estimated 400 Australian companies doing business in Indonesia. And of course, there’s the tourist sector, too. We all know how important Bali is to Australians. Before the October 2002 bombings, over half of the estimated 460,000 Australian tourists visiting Indonesia each year headed to Bali.
So what does the situation actually mean for Australian businesses in practical terms? What will happen at the micro-level?
The Jakarta bombing is another human tragedy. The terrorist attack has caused immense suffering to the families of victims, most of who where innocent Indonesian bystanders. The shock of another terrorist incident in Indonesia – so soon after the horrors of Bali – shows why Australia needs to support Indonesia as a people and in terms of economic security.
Our economic and security links with Asia are now more important not less. Indonesia is Australia’s 10th largest trading partner, and Aussie exports to Indonesia are worth over $3 billion. There are an estimated 400 Australian companies doing business in Indonesia. And of course, there’s the tourist sector, too. We all know how important Bali is to Australians. Before the October 2002 bombings, over half of the estimated 460,000 Australian tourists visiting Indonesia each year headed to Bali.
So what does the situation actually mean for Australian businesses in practical terms? What will happen at the micro-level?
In the short term, care needs to be taken. Businesses need to seek information and advice to protect the safety and security interests of their staff and families. Austrade has been helping businesses in Jakarta with logistics and is monitoring the security and safety situation throughout South East Asia. The Department of Foreign Affairs and Trade (DFAT) is also providing important travel advice.
In the medium term, given the way business is done in the region, trade relationships are likely to continue. How do we know? Looking at the Asian financial crisis of 1997-99 is one way.
When the financial crisis started to bite there were many Australian exporters who declared they were in Asia ‘for the long haul’. As the national executive director of the Master Builders Association, John Murray, commented:
“Clearly, there is evidence that those companies that had the commercial stamina to retain a presence in Asia are now getting the benefit… In Asia, the way forward is not by one-off contracts, but by long-term relationships”.
Likewise the then managing director of Bovis Lend Lease in Asia, Mick Caddey, explained that although its Asian revenues fell sharply during the period, Lend Lease’s response was not to vacate the market but to “batten down the hatches for two and a half years”.
How were they able to do this and what can we learn from that?
A study by Austrade and the University of NSW gives some clues as to how Australian exporters and joint venture partners should approach the current situation. It looked at a range of partnerships and alliances between Australian companies and businesses in Thailand, Malaysia and Indonesia, three of the hardest hit countries during that period.
The study found that the Australian exporters successful during that period viewed their intermediaries as strategic partners. The joint ventures that survived were those with foundations solid enough to withstand the ground moving under them. By honouring their relationships with their Asian business partners, in some cases despite the economic losses they were incurring, many Australian companies were able to persevere and, with their partners, rebuild their business when conditions improved.
The study also showed that Australian business people needed to see the situation from both sides. Empathy is important. Our local partners have less choice than us, and it’s their business in their country. Understanding their situation and helping out where possible, go a long way to maintaining and strengthening relationships.
Finally, the managers in the study likened their business partnership to a marriage – everything was easy while things were going well, but it was testing in tough times. Trust, communication and commitment were the top three relationship factors linked to business performance. These all involved more than just words, they required tangible actions and clear signals. The lesson we learn from this is pulling out expats and cancelling market visits may be prudent in some cases, but also needs careful handling. And regular contact must be maintained with joint venture partners (even by phone calls, emails or video conferencing).
Michael Abrahams, Australia’s Senior Trade Commissioner in Jakarta, has noticed an increased reliance of Australian businesses on Austrade services. “With the low level of investor interest in the market we took a good hard look at new ways to help Australian business. We have adapted by: focussing more resources on customer-facing activities in the market, expanding our customer base and improving the quality and convertibility of realistic market opportunities” he says. There has been some success, as over 50 per cent of all business deals achieved over the past year came from Austrade Indonesia scouring the market for new opportunities for exporters.
The lessons from the Asian financial crisis show that while care needs to be taken, and businesses should seek information and assistance from Austrade and DFAT, Australian businesses that work hard on the quality of their business relationships in Asia are well placed to survive the tough times, and later thrive good times return. Ultimately, maintaining these relationships will help both Australia and Asia in economic and security terms and also help Indonesia recover from the terrible events in Bali and now Jakarta.
