Asia-Pacific observed Greg Earl, The Australian Financial Review 10 March 2011   When Gita Wirjawan swapped a career with JPMorgan for the investment promotion agency in his native Indonesia two years ago, he discovered he had entered a time warp.   The now ministry-level agency has been the country's shopfront for foreign investors for four decades - but Wirjawan discovered it was still using faxes rather than email for communications.   Now, after issuing BlackBerrys to his key staff, the former investment banker is touting a 50 per cent increase in realised investment to $23 billion last year as the vanguard of a transformation in Indonesia's economic outlook.   He told his email story at an Australia Indonesia Business Council conference in Sydney this week, where the sense of expectation about Indonesia was more positive than it has been for more than a decade, fuelled by Wirjawan's forecast of a tripling in investment over the next three years and a $2 trillion economy by 2020.   Indonesia is basking in its successful negotiation of the global financial crisis and is expecting a sustainable average annual growth rate of more than 6 per cent ~ about where it was in the early 1990s boom years.   In the next few weeks, it is expected to settle the final technical details of its participation in the 2009 free trade agreement between Australia and South-East Asian nations that will open the way to more challenging economic partnership negotiations with Australia.   And this week, Vice-President Boediono will visit Perth, Canberra and Sydney with several other ministers in an effort to promote the economic turnaround.   But Vice-Minister of Trade Mahendra Siregar, also in Sydney this week, put all this new optimism in a longer-term perspective when he observed: "There's been so many big ideas on how relations between Australia and Indonesia have to be developed in the past 50 years. But it is always hard to do it."   This caution is underlined by the fact there has been a big decline in Indonesian language study in Australian schools, Indonesia has dropped below politically troubled Thailand as a trade partner and during Wirjawan's celebrated investment boom last year, there was only about $240 million from Australia.   The latest edition of the Australian National University's venerable Bulletin of Indonesian Economic Studies provides support for the sceptical position reflected in the paltry investment flow.   "The Indonesian public is becoming increasingly concerned about the gap between policy rhetoric and action," economist Ross McCleod writes. "Claims of progress in this [anti-corruption] and other fields, including the economy, are often overstated, and opinion polls suggest that people are increasingly unwilling to take them at face value."   The quiet competence of a generation of economic managers, including Siregar, goes a long way to explaining the country's economic survival through all the political turbulence, so his ideas are worth paying attention to.   He says Indonesia is at the point where it needs to process more of its resources at home, both to provide jobs and properly make use of its demographic dividend in the form of a youthful, working-age population.   Investment is already returning to the country from places such as China and Vietnam after an outflow early in the decade, and this is evident in the renewed strength of manufactured exports after a slide.   He says the country is managing to generate enough jobs for its semiskilled, high-ilchoollevel new workers but faces a problem with properly training its university level workers then providing them with jobs.   And this is where the big challenge for Australia will kick in as the two countries negotiate a broad economic partnership agreement rather than a conventional free trade deal.   Indonesia is making it clear that the labour force in all its manifestations will have to be a big part of this agreement.   Mineral producers and agricultural exporters will have to be aware of the need to train workers to do more value-added processing.   Universities will be under pressure to provide more education in Indonesia, rather than just rake off foreign student fees in Australia.   And the broader Australian community, including unions, will have to accept more Indonesian workers here for short-term training work and long-term residency as part of a much more integrated economy.    "It's a real partnership we are trying to develop," Siregar says. "It isn't just trade, plus, plus."

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