Reflexive relation

• While the politics have long been challenging, there’s reason to believe a change may be coming.
• One of the fastest-growing economies in the world, Indonesia has long been powered by coal.
• Now, it’s endeavouring to go green through renewables, grid modernisation, electric vehicles and geothermal.

Why has the relationship been rocky?

• During the Cold War, Australian agencies backed the Indonesian army’s bloody purges of communists.
• In 1998, Australian Prime Minister John Howard wrote to Indonesia’s President, B.J Habibie, pushing for East Timorese independence.
• Before Howard and Indonesia’s next president, Megawati Soekarnoputri, had time to restore the relationship, tensions ramped up again after the 2002 terrorist bombings in Bali which killed 88 Australians.
• Since then, Australia has been diplomatically silent on other Indonesian territorial issues, such as the separatist movement in Papua.

Could the green transition help the relationship?

• In 2022, Australian Prime Minister Anthony Albanese visited Indonesia, where he promised A$200 million to kickstart climate and infrastructure projects.
• The two nations already trade $18 billion of goods and services yearly, centred on Australian coal and beef and Indonesian fertilisers and petrol.
• The agreement builds on a memorandum of understanding on electric vehicles and another between Export Finance Australia and Indonesia’s State-owned Electricity Company last year.

What are we likely to see as tangible outcomes?

• This also means the archipelago nation has huge geothermal resources, estimated at 40% of the world’s total.
• The best underground heat resources tend to be located in mountains or in isolated areas.
• The KINETIK partnership could help through connecting Australian mining expertise to Indonesia’s deep heat resources.
• Indonesia has already secured commercial deals with EV and battery manufacturers such as Hyundai and LG from South Korea, as well as Foxconn from Taiwan.

Will this be enough?