August 23, 2013

Indonesia considers stake in Australia's live-cattle stations

As part of closer beef-industry ties between the countries, one of Indonesia's most senior trade ministers wants to see more Indonesian investment in Australia's primary industries, including owning cattle stations.

Indonesian Vice-Minister of Trade, Bayu Krisnawurthi, said that the suspension of the live-cattle trade between Australia and Indonesia in mid-2011 had led to a loss of trust of the Australian industry in Indonesia. However, both countries are looking forward towards expanding future trade.

Speaking at the IndOz Beef Investment and Trade Forum in Brisbane, Australia, Krisnawurthi said that Indonesia had a growing middle class which now numbered about 50 million people throughout the country, leading to far greater demands for beef. While Indonesia could accommodate some of the increase in demand from its own stock, the volume of the projected increase in demand could not be met domestically. Indonesia is dependant on reliable supplies of beef from other countries, most notably Australia.

"Demand for both meat and dairy is growing in Indonesia and we see Australia as one of the most suitable places in the world for raising cattle," Krisnawurthi said.

"That is one reason why we are having this meeting: to explore not only investment from Australia to Indonesia but vice versa. We have a very strong theme from Indonesian state-owned enterprises which are looking to explore that possibility of investing in Australia, and these companies would come to Australia to look at buying farms."

Such investments in Australia would require the approval of the federal government through the Foreign Investment Review Board. According to Krisnawurthi, while some private companies might look at such investments, government-owned enterprises such as the Badan Urusan Logistik (BULOG), which deals with food distribution and price control, or PT Berdikari, which deals with agricultural supplies, were more likely to make purchases.

Krisnawurthi added that government-owned corporations made decisions independently. He reveals that the Indonesian government saw the possible purchases of Australian cattle stations as part of a broader interaction between the two countries, and welcomed Australian investment in Indonesia.