Indonesia has been on the Australian legal industry’s radar for more than 20 years, but recent events have made it even more prominent.
Norton Rose announced it has formed a new alliance with local firm Susandarini & Partners in Jakarta in recent weeks. The new association continues the existing Indonesian presence of Norton Rose, which previously held an association with local firm Brigitta Rahayoe & Partners. Many Australian and international firms have formal relationships with local firms to capitalise on the growing economy. Blake Dawson formed a relationship with a new firm in Indonesia called Oentoeng Suria & Partners (OSP) last year after previously dealing with Soebagjo Jatim Djarot (SJD) for more than 20 years. Allens Arthur Robinson and Freehills have similarly had long standing relationships with local firms Widyawan & Partners and Soemadipradja & Taher respectively.
However, not all Indonesian firms are looking for official partnerships. Ali Budiardjo, Nugroho, Reksodiputro (ABNR) has for many years remained neutral after previously being tied up with US firm White & Case. “From our perspective, being an independent firm has enhanced our position,” said ABNR foreign legal counsel Philip Payne. The firm has received offers for official alliances from international firms, but Payne says the firm is not interested. “We work with many of the London and US firms on a regular basis – we work with Clifford Chance and Linklaters,” he added. Although, partner at Blake Dawson Bill Reid says he expects many other major Indonesian firms who are not yet associated with international firms will be thinking about their future.
The new Indonesia
For many years Indonesia has been a market highly focused on the mining & resources industries, and while they are still an important part of the economy in the past five years legal work has expanded to include a variety of new opportunities. “The economy has grown considerably. There has been a considerable internationalisation of the economy and it has a growing middle class,” said Reid.
Recent work done by Oentoeng Suria & Partners in association with Blake Dawson includes acting for Mercuria Energy Group (a large international energy company) in its acquisition of coal mining interests in Indonesia and acting for LG International (part of the Korean LG group), in its acquisition of mining interests in Indonesia.
Head of the Norotn Rose Australian energy practice Ross Ramsay says the Indonesian economy is growing strongly, averaging 6-8% growth year-on-year. “The market was originally very focused on resources, but there is a more diverse mix of business now,” he said. “There are increasingly large M&A transactions and a greater level of interest from clients in South Korea, Japan and China. We are acting on a lot of inbound investment agreements and because of the size of the projects there is a sizeable amount of finance work associated with them.”
One of the key growth areas for the legal market is infrastructure according to Freehills partner John Dick. “There had been talk around infrastructure for a long time, but there is a real feeling that things are starting to happen,” he said. “Indonesia is in expansion mode.” Robert Cornish, executive partner for South East Asia at Allens Arthur Robinson agrees: “There are real and pressing infrastructure demands in Indonesia – infrastructure has grown more rapidly in the last 12 months. It’s the main sector to come alive,” he said. With a growth in infrastructure projects there has also been considerable growth in banking and M&A work, as well as shipping, said Reid. For example, Blake Dawson has recently acted for Pelindo, the state-owned port operator in Indonesia.
How does it compare
“Indonesia is extremely important. It’s one of the key economies in South East Asia,” said Cornish. “It’s the economy in which there is potential for growth and is vitally important for Australia.” According to Dick in terms of developing economies in South East Asia, Indonesia is by far the biggest. “If you look at the other markets, they have not developed in the same way with regards to attracting foreign investment.”
A growing legal industry means greater competition, but Reid is confident that more firms working in the market is a good thing for everyone. “International firms are looking to work with firms in Jakarta which are used to the high quality legal work they regularly deal in. More firms coming into the market will increase the overall level of service and quality of legal services,” he said.