Indonesia FTA helps Australian METS company grow exports and services
The 2020 Indonesia–Australia Comprehensive Economic Partnership Agreement (IA-CEPA) is helping Australian mining technology companies to grow exports. Lower tariffs and improved foreign investment rules mean greater opportunities for the Australian mining, engineering and technology services (METS) sector.
One company that’s benefited is Queensland-based METS innovator, GroundProbe.
- The company’s Slope Stability Radars (SSRs) can now be imported into Indonesia with a tariff of just 5%. This has helped GroundProbe achieve new sales in the price-sensitive Indonesian market.
- Lower foreign-ownership thresholds have helped GroundProbe create a global centre of excellence in East Kalimantan that acts as a global service centre.
METS research develops life-saving mine site monitoring technologies
GroundProbe technologies makes mine sites safer. An unforeseen slope or tailings dam collapse has the potential to damage equipment and, in some cases, lead to loss of life. The resultant delays and stoppages can result in huge financial, logistical and legal implications.
One solution is to monitor slope and dams for signs of movement – and that’s where GroundProbe excels. The company’s hyper-sensitive radar and laser technologies monitor and detect movement, understand when it becomes a problem and determine when a collapse is likely to occur. This saves lives.
GroundProbe began selling its monitoring equipment to open cut and underground mines in Australia two decades ago. Today, it exports to more than 30 countries around the world. GroundProbe’s clients include BHP Billiton, Rio Tinto and Vale.
Lower IA-CEPA tariffs help METS exporters to Indonesia
Indonesia is a major export market for GroundProbe and a springboard for their global services. The company began selling into the Indonesian mining industry in 2005. But the IA-CEPA agreement has accelerated trade.
The IA-CEPA agreement reduced tariffs on multiple Australian goods exported to Indonesia. This resulted in a reduction in the tariff for Australian radar equipment to just 5%. This has increased the competitiveness of GroundProbe’s core METS technology in the Indonesian mining market.
‘We can offer our radars more cost effectively due to the elimination or substantial reduction of tariffs,’ says Rajendra Konidina, Business Manager Asia, GroundProbe. ‘We gain better market access and more competitive pricing. This allows us to expand faster.’
Australia’s network of FTAs helps build business across Southeast Asia
Rajendra says that Australia’s free-trade agreements in the Asia region are a direct benefit to the company. This includes being able to compete more effectively against other global METS companies.
‘Indonesia has historically been a big market for us – but it’s also competitive,’ he says. ‘With our main competitors being internationally based companies, free trade agreements allow us to be more competitive with our product offering. This helps other Australian-based companies as well.’
The Indonesia trade agreement also changed rules for investment. These permit increased Australian ownership of businesses based in Indonesia:
- up to 67% of contract mining services and mine site-preparation services
- 95% of powerplants
- 75% of oil and gas platform construction
- 67% for electrical power construction, installation, operation and maintenance
- 55% for electrical power installation constructions
- 51% of geothermal power plants.
Indonesia becomes a base for a METS global service centre
GroundProbe has an international service centre based in Balikpapan in Kalimantan, the Indonesian portion of the island of Borneo, which houses some of the company’s Geotechnical Support Services (GSS) engineers. The centre provides remote monitoring services for the company’s technologies on mine sites round the world. Geotechnical engineers based in the region monitor live radar data and respond to alarms and wall movement, remaining in close contact with site-based staff.
‘We’ve seen huge growth in GSS since we started the service,’ says Konidina. ‘In recent years, we have been growing exponentially. From the Balikpapan remote monitoring centre we service more than 100 GroundProbe systems in Africa, Asia, Latin America and Australia.
‘Mining is truly a global industry, so it’s important that we can easily and cost-effectively service global customers. The ability to hire fully-qualified engineers in Indonesia has helped us to build a world-class centre of excellence in Balikpapan and build on our client-servicing business model.’
Austrade helps GroundProbe steadily build its business in Indonesia
Austrade advisers based in Jakarta supported GroundProbe as the company established a commercial presence in Indonesia from 2007 onwards. This included forging valuable connections in Indonesia’s mining industry. According to Konidina, it also included invitations to METS forums.
‘We have had a very good relationship with Austrade from the start,’ he says. ‘Indonesia has a highly consolidated mining industry and the top 10–15 companies account for approximately 80% of output. Breaking into that market was tough going.
‘Austrade advisors helped us to build vital relationships and relationships led to technology demonstrations, which in turn led to revenue. It was a steady process, but now we have over 50 GroundProbe sensors installed across Indonesia.’
For Australian companies that want to grow in Indonesia, Konidina has some valuable insights.
‘Indonesia is a long-term game,’ he says. ‘You have to invest energy and time, and plan for the long term. It took time to understand industry networks and time to explain our value-add.
‘For Australian METS, I’d say: “Build relationships, develop one installation case study, then make that your ambassador.”’
The Australian Trade and Investment Commission (Austrade) is the Australian Government’s international trade promotion and investment attraction agency.
We deliver quality trade and investment services to businesses to grow Australia’s prosperity. We do this by generating and providing market information and insights, promoting Australian capability, and facilitating connections through our extensive global network.
To discover how we can help you and your business, visit austrade.gov.au or contact us on 13 28 78 (within Australia).