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Australian PM welcomes Indonesia joint ventures on cattle

Australia's Prime Minister Tony Abbott speaks beside Indonesia's President Susilo Bambang Yudhoyono during a joint news conference at the Pr
Australia's Prime Minister Tony Abbott speaks beside Indonesia's President Susilo Bambang Yudhoyono during a joint news conference at the Pr

By Kanupriya Kapoor

JAKARTA (Reuters) - Australian Prime Minister Tony Abbott on Tuesday threw his support behind Jakarta's plans to invest in Australian cattle farms to help end a trade dispute that has devastated his country's cattle industry and boosted beef prices in Indonesia.

Abbott's comments came on the final day of an official visit to Indonesia, his first overseas trip as prime minister, in which he was keen to focus on strengthening trade and business ties and move on from tension over refugee boats.

Indonesia has said it could buy up to 1 million hectares of Australian farmland for cattle grazing, to improve future supplies and keep prices stable under a long-term plan to be self-sufficient.

Beef trade has been a contentious issue in the past. In 2011 Australian live cattle exports to Indonesia were briefly suspended after Australian television broadcast images of cruelty in an Indonesian abattoir.

"If some Indonesian joint ventures in cattle are an important part of getting this trade re-started, well, please bring them on, bring them on," Abbott said.

Foreign investment in Australian farms is a sensitive issue for Abbott, who has already promised greater scrutiny of foreign investment in agriculture and who governs in partnership with the rural-based National Party, which has a more protectionist view of foreign investment in the sector.

Tighter scrutiny aimed to show Australians how investments were good for the country, Abbott said in his first comments on the issue.

"This is not designed to lock up our country," he said. "This is designed to ensure that the Australian people understand that the foreign investment we have and the foreign investment we welcome really is in our own best interests.

"I just want to scotch any suggestion that might be out there that somehow trade and investment is bad for Australia. Wrong, wrong, wrong. Trade and investment is good for Australia."

Indonesia relaxed quotas on Australian beef imports in May and Jakarta has since outlined plans for state enterprises to invest in Australia's cattle industry.

Abbott told business leaders in Jakarta he wanted to boost trade with Indonesia at a time when tension over asylum-seekers has threatened to overshadow his trip. Trade between the neighbours stood at $10 billion in 2012.

Abbott was accompanied by a 20-strong delegation of bankers, mining chief executives and agricultural barons to highlight Australia's willingness to expand bilateral trade.

As disposable incomes rise in Southeast Asia's largest economy, Australia's businesses are keen to cash in on the demand from Indonesia's burgeoning middle class.

Abbott identified several sectors for investment, from infrastructure to education and financial services.

Some Australian business people lauded Abbott's efforts, but said Indonesia could do more to improve its investment climate.

"Australian businesses certainly know the potential of Indonesian markets and Prime Minister Abbott is sending a positive message by being here," said Peter Fanning, vice president of the Indonesia-Australia Business Council.

"But the reality on the ground is often different and boards back in Australia are often not as confident or comfortable about investing here ... because of legal uncertainties and bureaucracy."

Abbott played down diplomatic tension over refugees in a joint statement on Monday with Indonesian President Susilo Bambang Yudhoyono.

"Of course we stand by our policies. But above all else, we want to work effectively to stop the boats," he said on Tuesday, adding that Australia would work with Indonesia.

About 400 boatloads of asylum seekers have arrived in Australia over the past 12 months and about 45,000 asylum seekers have arrived since late 2007, when the former Labor government eased border policies before tightening them again, spurred by a voter backlash.

($1=1.0695 Australian dollars)

(Additional reporting by James Grubel; Editing by Clarence Fernandez)

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