NZ must strengthen ties with Indonesia - Groser

John Key appears on a billboard in Jakarta marking his trade visit to Indonesia. Photo / Supplied

While acknowledging "some problems" within Indonesia, Trade Minister Tim Groser says New Zealand must strengthen economic ties with the fast-developing Southeast Asian nation.

Prime Minister John Key last night arrived in Jakarta for a formal call on Indonesian President Susilo Bambang Yudhoyono and to lead a delegation of key New Zealand business leaders.

The visit has prompted criticism from the Green Party which says the National Government is not doing enough to raise concerns about alleged human rights abuses in the disputed territory of West Papua.

Green Party MP Catherine Delahunty has criticised the Government for seeking "trade at any price" with Indonesia and even levelled accusations of hypocrisy at Mr Key.

"We hear constant concerns about Fiji and now he celebrates democracy in Indonesia. It's the height of hypocrisy to talk about trade and democracy while ignoring human rights abuses."

Ms Delahunty acknowledged there had been considerable progress on human rights in Indonesia in recent years, "but now is not the time to celebrate until human rights abuses in West Papua have been addressed".

Speaking to reporters yesterday in Darwin in transit to Jakarta, Mr Groser said Indonesia was a fully democratic state. "Yes, you've got numerous problems but it is absolutely a democratic country."

The scale and pace of Indonesia's economic growth made New Zealand's relationship too important to neglect.

Mr Groser said with per capita incomes in the country of 240 million currently at somewhere between US$3000 ($3644) and US$4000, and GDP growth of 6 per cent a year compounding, Indonesia's economy was reaching "a point of inflection".

With GDP close to US$1 trillion already the Asian Development Bank estimated that by 2050 Indonesia's economy would be worth a staggering US$11 trillion which is twice the size of the Chinese economy today. "We're going to Indonesia at a time where from now on these increments of economic growth change the whole game. There will be enormous implications for Australia and NZ."

"It's right up there at the absolute apex of strategic importance for Australia and I don't see why it should be fundamentally different for us."

But Mr Groser warned New Zealand was failing to grasp the current opportunities, let alone those to come.

Exports had peaked at just over $1 billion two years ago and last year were down to under $900 million.

Mr Key's delegation was against a backdrop of a relationship that was economically "not performing anywhere near its potential".

Mr Key will speak at a New Zealand-Indonesia business conference this morning before calling on the Association of Southeast Asian Nations' secretariat later in the day.

He meets President Yudhoyono tomorrow following a wreath-laying ceremony at Jakarta's Kalibata National Heroes Cemetery.