The Prime Minister has finished a meeting with the Indonesian President today, where trade and tariffs on New Zealand beef were top of the agenda.
John Key is heading a delegation to promote business and foster stronger ties with the southeast Asian nation - the fourth largest in the world.
With a population of almost 250 million, Indonesia is poised to become a $1.2 trillion economy in the next two years and is predicted to be the world's sixth biggest economy by 2030.
ONE News political reporter Jessica Mutch said Key was officially welcomed to the presidential palace in Jakarta today to meet Susilo Yudhoyona and hold bi-lateral talks, with focus on the Trans Pacific Partnership multi-national free trade agreement involving the United States.
Two-way trade with Indonesia is already worth $1.5 billion, and in January it entered a free trade deal with New Zealand and Australia.
And although the free-trade agreement only came into effect in January, the Government is concerned about protectionism of local producers by Indonesia which has seen tariffs on beef rise by 25%.
"Previously we were exporting about $150 million a year of beef to this market, our second biggest export of beef to this market, and that's actually fallen back to under $100 million, so it is definitely having an impact," Key said.
Key said that was not only having an effect on New Zealand, it was impacting on Australia and the US as well.
"Technically, almost certainly, that is a breach of the FTA," he said.
While New Zealand could complain to the World Trade Organisation, it was better for the Government to try to resolve the issue.
Key said he would raise the matter in a way that was "respectful but nevertheless makes our point".
"It's not just in New Zealand's interest. It's actually in Indonesia's interests for this thing to work really well."
In the building industry it is a different story.
New Zealand engineering company BECA built the Sky Tower and now have the contract to build the signature tower in Indonesia that will be twice as high.
"Currently we're doing 22 buildings over 40 stories high. When you think about the the buildings in New Zealand that height you can list them on one hand," said BECA Director David Carter.
Key will fly to Singapore tomorrow, where trade talks will
The Prime Minister will also lay a wreath at the Kalibata National Heroes' Cemetery.
More than 7000 soldiers from the Indonesian War of Independence are buried there, along with veterans of the Imperial Japanese Army who stayed in the former Dutch colony after World War II and people considered notable by Indonesians.
Visit pays off
The trip seems to be paying off already with Indonesia's national airline, Garuda Indonesia, announcing its intention to resume direct flights to Auckland.
It has signed a memorandum of understanding with Auckland Airport indicating its plans, but only if market conditions for the company improve.
House of Travel's retail director Brent Thomas says Indonesia is a growing market and New Zealand is ready to take full advantage.
He believes business travel will grow and demand for holiday travel will then follow.
Fonterra also announced it would open its first processing plant in Indonesia.
Chief executive Theo Spierings said the $20 million investment would help the dairy giant meet the needs of the Indonesian market, one of the fastest growing for milk products.
"Global dairy demand is set to increase by 100 billion litres over the next eight years and 60 per cent of this growth is expected to come from China, India and Indonesia."
The new plant would help expand Fonterra's brands Anlene, Anmum and Anchor Boneeto throughout Indonesia and is expected to be operational within 18 months.
Human rights to be brought up
As well as focusing on the relationship between the two countries in these meetings, Key has also promised to bring up Indonesia's record on human rights, including the province of West Papua's fight for independence.
The international advocacy group Human Rights Watch said Indonesia has made great strides to improve its record but it still has serious concerns.
In its 2012 report on the country it said authorities continue to invoke harsh laws hindering free speech, and incidents of religious violence have become more frequent and violent.
Mutch said the issues are a worrying distraction from the main purpose of the visit.
"This trip is all about creating trade opportunities, creating
New Zealand jobs and growing the economy," she said.