The study consists of five chapters. The first chapter gives a brief description of how English as a foreign language is taught in Indonesia and the need to improve the social competence of Indonesian speakers of English so that they will be regarded as competent speakers in social interaction. Language competence, including the notion of linguistic competence, together with the notions of communicative competence and social competence, is discussed in the second chapter, since it underlies the language learner's knowledge and ability to create and maintain a harmonious atmosphere in social interaction. Furthermore, the theory of communicative competence will include competency in sociocultural rules of use which will specify the ways in which utterances are produced and understood appropriately with respect to the components of communicative events outlined by Hymes. Speech act theory, particularly as it relates to complimenting behaviour is discussed. Chapter three reviews research on complimenting behaviour and considers some possible reasons why Indonesians do not pay as many compliments as Australians do. Ways of perceiving face - threatening acts and politeness are related to different cultures with different social values because of their different traditions, experience, ways of development and ways of thinking. Developing from these considerations of theory and research, the fourth chapter describes the study project which deals with what counts as a compliment in Indonesian and Australian English, what to compliment about and how people compliment as well as how people accept and respond to compliments. Analysis of some problems caused by lack of awareness of the differences between cultures and the effects of applying ones own strategy in complimenting behaviour, leading to misunderstanding, are also discussed. In the final chapter, the results of the project suggest what Indonesian learners of English need to be taught to help students develop social competence in complimenting behaviour. Suggestions for improving the social competence of Indonesian speakers of English are made.