Sino-Indonesian relations appear to be off to a good start. But it is
still early days.
Earlier this week, Indonesia and China held their first ever high-level
bilateral economic meeting. The meeting, chaired by Chinese State Councilor
Yang Jiechi and Indonesian Coordinating Minister for Economics Sofyan Djalil,
is part of an effort to concretize their comprehensive strategic partnership
under the new administration led by President Joko “Jokowi” Widodo.
As I have argued elsewhere,
Sino-Indonesian relations had already strengthened considerably both
symbolically and substantively under the Yudhoyono years, in spite of their
inherent limitations. Trade quadrupled to $66 billion as both countries went
from strategic partners in 2005 to comprehensive strategic partners in 2013.
People-to-people relations have also expanded appreciably, while military ties
have advanced, albeit at a more cautious level (as might be expected).
From the
get-go, Jokowi signaled that his approach to Sino-Indonesian relations would be
much more concrete than that of his predecessor. During his first encounter
with Chinese president Xi Jinping on November 9 last year, Jokowi bluntly
stated that he wanted the relationship to “materialize into more concrete
outcomes.” Pressed on what those outcomes might be, he said he wanted more
progress in trade and investment and would like Chinese companies to be more
involved in infrastructure development.
Since
those remarks, things have gradually begun to take shape. Later that month,
Indonesia joined the Chinese-led Asia Infrastructure Investment Bank (AIIB),
even though Jokowi did not get his wish for the AIIB to be based in Jakarta.
Indonesian and Chinese officials have also been discussing
how Jokowi’s global maritime fulcrum doctrine can potentially complement
Beijing’s Maritime Silk Road idea – including the building of ports and
tollways in Indonesia. And at their economic meeting, Yang and Sofyan both
agreed to expand two-way trade and enhance cooperation in major infrastructure,
with a specific focus on power plant cooperation.
But as is
often the case in China’s relations with Southeast Asian countries, there is
more than meets the eye. For one, too often trade and investment pledges are
not actually followed through on. Last week, Indonesia’s Investment
Coordinating Board (BKPN) said that only 6 percent of Chinese investment in
Indonesia had actually materialized, putting it in 13th place, below the
Netherlands, Mauritius, and – embarrassingly – even Taiwan. While gaps between
proposed and realized investments are quite common for those who monitor such
statistics, this is a pretty huge one.
As for
infrastructure, as I have argued previously, there is
a bit of a Catch-22 in that attracting foreign investment from countries like
China hinges on whether Jokowi can accomplish some of his domestic reforms, but
those domestic reforms may require foreign investment to succeed in the first
place. To his credit, some moves have already been taken to improve the
country’s regulatory environment, including the official launch of the one-stop
investment licensing service earlier this week. But there is much more that
needs to be done in this regard.
It would
also be a mistake to view the Sino-Indonesian relationship purely from the
prism of economics. There is still lingering distrust in Indonesia toward China
– a product of historical and contemporary factors – that tends to spill over
into economics realm as well and serves to limit the upward trajectory of ties.
More specifically, the strident tone the Jokowi administration has adopted on
sovereignty and territorial integrity could also complicate things in the
economic dimension. Chinese vessels have thus far escaped Indonesia’s ‘sink the vessels’ policy
to eradicate illegal fishing, which I have reported on extensively. But with
Jakarta already confiscating more than nine vessels and recently revoking a
2013 bilateral agreement signed with Beijing on fisheries, it remains to be
seen how long this will last.
Then
there’s the specific issue of the South China Sea disputes. Indonesia is not a
claimant – strictly speaking – because China’s infamous “nine-dash line” map
overlaps with the waters around the resource-rich Natunas, rather than the
islands per se. But as I’ve emphasized previously,
it is no secret that Jakarta is nervous about this, which is why it is
increasing its military presence in the South China Sea. That, combined with
the Jokowi administration’s prickliness on sovereignty issues, could lead to
friction farther down the line. More broadly, Jokowi has signaled that
Indonesia intends to act as an “honest broker” on the disputes. If this
manifests into more active involvement, it risks irking Beijing, which has
repeatedly insisted that the disputes ought to be handled by the parties
themselves – a self-serving demand that comports with its strategy to keep
ASEAN divided.
It is
still early days, however, and both sides are content to try and make progress.
The BKPN says it plans on establishing a special unit focused on boosting
Chinese investment, and that it expects Beijing to jump from thirteenth to
third place soon. Chinese and Indonesian officials are also happy to talk
broadly about the intersection of their maritime visions, even though it is
quite clear where their interests diverge. For now at least, Sino-Indonesian
relations appear to have gotten off to a good start under Jokowi.
The
Diplomat
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