Authors: Muhammad Zulfikar Rakhmat, Ramadha Valentine and Dimas Permadi*
China-Indonesia relations are expanding significantly. This is particularly true in the economic sphere, as evidenced by the trade figures which have reached USD 40.8 billion. The relationship between the two countries is primarily focused on three sectors which include trade and business, politics and security, and people-to-people exchange. Various agreements also appear to have been reached by both parties along with the increased visits of the two state actors.
With Joko “Jokowi” Widodo being re-elected for a second term, cooperation between Jakarta and Beijing is likely to intensify further.
To date, Indonesia has accepted 28 joint projects with a value ofUSD 91.1 billion, under the guise of China’s Belt and Road Initiatives (BRI). The projects include the Sei Mangkei Special Economic Zone; phase two of the construction of the Kualanamu Airport; clean energy development in the Kayan River in North Kalimantan, along with the construction of special economic zones in Bitung, South Sulawesi and Kura island, Bali.
In April 2019, Indonesia also signed the latest BRI agreement, which consists of 23 cooperation packages in investment projects. These include the development of four economic corridors, a high-speed train and technology development project, besides education projects. The 23 projects are expected to have an investment value of USD 14.2 billion.
Moreover, several Chinese-led projects have not yet been fully realised in Indonesia due to various obstacles, such as budget issues and difficulties linked to obtaining a licence. The realisation of the USD 50 billion budget has only touched the USD 3 billion figure, which signifies that a number of projects have not yet been implemented.
For these reasons, in the coming years, China is expected to make maximum efforts to realise the target projects that have been signed. Beijing alsoneedsto cover up the issue of project failure in Indonesia which is being extensively reported by several international and national media outlets.
China’s expected efforts to accelerate the completion of the BRI projects is in line with its goal to complete the overall BRI in 2049. That year was chosen as it will commemorate the 100th anniversary of the People’s Republic of China. Indonesia is one of the countries where the BRI investments are extensively directed.
These circumstances would prompt China to work harder to realise many of its projects in Indonesia.
Likewise, Jokowi’s presidency has also been focusing on infrastructure developments. This can be seen with several Infrastructure projects that have been planned and are currently being implemented in several regions of Indonesia. Nonetheless, many of these infrastructure projects have not yet been fully achieved, especially during the recent transition period whereby the government has been occupied with other issues.
In this context, Jokowi may see the BRI as an opportunity for the Indonesian government which has a vision of equitable development in the country. Collaboration under the BRI is seen to benefit the Indonesian government in realising its infrastructure development in the near future.
This shared interest would be the impetus for both countries to cooperate further in the coming years.
To reap the full benefits of the rapidly expanding China-Indonesia relations, both countries need to take several steps. The Indonesian government should learn from other countries in Asia, such as Sri Lanka and Malaysia, where Chinese investments that are not accompanied with proper domestic management, have ended in debt-traps.
Indonesia could learn from how Malaysia renegotiated the BRI project, as it felt disadvantaged by the BRI agreement. As a result, the projects’ costs were reduced from the initial agreement fee.
Learning from Malaysia, the Indonesian government needs to be brave in negotiating with China. To do so it needs to be aware of the country’s position in its cooperation with China and that Indonesia has a fairly high bargaining position. It is not only that Indonesia needs China to achieve several of its development goals, but China also needs Indonesia to achieve its economic goals associated with the BRI project. Without the role of Indonesia, the BRI, which, as mentioned earlier, should be completed by 2049, would not be possible.
*Ramadha Valentine and Dimas Permadi are analysts on Indonesian political economy