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Southeast Asia

Indonesia’s economic diplomacy: From hope into doubt

Brandon Firman Cahyadi

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The dawn of 2020marked as a new era for Indonesian foreign affairs, as the Indonesian government issued a new foreign policy direction shortly after Retno Marsudi re-elected as foreign minister for the second period. On its new foreign policy direction, Marsudi altering her previous policy priority to compete with global economic challenges in the new decade.

In 2015 Marsudi asserted that Indonesia top priority in foreign affairs was to maintain state sovereignty. It was demonstrated by Indonesia intensity to carried out around 129 border negotiation which resulted in significant border agreements. But now, economic diplomacy seemingly become Indonesia’s prominent foreign policy outlook.

With a sluggish economic growth in the past five years, Indonesia intentionally boost its economy through the implementation of economic diplomacy strategy. Theoretically, economic diplomacy is the government strategy to engage possible stakeholders (states or non-state actors) for the sake of national economic growth.

In the Indonesian case, economic diplomacy originally has been implemented through many initiatives during Marsudi’s first period. Economic ties with new and potential market in other regions such as South Asia, Latin America and African states have grown stronger. Also, profound bilateral cooperation was taken through comprehensive economic partnership (CEPA) mechanism, among others are Indonesia CEPA agreement with Australia, Chile and European Free Trade Association that was finally concluded in the past five years.

One of the most historical breakthrough was the achievement to hold Indonesia-Africa Forum (IAF) in 2018. It was a milestone for Indonesia footprint in African states. The dialogue has generated more than $568 million business deals and $1.3 billion business announcement only two days after the forum.

Unfortunately, we all also witnessing the plot-twist result of Indonesian economic growth. In the beginning of president Joko “Jokowi” Widodo administration, he was very confident to elevate Indonesia economy up to 7% in GDP. In fact, Indonesia economy has desperately stagnated in the number of 5%. And yet, Jokowi’s economic priority in the second terms predominantly inherited by his lack of budget infrastructure development projects. It reflects that some possible hurdles for Indonesia’s economic diplomacy are waiting to be address.

The challenge lay down in the weeds

According to Minister of Public Works and Public Housing (PUPR), Basuki Hadimuljono, reiterated that infrastructure development in 2019-2024requiring up to Rp2000 trillion budget allocation, while the state-budget only covered Rp620 trillion out of it.He added that private sectors and state-owned company are expected to patch the remaining budget through cooperation framework. This scheme is about the same of the previous National Medium-Term Development Plan (RPJMN) mechanism, stated that 36% of the development were funded by the private sectors and 22,2% were funded by state-owned company.

The problem is, Indonesia was hassles in providing economic capital for infrastructure projects. As what Prameswaran has been said, the challenge for Indonesia is not in the big picture, but lay down in the weeds. Some local investors are unable to provide assistance due to large funding requirement. Otherwise, foreign investor become the government’s main target.

However, to attract foreign investors─ it requiring radical changes in the system and circumvent possible regulatory hurdles, included stipulate legal certainty, restrain corruption and harmonizing regulations. After so many ineffective economic package policies, the omnibus billhas been offered from the government as an ultimate effort to regulate its investment environment. The bill encompassed 82 regulations and expectedly boost Indonesia GDP up to 6% in a near future. However, Indonesia’s limited experience on conducting omnibus law remain questioned.

Therefore, Jokowi inward looking foreign policy has been impeded by the ─ classical problem of─ convoluted bureaucracy, his round-the-clock slogan of “deregulation and simple bureaucracy” has not been able to realize by far, as we can see when he evokes it again in 2019 election. Having said that, Marsudi’s five-year foreign affairs plan of4+1 formula raises doubts.

Trade deficit

Another critical challenge for Indonesia’s economic diplomacy is how to conduct productive trade relations, as the country facing massive deterioration of its trade balance. In April 2019, Jokowi administration recorded the worst trade deficit in history, as the nation posted $2.5 billion trade deficit, surpassing the previous record $2.05 billion in December 2018. After some improvement in a next months, trade deficit reoccurs in November 2019 when the number slumped at $2.29 billion.

The global economic slowdown that resulted to the lower demand for Indonesian products deemed to be the causative factor of trade deficit and contributed to the slackening of Indonesia’s export absorbency. In the other side, huge imports have caused to the increasing number of trade deficit into $3.11 billion during 2019.

In addition, oil and gas exports posted as one of the most influential commodities for Indonesian trade balance fluctuation. The April and November trade deficit were among the example of how oil and gas deficit causing to the widen gap of Indonesia’s trade balance. Reversely in May 2019, Indonesia encounter trade surplus, mostly driven by a narrower trade balance in oil and gas industry. It reflects that oil and gas exports largely influence the trade balance stability.

Therefore, Indonesian trade relations are an important feature to achieve the resilience of economic diplomacy. Given its three-quarter of Indonesian exports by value were delivered to Asian countries, Indonesia’s commendable efforts to open diplomatic relations to new regional market need to encompass Indonesia’s export interests. Especially, widening a new and promising relations to other regions for oil and gas sectors, it is required as most of Indonesian exports (23%) are driven by this product.

Overall, Indonesian economic diplomacy direction depended on domestic ability to produce a healthy and competitive environment for economic activity. Similarly, government intervention to manage productive trade relations are crucial in order to escalate Indonesian economic growth.

Brandon graduated from his bachelor in International Relations, his specialization is Non-traditional security, diplomacy, peace and conflict resolution. Currently, he is acting as a research assistant intern at the Center for Indonesian Policy Studies.

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Southeast Asia

Curing Malaysia’s National Psychosis

Prof. Murray Hunter

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Malaysia has reached a chronic situation where the police are using the court system to suppress alternative points of view by banning closed door meetings of legally registered societies, where members of a governing coalition party are arrested on alleged terrorist links to a defunct organization, and where the prime minister uses inuendo to threaten sectarian retaliation against a community group. A high-ranking Islamic official is arguing Malaysia should be exclusively for the Malays, contrary to the constitution and principles of Islam, and the education system is used as a propaganda tool to spread racism and distorted views of Islam. The rule of law is not the same for all, where designated people are treated differently by police.

The themes and arguments within social discussion and outcomes of governance in Malaysia today set the country apart from the rest of the world community. Malaysia’s failure to sign the United Nation’s International Convention on the Elimination of all Forms of Racial Discrimination (ICERD) put it in the company of Dominica, South Sudan, Myanmar, and North Korea. Institutionalized racism in Malaysia puts the country in the same category of the old South African Apartheid regime, that Malaysia once vigorously opposed. Prime minister Mahathir Mohamed is perhaps the only world leader to be publicly anti-Semitic today.

Today in Malaysia, government policy, decision making, leadership, and institutional development are all influenced by certain ‘sinister’ forces. These subliminal psychological forces are controlling political outcomes that are appearing more irrational and dysfunctional as time goes on. The divisive ketuanan Melayu (Malay supremacy) narratives are now implanted deeply into the assumptions and beliefs of the ruling elite’s psych.

These beliefs are heavily skewing political decision making. This cognitive dissonance has been destructive upon community relations, nation building, national culture, and even the Malaysian concept of nationhood itself.

When comparing Malaysian governmental decision making with the outcomes of other nations, Malaysia can be seen as being outside the gamut of normality. Other governments across the world try to build community integration, enhance the national culture, and hold nationhood as something sacrosanct, whereas Malaysian leaders are for political ends allowing these things to deteriorate.

Thus, a national psychosis exists. This is the reason why reform is off the national agenda, as reform challenges the ruling elites’ view of the reality of how they see Malaysia. Through transference, political reform is feared as an attack on authority, status, prestige, and the very security of those in power. These fears are currently projected onto the DAP, a member of the ruling coalition, which is now seen by some in power as an ‘evil’ force.

Symptoms of this psychosis are strewn around the national narrative. This narrative has become an instrument of exclusion, where the roles of groups working towards independence have been largely rewritten to serve the perceptions of the leaders of today. The aspirations of Sabahans, Sarawakians, and Orang Asli (the true indigenous people),have been excluded. This was seen in one of the final directives given by the ex-education minister Maszlee Malik before he was sacked in appointing a non-SarawakianKamal Mat Salihas chairman of the board of directors of Universiti Malaysia Sarawak (UNIMAS), which has led to criticism and outrage by some Sarawakians.

There is no narrative of inclusiveness anymore in Malaysia. Today’s narratives are focused on severing empathetic ties between the various ethnic groups, replacing them with a biased single narrative akin to the film Tanda Putera, which according to critics gave a biased view of Malaysia’s First Prime Minister Tunku Abdul Rahman over the May 13 1969 incident.

With thanks to a mentality within the national education system that frames exam questions claiming Zakir Naik is an Islamic icon teaching ‘true Islam’, more than two generations of Malays now behave according to the beliefs and values incorporated within these narrow vistas of reality. This denies the cascade of alternative perceptions and views that would accompany a true multi-cultural nation. The current national narratives completely fail to encompass any evolving aspirations that promote any semblance of national unity. 

What is completely missing from the current national narratives are any aspirations about the dreams the nation was founded upon. There is just a subliminal sense of loss, something is missing. An alternative sense of identity has crept in – divisiveness, exclusion, and hate. Today’s narratives lack any optimism. They are depressive, holding onto an outdated caste concept. Malaysia is now a prisoner of the paradigm of division, a culture of segregation manifested by an institutionalized psychosis.

Malaysians now live within a psychic prison that is full of illusions about enemies which don’t exist. People are suffering from hallucinations about the Jewish plot, the Christian plot, and the Chinese plot. Threats from communism have long disappeared in history. Paranoia is behind the disappearance of Pastor Koh and Amri Che Mat. Lack of transparency, the failure to introduce Freedom of information (FOI), and ministerial cover ups are based on fear that the people will see the shortcomings of government. The centralization of decision making, often within secretive circumstances indicates the government’s fear of scrutinization. This paranoia is displayed in the way ministers attack those who expose their shortcomings.

The ‘Eros complex’ hypocrisy of the governing elite is projected onto LGBT, Shia and liberal Muslims, who become the enemy of the state.

The narcissistic distain for other cultures was recently displayed when a school principal veep of an ultra- Malay party demanded that Chinese New Year decorations be removed from the school. This depressive display of force has been nurtured on the assumption that ‘we are the law’. Within Malay society, ‘Malay unity’ means that all must agree to the views and ideas of the elite. Dissent is considered disloyalty. Challenging the khat and Jawi in schools is akin to an attack on the national language. All must adhere to a political interpretation of Islam rather universal principles of Islam. Those who have alternative views are the enemy. Malaysia is in the depths of a repressive totalitarian-like cultural reformation that values conformity, obedience, and extreme conservatism. Citizens of Malaysia are smothered with a single dimensional view.

Racism has become so much embedded within Malaysian culture to the extent of delusion. Its now ingrained into the psych. Racism is the emotional precursor to repressing and discriminating against other groups. However, racism has been a cover for deep corruption arising from the discriminatory policies like the New Economic Policy (NEP). The anxiety generated by the ‘lazy Malay’ being raped and plundered by other groups fallacy revived by Mahathir from British colonial times was its justification. The ruling elite has always been projected as the saviour. However, this projection of being the savour is more about resolving intra-Malay political and power rivalries, than inter-racial conflict. It’s all been a convenient fabrication for maintaining power. This delusion has allowed one group rule the rest in a negative and grandiose manner. This schizoid trait has severely impaired Malaysia maturing as a nation.

Ketuanan Melayu must be seen for what it really is; a defence mechanism against change. The irony of Ketuanan Melayu is that it is not protecting and enhancing a rich Malay culture, but rather gutting it to the mercy of some alien tribal desert culture. The imposition of Arabism has destroyed much of the richness in the beautiful Malay culture that was once fondly treasured, even by non-Malays. Now there is hate. So many traditional Malay traditions and art forms have been discouraged and even banned, under the arbitrary declaration that they are un-Islamic. Hard-line Islamic policies are taking root throughout government institutions, leading to the belief that the more one takes on the artefacts of Arabism, the better a Muslim he or she will be. Government was not set up for the purpose of worshipping God. Government was set up to build and manage a nation. Reciting Rukun Negara would be much more appropriate than reciting prayers before government events and meetings.

Curing Malaysia’s national psychosis can only come from reverting back to the assumptions, beliefs and values that were around when the nation of Malaysia was created. This means breaking up the fallacies that are hindering the pursuit of nationhood. These include the fallacy that public enterprise can do what private enterprise can’t do. This is where the elite have gained their ill-gotten wealth and most state economic development corporations, and their subsidiaries are bedrocks of corruption. The fallacy of Fadhli-Ainwhich has encouraged blind following of ritual, should be questioned and more focus put on values pursuing Fadhli-Kifayah, where all life thinking, action, and relationships shows true devotion to God. Fadhli-Kifayah brings Islam into the community. It’s unselfish Islam and true da’wah.

‘Biarmatianak, janganbiarmatiadat’ (better your children die than your traditions) is abandoned Malay wisdom. Malay culture is quickly being killed off by the Arab fallacy. Malay and other indigenous cultures originated from three distinct sources. Those indigenous to Tanah Melayu (the Malay Peninsula), Sabah and Sarawak, those who migrated to Malaysia from the Nusantara archipelago, and those who migrated to Malaysia while the Sultanates were riverine rather than territorially defined. Some of the migrants from outside of Nusantara over the centuries from China and South Asia formed a unique Baba culture that has co-existed with Malay culture for centuries. Once, Malays, Chinese, Indians and the other peoples of Malaysia celebrated Hari Raya, Chinese New Year, Christmas, and Deepavali together as a symbol of unity, this is now forbidden.

The new Arabized cultural traits and inwardly politically defined Islamic view of the world has become a fence of exclusion. This is pushing younger Chinese into a China admiration syndrome which holds China’s accomplishments in awe, which China is now clandestinely exploiting for its own advantage. Expect this to become much more pronounced over the next few years.

Malay culture started to change when the cikgu (teachers) and civil servants were replaced within UMNO by an opportunistic rent-seeking Malay class and when Mahathir-Anwar ran amok Islamizing the government and civil service. This was also the time of the birth of crony capitalism which guaranteed the gentry would rule over the rest. Malay culture was sold out for greed. The rule of law became we are the law, where police need special permission to interview anyone seen as being a member of the gentry in any investigation.

However, the constructed truths created and manipulated by those in power have always depended upon economic prosperity. The government handed out millions of Ringgit to the people, gave out privileges, and extended credit so households could consume, so people could be controlled through debt and gratitude. Affluence bought silence, it kept the opposition weak, and enhanced the image of the government as being benevolent.

Government budgetary and fiscal problems, economic downturn, and rising cost of living are making it much harder for any government to placate the people, as has been done traditionally for decades. Its going to be much more difficult to buy into power in the future.

The country has been led by the same people for 50 years. The Pakatan Harapan government is still operating the old practices of feudalistic nepotism.

None of the present political parties, either alone, or in any combination can remedy this national psychosis. Bersatu members of cabinet have shown their disdain for transparency, in honouring their pledges, and have been implementing their own agendas. PKR ministers have been enjoying the trappings of office. They are changed people from the days they were in opposition.

The Malaysian Malaysia dream of Tunku Abdul Rahman is fading away into a Wahabi state with all the tribal trimmings, pushed by the Malay-centric parties on the people.

The only hope for a cure is for intellectuals, activists, writers, lawyers and other professional people, members of Royal families, along with ordinary citizens, led by those who once experienced a Malaysian Malaysia to come together to initiate change. This doesn’t have to immediately become a political movement, but a diversity of social and cultural organizations that refocus the narratives back to the old Nusantara values, society once cherished. This movement could advocate de-Arabizing the Malay language, and returning to Islam Hadhari (today) with its wider universal values. Kampongs need revitalization, where mosques become centres of vocational and community education. Cottage industry can be revitalised to develop local sustainable economies. This would also mean dissolving state economic development corporations and their subsidiary companies that are full of corruption and taking market-space away from local entrepreneurs.

The states need their sovereignty back. Political centralization must be reversed. They need to campaign for local government and Citizen Development Committees (LPPKN)elections, so thatas many people as possible can participate in some level of governance.

The movement would be as much spiritual as it would be political focusing on the similarities rather than the differences between religions. Finally, history needs to be taught as it really was. A country without a deep sense of history is a country without a soul.

If such a movement could ever gain momentum, some of the old political partisans from the PKR, DAP, and political forces in Sabah would come onboard. This is not an impossibility. Thanathorn Juangroongruangkit’s Future Forward Party made a successful debut in Thailand’s general election last year, and is very quickly becoming a mass social movement aimed at changing Thailand’s current political paradigm.

An abridged version was originally published in Asia Sentinel

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Southeast Asia

Ripples of 1MDB scandal likely to complicate Malaysian ties to key Gulf states

Dr. James M. Dorsey

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Disclosures of taped phone calls between embattled former prime minister Najib Razak and a person believed to be United Arab Emirate crown prince Mohammed bin Zayed go a long way to explain Malaysian efforts to counter UAE and Saudi influence in the Muslim world.

The disclosures are the latest incident in what have been complex, if not strained relations with the UAE and Saudi Arabia since prime minister Mahathir Mohamad returned to office 19 months ago on the back of the 1Malaysia Development Berhad (1MDB) scandal.

The scandal involves the siphoning off of billions of dollars from the government investment fund for which Mr. Razak is standing trial.

Strains in relations between Malaysia and Saudi Arabia and the UAE, the kingdom’s closest ally, were on display last month when Mr. Mahathir convened in cooperation with Turkey, Iran and Qatar – countries with which the two conservative Gulf states are at odds — an Islamic summit that did not involve the Saudi-controlled, Riyadh-based Organization of Islamic Cooperation (OIC). The OIC groups 57 Muslim countries and is the usual convener of Islamic summits.

In line with the summit that called for Muslim nations to jointly confront problems Muslims face, Mr. Mahathir earlier this week, in contrast to the Gulf states, condemned the killing in Iraq of Iranian general Qassim Soleimani in a US drone strike as a violation of international law.

Saudi Arabia and the UAE called for restraint in the wake of the killing but few in the two states mourned the commander’s death.

Mr. Mahathir’s critical view of Saudi Arabia and the UAE, rooted partly in their alleged associations with the 1MDB scandal, was evident almost from the moment he assumed office.

Mr. Mahathir appointed as defense minister Mohamed Sabu, known for his critical views of Saudi Arabia.

Within a few months, Mr. Sabu closed the King Salman Centre for International Peace (KSCIP), a Saudi-funded anti-terrorism centre established together with the Malaysian defense ministry.

Similarly, Mr. Mahathir re-appointed Seri Mohd Shukri as head of the Malaysian Anti-Corruption Commission (MACC).

Mr. Shukri noted in one of his first statements that “we have had difficulties dealing with Arab countries (such as) Qatar, Saudi Arabia, (and the) UAE.”

Mr. Shukri initially resigned in 2016 as the government’s anti-corruption czar because he had been pressured by Mr. Razak to drop his plans to indict the then prime minister.

Excerpts of tapes played by the MACC at a news conference this week suggested that Mr. Razak asked a person believed to be Prince Mohammed to assist in unidentified ways to resolve the scandal and as a “personal favour” help his stepson, Riza Shahriz Abdul Aziz, evade charges of money laundering.

The voice of the person Mr. Razak was speaking to on the tapes did not identify himself but was addressed by the prime minister as “Your Highness.” The MACC believes on the basis of the context of the conversations that the voice is that of Prince Mohammed.

In the recordings, Mr. Razak advises the person that “it is important to resolve this impasse with respect to 1MDB… so that we put closure as soon as possible because it’s embarrassing to both countries, embarrassing Malaysia and embarrassing the UAE as well as personalities close to you.”

The person rejects a request by Mr. Razak to discuss the issue in person but delegates an associate to talk to the prime minister.

He “has the full authority from me and I really, genuinely, want to find a solution…. It’s in our both interests, Mr. Prime Minister, to solve it,” the person said.

It’s not clear from the tapes whether the UAE actually stepped in a bid to help Mr. Razak and his stepson out of their predicaments.

Approaching the UAE for help made sense for Mr. Razak not only because of the country’s alleged links to the scandal but also because it has established itself as a financial and/or physical safe haven for politicians, businessmen and others while in office or positions of influence as well as those who have fallen into disgrace like former Pakistani president Pervez Musharraf and his former Thai colleagues Thaksin and Yingluck Shinawatra.

A Pakistani court last month sentenced Mr. Musharraf to death on charges of treason. Mr. Musharraf lives in Dubai where he is receiving medical treatment.

Mr. Shinawatra, who was toppled in a military coup in 2006, fled into exile in Dubai after escaping Thailand to evade serving a prison term for a conflict of interest conviction.

Ms. Shinawatra, Mr. Shinawatra’s sister, followed him in 2017 after being removed in 2014 by another military intervention and having been charged with negligence while serving as prime minister.

Political scientist Abdulkhaleq Abdulla, whose views are often seen as reflecting UAE government thinking, anticipating a possible change in relations, disparaged Mr. Mahathir and his election victory at the time.

Mr. Abdulla focussed on Mr. Mahathir’s age as well as the fact that he had forged an alliance with his former deputy prime minister and rival Anwar Ibrahim, an Islamist believed to be close to the Muslim Brotherhood, a bete noir of Prince Mohammed.

“Malaysia seems to lack wise men, leaders, statesmen and youth to elect a 92-year-old who suddenly turned against his own party and his own allies and made a suspicious deal with his own political opponent whom he previously imprisoned after fabricating the most heinous of charges against him. This is politics as a curse and democracy as wrath,” Mr. Abdulla said on Twitter, two days after the election.

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Southeast Asia

China’s relations with Indonesia requires more cautious moves

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photo: ANTARA

Authors: Zhou Dong-chen & Muhammad Raihan Ronodipuro

At the invitation of Chinese military commission, Indonesian Minister of Defense Prabowo Subianto made a working visit to Beijing during December 17-19. It is clear that the comprehensive strategic partnership between the two countries has maintained good momentum, as Chinese military leaders expressed that the Chinese and Indonesian militaries should implement their consensus reached by the leaders of the two countries, explore deepening cooperation in various areas, promote the two sides’ comprehensive strategic partnership and benefit the two countries and the region. Echoing his Chinese counterpart’s remarks, Prabowo highlighted the necessity of enhancing regular contacts and dialogues between the two militaries in order to jointly safeguard regional peace.

Though having been partners in modernizing Indonesian weaponry system, this is the first high-level visit to China by Indonesian Defense Minister with a view to discussing the efforts to further enhance cooperation in defense of the two countries. Yet, the rapidly growing power of China has constituted one of the most strategic dimensions in East Asia and beyond. For realist view, it represents a key driver of change in the dynamics of major power relations and will have significant impacts on the Asian-Pacific since the end of the WWII. True, the rise of China, even though it is claimed the peaceful rise, has become a dominant discourse within and outside public circles as well. For Indonesia which is the largest country in Southeast Asia and had complicated relations with China until the early 1990s, the rise of China unexceptionally presents an opportunity and challenge. Since normal relations between Beijing and Jakarta were restored less than three decades, Indonesia’s response to the rise of China is still evolving. As scholar Rizal Sukma observed that while recent developments suggest a marked improvement in bilateral relations, Indonesia’s policy of re-engagement towards China should also be perceived from the complex relationship of history, the primacy of domestic politics and the imperative of regional considerations.

Given this, the study argues that Indonesia’s policy towards China continues to reflect a degree of ambiguity and suspicion as well. On the one hand, Indonesia is sure to take the benefits of having good relations with China and begins to demonstrate increasing comfort in managing the bilateral relations with the rising economic giant. On the other hand, Indonesia remains ambiguous of China’s long-term goal and intentions in the region. This mentality has surely led Indonesia to pursue a policy of re-engagement characterized by a mixture of cooperative and suspicious approaches in its response to the rise of China.

There are several reasons to endorse the argument that China’s relations with Indonesia should be moving cautiously and attentively. First of all, since China and Indonesia shared modern sacrifices imposed by imperialist powers of Europe and Japan, it did help promote the reciprocal recognition of each other in 1950; yet it unnecessarily means that their relations have proceeded steadily. In effect it is quite opposite as their relations were subject to pressures stemming from each domestic concerns, particularly for the perceptions among the public and the elite have served as the key context within which Jakarta’s policy towards Beijing has been formulated and carried out. For example, in the early 1960s, attempts by both parties to forge a radical political alignment, primarily in terms of a united front against the West, failed to withstand the pressure emanating from Indonesia’s domestic politics, which was patently manipulated by the West. As a result, the Beijing-Jakarta axis was brutally brought to an end in 1965, followed by the suspension of their normal relations for more than 20 years.

Secondly, it is true that both China and Indonesia can’t ignore each other in a long run, it is because China has rapidly increased its power and influence since the 1980s while Indonesia as the largest country in the Southeast Asia has also aspired to be a regional power. In light of the vicissitude of the world politics, the two countries began to rethink of their relations in a more realist perspective. Yet, even during the 1980s, the anti-communist leadership of Indonesia was not moved by what China had already adopted the reform and openness policy. The dynamics of Indonesian politics which required the preservation and the enforcement of anti-communist ideology as the basis of regime legitimacy, arduously carried out the predominance of domestic political interests over other necessary concerns in Indonesia’s foreign policy. Only by 1990, did the two countries finally agree to resume direct trade and soon restored diplomacy. Even though, the restoration of normal relations did not improve substantially. Suspicions and sensitivity continued to characterize Jakarta’s attitude towards Beijing. The event in 1994 once again verifies this point when a labor unrest soon flared into an anti-Chinese riot in Sumatra. China’s official concerns were not only rejected but also accused of flagrant interfering in Indonesia’s internal affairs. As for China, the episode is a reflection of its lack of understanding in Beijing on Indonesia’s sensitivity on issues involving the ethnic Chinese minority in the country.

Thirdly, from the very beginning since 1990 when both countries resumed their relations, still Indonesia preferred dealing with China within a multilateral framework, either through ASEAN or the ASEAN Regional Forum (ARF). It is argued that ASEAN has been regarded in Jakarta as likely to be a more effective instrument for managing relations with a China regarded with apprehension and some foreboding. Similarly, the ARF has been taken by many Indonesian elites as a regime not only to engage China regionally but also to secure Beijing’s respect for international norms of inter-state relations. Prior to early 1998, Indonesia had begun to promote the economic dimension of bilateral relations with China. Since then, the contacts in overall terms have increased rapidly and remarkably. It is said that the great efforts to promote trade between the two sides since 1990 were obstructed by the financial crisis in 1997, yet, ironically it was the political implications of the 1997 financial crisis in Indonesia that opened up the opportunity for a much more cordial relationship between Indonesia and China to develop. For sure, the financial crisis which brought the Suharto regime from power served as a defining moment in bilateral relations of the two countries as the collapse of Suharto’s regime was followed in 1998. To certain extent, during the after the financial crisis, the ruling elites of the two sides did manage the issue well and did not let the long issue of Chinese diaspora in Indonesia out of control. Due to this, since 1998, the real improvement in the bilateral relations has become more evident, and the scope of bilateral cooperation has been expanding to include cooperation on areas such as security and defense. In 2005, China and Indonesia further established a strategic partnership which covered all the key areas such as security and defense technology cooperation. In addition, China’s image as a responsible and benevolent major power have also received further boost during the Tsunami disaster that struck Indonesia and other Indian Ocean countries in 2004.

Yet, as the past lessons have indicated that despite obvious improvements in bilateral relations, Indonesia and China are not immune from issues. Three issues might affect how Indonesia-China relations would evolve in the future. First, internationally Indonesia’s elite remain uncertain regarding China’s role and long-term intentions in East Asia. In this context, they are easy to follow the realism that a rising major power with an ancient pride aims to be a dominant power in the region would certainly revive Indonesia’s sensitivity. Although some of Indonesians have begun to display their willingness to trust China, but that trust takes time. A public opinion poll conducted by the Lowy Institute in 2006, for example, reveals that Indonesians trust Japan (76%) more than China (59%). For China to be fully trusted, it needs to consistently pursue a good neighbor policy towards Southeast Asia.  Second, domestically, there is still the issue regarding the public perceptions of Indonesia’s ethnic Chinese. If there is a resurgence of anti-Chinese feeling in Indonesia, and if the issue of the ethnic Chinese minority once again becomes a political victim in Indonesia, then Indonesia-China bilateral relations is sure to be affected adversely. Due to this, both sides need to learn how to avoid their previous mistakes in the new era.

 China and Indonesia have learned the lessons from the past. As a result, the bilateral relations have been improved over the last two ten years in terms of maturity and stability. In spite of this, the reality still requires the ability of the two countries to steer in the course cautiously and attentively.

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