Indonesia’s Choice: A New Era of Economic Cooperation – Saying No to BRICS, Yes to OECD

Indonesia's internal dynamics and China's growing influence have sparked concerns about the country's possible alignment with Beijing's goals.

In recent decades, Indonesia has been confused by two significant choices to become a steppingstone for the Indonesian economy. Take a look at it from the perspective of Indonesia’s foreign policy, which was facing a dilemma, namely a complicated balancing act between the traditional and deep-rooted “active and free” action and also increasing economic relations with China. This dichotomy raises important questions about whether Indonesia should join the BRICS economic bloc or the Organization for Economic Co-operation and Development (OECD). Although both options have their respective advantages and disadvantages, a deeper examination of the two organizations and their implications for Indonesia, especially the economy, shows that joining the OECD may be a more appropriate choice for this country.

  • The BRICS’s choice

BRICS, an abbreviation for Brazil, Russia, India, China, and South Africa, was originally intended to serve as a counterbalance to Western-led economic institutions such as the G7, IMF, and World Bank. However, Indonesia’s internal dynamics and China’s growing influence have sparked concerns about the country’s possible alignment with Beijing’s goals. For example, China’s enormous investments in Indonesia, such as the $7.3 billion Jakarta-Bandung high-speed train, have led to speculation that Indonesia is leaning towards China’s economic and strategic influence.

In addition, BRICS confronts internal issues, such as territorial disputes between China and India. This internal instability may have a negative influence on the Indonesian economy and generate uncertainty for foreign investors. Furthermore, according to Nur Rachmat Yuliantoro, Head of the Department of International Relations at Gadjah Mada University (UGM), Indonesia’s decision took into account the prospective perception of the United States and its allies, as reported by The China Project. Com that Indonesia has strong economic and investment links with all BRICS countries, particularly China, but it must also analyze its contacts with other BRICS members and not rely just on those with China.

Mr. Rachmat further stated that Indonesia’s biggest issue in joining BRICS is convincing the international community, especially the United States and its allies, that this participation does not violate the principle of non-alignment, namely a “free and active” foreign policy and this decision was made entirely for Indonesia’s national interests.

On the one hand, Bhima Yudhistira, Director of the Center of Economic and Law Studies (Celios), believes that Indonesia’s membership in BRICS could provide opportunities for debt forgiveness or elimination, such as from China. As we all know, Indonesia shares a lot with China, including BUMN debt. However, President Jokowi’s statements some time ago became the first stage in deciding whether Indonesia will join the BRICS or not. “We are reviewing and considering joining BRICS, but we will not make any hasty decisions.” and the government has not yet submitted a statement of intent to join the organization.

  • The OECD’s choice

 Entering the OECD provides Indonesia with a road forward, primarily in terms of strategic and advantageous economic issues. The OECD is a group of developed countries that seeks to promote economic progress through the implementation of specific criteria. Indonesia’s membership in the OECD will bring various advantages, including:

Economic Efficiency and Governance where Indonesia’s OECD participation will help it enhance economic efficiency and governance by standardizing taxation, labor legislation, environmental protection, and other issues. This presents a chance to attract international investors and boost Indonesia’s global economic prominence.

Also, Access to the European Market. As an OECD member, Indonesia will have easier access to the European market, considering that the OECD membership includes these countries. This is crucial for economic diversification. It will be extremely favorable to Indonesian exports, as several OECD nations are significant importers. Like the United Kingdom and Switzerland.

Lastly, knowledge and Technology Transfer. One of the most significant advantages is that the OECD concentrates on knowledge and technology from here, allowing Indonesia to leverage the expertise of industrialized countries to enhance its economic policies and institutions. As stated in the JakartaGlobe. This is critical to achieving Indonesia’s objective of being one of the world’s four largest economies by 2045, as well as the country’s aspirations for Indonesia Emas.

However, joining the OECD did not come without its hurdles. Indonesia must achieve high OECD criteria, which represents a substantial effort. For example, as reported by The, the OECD objected to Indonesia’s ban on raw mineral exports, citing unfair export restrictions. Aside from that, Indonesia needs to establish diplomatic relations with Israel, which is very opposed to Indonesia’s stance this whole time. It can also become a difficult subject both domestically and globally.

Eventually, because there were more values that were in line with OECD from the very beginning.  Indonesia’s journey to join the Organization for Economic Cooperation and Development (OECD) has been marked by tremendous progress, the challenges that have been mentioned above also begun to discover their own solutions, one by one.  Back in May 2024, Indonesia formally joined the OECD. An accession roadmap was received by Indonesia in Paris   outlining the terms and conditions of the accession itself, such as policy alignment with OECD standards and best practices. Technical assessments are conducted in a variety of policy areas, including open trade and investment, public governance, integrity and anti-corruption initiatives, and environmental protection. Although Indonesia’s protectionist policies, such as local content requirements and a ban on nickel ore and other raw minerals exports, are controversial and might also appear to contradict OECD principles, the country is dedicated to revising these policies to conform with the organization’s standards. Furthermore, Indonesia has made significant progress in applying OECD principles, establishing legal tools, and participating with the organization’s main bodies. The country’s commitment to becoming an OECD member is expected to provide many benefits, including better economic growth, more investor confidence, and not to mention a stronger global bargaining position.

At last when it comes to whether Indonesia will open formal relations with Israel as one of the requirements for becoming a full member of the OECD, the answer is no. Indonesia has constantly denied any plans to open diplomatic relations with Israel as a condition for joining the organization. In reaction to suggestions that Indonesia might restore relations with Israel in order to join the OECD, the Ministry of Foreign Affairs reaffirmed its stance. The Ministry also stated that Indonesia’s position is unaltered, and it continues to support Palestinian independence within the context of a two-state solution.

Allene Florence Darmawan
Allene Florence Darmawan
I am Allene Florence Fadhilah Darmawan, an undergraduate student of International Relations at Gadjah Mada University. My academic pursuits have instilled in me a deep fascination with international issues, particularly those related to gender equality and socio-cultural problems. I also enjoy writing as my tools for expressing my understanding,