Sekretariat Kabinet Republik Indonesia
The continuing stress between the USA and China ought to encourage Indonesia to search out methods to cut back reliance on the 2 nice powers. It may begin by seeking to strengthen political and safety ties with non-traditional companions.
Tensions with the US have led to China rising more and more assertive in Southeast Asia and mistrust of the US as a safety companion is on the rise. Financial ties between the Chinese language and American economies could also be in decline, which may imply greater US tariffs on China, and vice versa.
As some have argued, rising protectionism within the two international locations would additionally disrupt broader Southeast Asian entry to the US market.
A decoupling of China and US relations may additionally result in completely different buying and selling blocs; one led by China and one other led by the US.
This prospect may complicate life for Indonesian firms when conducting enterprise with or investing in China and the US. They might want to take political components into consideration.
The Gulf may function a gateway for Indonesia to maneuver away from the orbits of China and the US. It additionally supplies a doubtlessly profitable market and funding companion.
On this relationship, the Gulf is represented by the Gulf Cooperation Council (GCC) — an intergovernmental political and financial union made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
Listed here are 4 areas that may help cooperation between Indonesia and the GCC.
1. Commerce and funding is nice — however may be higher
The GCC and Indonesia have already got fairly a superb funding relationship, and it’s improved additional in recent times.
Commerce between Indonesia and the Gulf States elevated by 40% from US$ 8.68 billion in 2016 to $12.15 billion in 2018. Indonesian imports from the Gulf international locations are value greater than $7.6 million per yr, with Saudi Arabia ranked twelfth amongst Indonesia’s world buying and selling companions.
Funding has additionally grown — by 26% from $60.3 million in 2016 to $76.1 million in 2018. Though the quantity stays small, the 2 international locations have elevated their two-way investments.
Growing cooperation within the financial sector, nonetheless, will not be sufficient.
The Gulf is wealthy in oil and gasoline; Indonesia, too, has a wealth of pure assets.
There is a chance for each of events to cooperate additional with regards to pure useful resource growth, particularly within the oil and gasoline sector.
In 2019, Indonesia’s imports of fossil fuels from the GCC reached $2.4 million. Saudi Arabia, the UAE, and Qatar had been among the many ten greatest sources of oil imports for Indonesia.
In the identical yr, imports of coal from Indonesia to the GCC was value $18,922, making Indonesia the fifth largest exporter of coal to the Gulf.
2. Multilateralism presents alternatives
Multilateralism, which is extra coordinated interplay between states, may help enhance effectivity and produce extra coordinated world networks.
By working collectively, each events contribute to strengthening the world buying and selling system and multilateralism basically.
On this case, Indonesia and the Gulf are already eyeing cooperation. Indonesia inspired the formation of the GCC Complete Financial Partnership Settlement (CEPA), which is able to assist facilitate higher outcomes for each economies, particularly for Saudi Arabia, which a key companion for Indonesia.
Indonesia supported and welcomed the 2020 presidency of Saudi Arabia on the G20 — a global discussion board for the governments and central financial institution governors of 19 international locations and the European Union.
On the similar time, it has supported Saudi Arabia’s efforts to encourage key G20 member international locations to debate world financial challenges and alternatives.
3. Solidarity in and after the pandemic
On the pandemic mitigation entrance, the UAE needs to offer Indonesia 10 million doses COVID-19 vaccine (different sources say it’s 30 million doses).
The vaccines are from China, and this type of pandemic mitigation effort varieties a brand new entrance within the cooperative relationship between Indonesia, the UAE and China.
Indonesia’s need to work with Saudi Arabia to deepen cooperation on well being points may help sort out COVID-19.
Indonesia additionally needs to ship well being staff, gear and medicines to Saudi Arabia.
Indonesia and the UAE are additionally collaborating to fabricate laser-based and synthetic intelligence-based COVID-19 detectors.
Indonesia final yr sought to expedite inside processes within the GGC to speed up financial partnership agreements with the Gulf international locations.
The CEPA may help two-way commerce and funding, enhance market entry, and promote inclusive financial development in Indonesia and the GCC for the mutual advantage of each international locations.
Though this effort could be affected by the pandemic, it would definitely proceed in future and assist return financial exercise to regular.
4. Cultural and people-to-people contacts
Mutually useful socio-cultural cooperation can encourage higher financial and political relations.
As Muslim-majority international locations, Indonesia and the Gulf states share an analogous spiritual background which may help facilitate communication and cooperation.
Schooling may be place to start out, with younger era exchanging data and deepening connections.
Such cooperation may assist overcome linguistic-cultural limitations and enhance the variety of professionals who’re acquainted with one another’s societal norms, customs, strategies of performing enterprise, in addition to nationwide and institutional pursuits.
Tourism is one other space to develop. This sector may set an instance of how cultural and people-to-people connection generally is a driver for financial growth between the 2 events.
Fuad Tingai, a Universitas Islam Indonesia pupil, contributed to this text.
Muhammad Zulfikar Rakhmat doesn’t work for, seek the advice of, personal shares in or obtain funding from any firm or group that might profit from this text, and has disclosed no related affiliations past their educational appointment.