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Indonesia deepens ties with China mainly for economic gain - Analysis

Eurasia Review - June 19, 2021

Ronna Nirmala and Tria Dianti (BenarNews) – Ties are growing between Indonesia and China on the back of increasing investment and trade, but analysts say these will not develop further at the expense of Jakarta's relations with other powers or its sovereign interests in the South China Sea.

Indonesia is as open to working with the United States as it is with China or Japan as long as it benefits the country, Rizal Sukma, a former Indonesian ambassador to Britain, said in dismissing the perception that Jakarta has swung toward Beijing.

"We are working with China in sectors where we think cooperation is essential for our national interests. Indonesia will work with any country when we need to and stand up to anyone whenever we must. That is our principle," Rizal told BenarNews.

"Why should the U.S. be worried? If the U.S. is serious about building relationships with ASEAN countries, including Indonesia, naturally we are open to that as well," he said, referring to the 10-member Association of Southeast Asian Nations.

China is not yet the biggest investor in Indonesia, but its investments in Southeast Asia's largest and most populous country have grown consistently, nearly doubling to $4.8 billion in 2020 from $2.4 billion in 2017.

China's investments are mostly in Indonesia's transportation, industry and tourism sectors, according to the Ministry of Investment.

"Everything seems to come from China nowadays – vaccines, investment and Mr. Luhut has been at the forefront of this," Indonesian business tycoon Chairul Tanjung quipped to senior minister Luhut Pandjaitan during an online event in February.

Luhut, Indonesia's coordinating minister for maritime affairs and investment, and Chinese Foreign Minister Wang Yi have met twice in five months this year. In January, Wang visited Luhut's hometown in North Sumatra.

Earlier this month, Luhut led an Indonesian delegation for talks with Wang in China, where they signed five agreements on cooperation in the infrastructure, maritime and investment sectors, details of which were not made public.

China is also funding projects in Indonesia as part of its ambitious One Belt, One Road (OBOR) worldwide infrastructure-building program. These include the $6 billion Jakarta-Bandung high-speed rail project, which is expected to be completed next year.

And this year, Indonesia approved China's proposal to conduct a study on the $400 million Lambakan Dam project in East Kalimantan, near the site of the future Indonesian capital in Penajam Paser Utara regency.

Still, Luhut told businessman Chairul at the February event that these Chinese investments have no strings attached. "They are not dictating anything," said Luhut, who is widely regarded as President Joko "Jokowi" Widodo's right-hand man.

As Jodi Mahardi, spokesman for the maritime affairs ministry, told BenarNews – "We are open to investors from anywhere, including the U.S. The other day we received investment from the UAE."

Indonesia 'can become a balancing force'

Meanwhile, it so happens that China is now in a position to invest in many countries, said Yose Rizal Damuri, head of the economics department at the Center for Strategic and International Studies (CSIS) Indonesia.

"Now that China is economically maturing, they can expand by doing what Japan did in the '70s," Yose told BenarNews.

"In the last 10 years, they have invested more in natural resources, but now the direction is to build a production bases in countries. If Indonesia can tap this, we will benefit much."So, yes, Indonesia stands to gain by increasing its ties with China, but the United States stands to gain from that as well, said Muhammad Arif, an analyst on Sino-Indonesian relations at the University of Indonesia.

For instance, as the United States expands its footprint in Southeast Asia, with initiatives such as the Quad group that promotes "a free and open Indo-Pacific" region, a strong Indonesia will benefit America, he said.

"Growing Indonesia-China ties will benefit Indonesia economically and politically. And this is in U.S. interest. Because with Indonesia being strong, it can become a balancing force in the region," Arif told BenarNews, referring to Beijing's expansive claims in the South China Sea as well its outsized investments in the region's countries.

"If Indonesia is weak, the biggest risk is that Indonesia will be vulnerable to being dragged into a major conflict and its options will become more limited, having to choose an alliance with China or the U.S., for example."

Arif, too, said Indonesia's ties with China would not be at the expense of relations with other major powers, including the United States.

Besides, Yose of CSIS noted, growing economic relations are not likely to cause Indonesia to become dependent on China."Our biggest investor is Singapore, and previously it was Japan. Have we become dependent on these two countries?" Yose said. "Geopolitics can affect economic ties, but the opposite is unlikely."

South China Sea

Still, Indonesia needs to ensure that it enhances relations with other major nations involved in the Indo-Pacific theater, said Aristyo Rizka Darmawan, a lecturer in international law at the University of Indonesia, in a recent article on the Fulcrum.sg website.

That's because while Jakarta does not regard itself as a party to the South China Sea dispute, Beijing claims historic rights to parts of the maritime region that overlap Indonesia's exclusive economic zone (EEZ).

"Jakarta should mind the gap in its approach to China and also seek to balance its growing relationship with Beijing by pursuing deeper relations with other major powers with interests in the Indo-Pacific," Aristyo wrote on the website run by the ISEAS – Yusof Ishak Institute in Singapore.

Indonesian Navy and Chinese coast guard ships have had frequent skirmishes over maritime rights in waters off Indonesia's Natuna Islands, a chain located in the southern reaches of the South China Sea, in the past several years.

In January 2020, Indonesia sent warships and fighter jets after scores of Chinese fishing vessels, escorted by the China Coast Guard, entered Jakarta's EEZ. China insists that the area is its traditional fishing ground.

Indonesia has also protested to China over what it called the slave-like treatment of its sailors working on Chinese fishing boats. At least 16 Indonesian sailors working on Chinese boats have died since late 2019, according to officials.

China's incursions near the Natunas "were serious in terms of vessel numbers and duration, but one of many to rattle Indonesia's security establishment," Natalie Sambhie, executive director of Verve Research, an Australia-based independent think tank, told BenarNews.

Indonesia's stance in the Natuna Sea has, however, been consistent – balancing concerns about sovereignty with the need for investment and COVID-19 relief, Sambhie said.

"While these policymakers are well aware of the slow erosion to national confidence and even sovereign rights posed by China's incursions, they are also well aware of the present-day limitations of pushing back," she said.

This has benefited Indonesia during the COVID-pandemic, said Dewi Fortuna Anwar, a senior researcher on international politics at the Indonesian Institute of Sciences (LIPI).

"Amid vaccine nationalism in several countries, China has been willing to share their vaccines. This goodwill gesture paved the way for trust," Dewi told BenarNews.

Indonesia's stance "also strikes an equilibrium between Indonesia's interactions with other large powers like the U.S., India and Japan," Sambhie said.

She cited the fact that Indonesia accepted search-and-rescue support from Australia, India, Singapore and the United States after the KRI Nanggala-402 submarine sank in April, killing all 53 sailors on board.

Jakarta also accepted assistance from China, which sent three ships to support efforts to lift the wreckage of the submarine, albeit unsuccessfully, from waters off Bali a half-mile deep.

Source: https://www.eurasiareview.com/19062021-indonesia-deepens-ties-with-china-mainly-for-economic-gain-analysis