Indonesia’s new era: As president, how will Prabowo’s foreign policy navigate Sino-US rivalry?
In the last of a three-part series on Mr Prabowo Subianto’s upcoming presidency, CNA looks at how he will balance the country’s ties with the US and China amid fierce rivalry between the world's two largest economies.
by Kiki Siregar · CNA · JoinMOROWALI, Central Sulawesi: From dusk till dawn, the small main road in Fatufia is crammed with factory workers on motorbikes and big trucks.
It is a drastic change from 10 years ago when the village in Central Sulawesi’s Morowali regency was just a sleepy area with intermittent electricity during the day.
Today, Fatufia is home to Indonesia Morowali Industrial Park (IMIP), which claims to be the longest industrial chain in the world. It produces nickel and stainless and carbon steel which are crucial components in many products, including batteries for electric vehicles.
Spanning 2,000ha, IMIP is an industrial complex with around 90,000 workers and 56 tenants, many of them Chinese companies.
Fatufia’s shifting landscape is a sign of Indonesia’s wider economic ambitions. As the world’s biggest nickel producer, the country is keen to attract investments from China.
But it also has its eye on another economic power: The US, where Tesla, the world’s largest pure electric vehicle manufacturer, is based.
Local business owners are already looking towards the potential opportunities.
“It is good that we have China in Indonesia. We cannot deny that they help our economy,” said Mr Rizky Anton, 37, an employee at a mobile phone shop around the IMIP complex.
“But if the US is also here, there could be even more jobs.”
The government has attempted to attract Tesla to join IMIP. However, the company and the US have yet to make any investments.
Meanwhile, another change is coming up for Indonesia. On Sunday (Oct 20), President-elect Prabowo Subianto will take the reins from current president Joko Widodo, popularly known as Jokowi.
Mr Prabowo’s foreign policy will revolve around navigating relations with the world’s two biggest economies, say analysts.
FOREIGN TRIPS AND TRUSTED CIRCLES
Mr Prabowo has made about 20 trips abroad since winning February’s election.
His first trip was to China at the end of March, and analysts say this signals that he views it as a very important country.
Analysts told CNA that Mr Prabowo will try his best to continue carrying out Indonesia’s non-aligned foreign policy by maintaining a harmonious relationship with the US and asking it to join IMIP.
“But we also have to increase our capacity. Otherwise, we won’t have any leverage against big countries,” said Dr Lina Alexandra, an international relations expert from the think tank Centre for Strategic and International Studies (CSIS).
However, there will be differences in foreign policy approach from his predecessor, say analysts.
Dr Lina said Mr Prabowo would be more blunt and outspoken if issues crop up.
“I think Mr Prabowo could be quite vocal, blunt to speak out if we have issues with China, for example,” she said.
The incoming president will also rely on a trusted inner circle when driving foreign policy decisions, experts told CNA.
“When we talk about foreign policy, it is not just dependent on the president,” said Dr Broto Wardoyo, a lecturer at the University of Indonesia, specialising in international relations.
“Mr Prabowo has an inner circle, and they have different views.”
Dr Broto cited how for instance, Mr Hashim Djojohadikusumo - Mr Prabowo’s younger brother and confidant - focuses on how to develop the economy, while the president-elect's other trusted military aides often tout the need for a strong defence.
These aides include retired general Sjafrie Sjamsoeddin, who is currently Mr Prabowo’s special assistant for defence management. Mr Sjafrie is Mr Prabowo’s longtime friend, both having attended the same military academy together.
“When we talk about strengthening defence, realistically speaking, Indonesia will need the US to maintain regional stability, so leaning towards the US,” said Dr Broto.
“But when we talk about the economy, the question is who can be Indonesia’s best partner? In that context, China will of course be Indonesia’s most important partner.”
Mr Prabowo will have to juggle these conflicting priorities and navigate strong relations with both as president.
“He will try to navigate interests between those two countries but on different issues. So this is something he needs to consider,” said Dr Broto.
DOING BUSINESS WITH CHINA
China has been one of Indonesia’s largest trading partners in recent years.
IMIP is for example backed by major Chinese companies such as Shanghai Decent Investment, a subsidiary of one of the world’s largest stainless steel producers Tsingshan.
The company says it would be happy if American companies could be tenants in its industrial complex. In addition to Indonesian and Chinese tenants, it is also home to companies from Australia, Japan, and India.
“IMIP is always open to companies from various backgrounds, including multinational companies such as Tesla,” the company’s communications director Emilia Bassar told CNA.
But Indonesia’s Investment Minister Rosan Roeslani told parliament on Sep 3 that Tesla has yet to invest in Indonesia because Southeast Asia’s biggest economy still uses fossil fuels.
“I happen to be directly involved in talking with Tesla. One of the reasons they diverted their investment from us was because they said as an electric vehicle (manufacturer), they certainly want everything to be clean," said Mr Rosan.
“If they operate in our industrial area but our energy is still from fossil fuel like coal, it is not in line with its vision."
Mr Abdul Kadir Jaelani, 34, a worker at IMIP, told CNA that there are other issues, such as unsafe working conditions for certain employees.
The US has high standards for doing business, while China’s focus is predominantly on making profits, opined Prof Angel Damayanti, an international relations and defence expert from Jakarta’s Christian University of Indonesia.
Thus, she thinks attracting American investors to invest in Indonesia is harder.
“The US has certain political terms and conditions when wanting to do business,” opined Prof Angel, citing issues such as human rights or environmental protection.
“China does not have that many terms and conditions. It just talks about the economy; how much is the profit and the loss?
“So it appears more flexible, even though ultimately at the end there are certain terms and conditions too, for example, that there must be Chinese workers involved (in a certain project) or that the raw material must be from China, and others.”
Mr Hashim, Mr Prabowo’s younger brother, told Hong Kong broadcaster RTHK that the government had tried to woo Tesla to invest in Indonesia’s nickel industry and aspires to continue doing so.
“We’re trying to attract Japanese companies, American companies, Tesla.
“Our government is trying to woo Mr Musk and Tesla. That’s the aspiration,” Mr Hashim said in an interview aired earlier this month.
Under Mr Prabowo’s presidency, the government is likely to continue lobbying the US, but Prof Angel opined that as a businessman, Mr Hashim probably also knows that it is easier to strike a deal with China as it does not have the same requirements.
“If Mr Prabowo takes an economical approach, one that is not bothered with political or environmental terms and conditions, he will definitely lean towards China.
“Especially with China’s Belt and Road Initiative since 2013,” said Prof Angel.
Dr Broto noted that it is more straightforward to work with China as working with China essentially means working with the state.
However, when trying to work with the US, Indonesia cannot just approach the state but must also approach business groups.
“And business groups have different considerations when they want to invest.
“They consider security issues and legal certainty, among others,” said Dr Broto.
That is why Dr Broto said Mr Prabowo should work on certain things if Indonesia wants to approach the US. These could include ensuring a safe investment environment and an environmentally friendly industrial zone.
For example, when it comes to the downstream industry, the government should have a concrete plan so it is not reliant on China or to other countries.
Downstream operations are efforts to produce valuable products such as EV batteries instead of exporting raw minerals.
MILITARY TRAINING WITH THE US
Analysts said that even if Indonesia does not succeed in attracting Tesla or other American companies, the US will remain important in defence matters and as its primary security partner.
Since 2007, Indonesia and the US have been conducting two-week joint military training and drills in Indonesia yearly, known as the Garuda Shield.
Last year, the training was expanded to include countries from the Association of Southeast Asian Nations (ASEAN), UK and Japan joining in the South Natuna Sea, not so far from the North Natuna Sea, where Chinese fishing and coast guard vessels have been spotted.
Some members of ASEAN, namely Brunei, Malaysia, the Philippines and Vietnam, have overlapping claims with China over some parts of the South China Sea, which carries about one-third of global shipping and over US$3 trillion worth of trade yearly.
Indonesia is not a claimant state of the South China Sea.
In 2016, an arbitration court in the Hague ruled that China had no legal basis to claim historic rights to areas within its nine-dash line.
However, that same year, Chinese fishing boats were spotted in Indonesia’s Natuna waters, which is on the edge of the South China Sea. While Indonesia has condemned Beijing in such instances, it has never taken any serious action.
ASEAN member states and China are currently engaged in negotiations over a Code of Conduct in the South China Sea, which commenced in March 2018.
Dr Lina said Mr Prabowo should outline Indonesia’s vision as the leader of ASEAN.
“Indonesia’s leadership in ASEAN has long been awaited,” she said.
“And the current chaos in ASEAN, the disunited ASEAN, and the ASEAN that lacks credibility is, I think, because Indonesia has no leadership in ASEAN.”
Dr Lina thinks Mr Prabowo will be able to balance China and the US against each other well because he needs both countries. Indonesia wants China to do business and the US to develop Indonesia’s defence industry and increase its military capabilities.
“So he will still try to maintain a good relationship with China and the US,” said Dr Lina.
Prabowo’s approach to foreign policy will likely also have an impact on ASEAN’s international influence, according to analysts.
They believe the bloc is a buffer zone amid the US-China rivalry, and under Mr Prabowo, Indonesia will most likely take on a crucial role.
The archipelago is one of the founding fathers of ASEAN and the biggest country in the group.
Dr Broto from the University of Indonesia believes Mr Prabowo would give fewer rhetorical speeches and do more than Jokowi, further increasing ASEAN’s international presence.
This is because of Mr Prabowo’s outgoing character, vast global network, and track record as defence minister, where he, for example, actively took action to help Palestinians by sending aid.
Mr Prabowo has repeatedly said that having “best relations” with all partners and countries is essential.
“One thousand friends are too few, one enemy is too many,” he has often said, including when he spoke at an event organised by CSIS on Nov 13, before the official presidential campaigning started.
Dr Broto said that while maintaining a good neighbour policy, Mr Prabowo will increase engagement with other countries, increasing ASEAN’s credibility.
Apart from the US-China rivalry, he must face the ongoing Myanmar conflict and tensions in the South China Sea.
Mr Prabowo may not be able to do much to bring the code of conduct forward, but he may do more to protect Indonesia’s North Natuna waters from being occupied by Chinese fishing vessels.
Dr Broto said he could turn to the US for help or other countries, given his vast network, if money is the issue in increasing defence procurement.
PLAYING A ROLE IN STOPPING WARS
Jokowi was widely perceived as having limited interests in foreign policies, but Mr Prabowo will most likely be very active on the global stage, say experts.
During his 10-year tenure, the outgoing president relied heavily on Foreign Minister Retno Marsudi for international matters.
While many saw Madam Retno as a competent minister, having a minister representing Indonesia on significant issues sent a message that it was not serious and concerned enough about foreign policy, said Dr Broto.
Mr Prabowo is predicted to be the opposite and attend many international forums and so Indonesia will have a bigger voice, said analysts.
Prof Angel said that when pushing for peace in Gaza, Mr Prabowo could use the Organisation of Islamic Cooperation (OIC) to voice its concerns regarding Palestine.
Mr Prabowo attended a conference on Gaza in Jordan in June on behalf of Jokowi. There, he said that Indonesia supported the independence of Palestine and it is the real solution to the conflict in Gaza.
Mr Prabowo may take matters further into his own hands when he is president, for example by sending aid directly to Gaza or peacekeeping forces, according to analysts.
Dr Lina from CSIS stated that when certain countries violate international laws, a middle-power country like Indonesia could remind them.
“Our interest as a middle power is to uphold international laws,” said Dr Lina.
“When big countries are now violating international laws, we need to tell them without damaging the relationships.
Over in Morowali, Mr Rizky, the employee at the mobile phone shop, believes that whoever Indonesia works with, collaboration is key.
“We people need each other, so we should work with one another,” he said.
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