RI At A Crossroads: Which Way To Go In The Asian Century

Posted on January 6th, 2010 at 10:09 am by Akhyari


RI at a crossroads: Which way to go in the Asian century

Veeramalla Anjaiah, The Jakarta Post, Jakarta

World After passing through an extraordinary year, 2009, as well as the first decade of the 21st century, Indonesia finds itself at a crossroads just ahead of both the new year and the century’s second decade.

Throughout 2009, there has been an interesting debate over whether Indonesia should continue its foreign policy with ASEAN as its cornerstone. Or is it the time for Jakarta to look beyond ASEAN, especially after its elevation from an impoverished nation to one of the top 20 economies of the world? Moreover, it has a new and energetic young foreign minister. So which way will Foreign Minister Marty Natalegawa take Indonesia: regional or global. Is there any middle path?

During the last 10 years, Indonesia, a huge, diverse and resource-rich archipelago, has achieved numerous success in its almost half-way journey from rags to riches.

It was a remarkable transformation, changing from a chaotic state to a stable country with a burgeoning democracy and dynamic emerging economy. Just 11 years ago, Indonesia was on the verge of becoming a failed state, especially after a devastating financial crisis in 1997 and violent riots the following year.

But today, Indonesia is a member of the world’s most influential group, G20. Despite the global recession, its economy grows at a reasonable rate. With the recent successful and peaceful elections, the world’s most populous Muslim nation has once again shown the world that Islam, the fastest growing religion in the world, is perfectly compatible with democracy.

According to the renowned American think-tank Freedom House, Indonesia, which had a democratic deficit for more than three decades under the Soeharto regime, is the only completely free country in a region that has monarchic, undemocratic, semi-democratic states.

In the past Indonesia tilted toward both the left (under the first revolutionary president Sukarno) and the right (under authoritarian Soeharto). Though the world’s fourth populous nation has been pursuing the so-called “free and active” foreign policy for a long time, and trying to maintain its strategic autonomy in foreign policy and decision-making, its role in international affairs has been limited. This was mainly due to preoccupation with domestic challenges and lack of economic and political clout in the international arena.

Most of the time in its 64-year journey as an independent nation, Indonesia has been busy fighting penury, unemployment, separatist movements, religious conflicts and Islamic insurgencies. Now the situation, to a large extent, has changed.

“But we overcame these challenges,” President Susilo Bambang Yudhoyono said in September 2009 at the Harvard University. “We adapted. And instead of failing, we have thrived. Today we are not a hotbed of communal violence: we are by and large an archipelago of peace. Today we are not at the brink of Balkanization.

“Today we are not paralyzed by financial crisis, but forging ahead with sweeping reforms of our financial and industrial structure. And Indonesia is a dynamic emerging economy, enjoying one of the highest growth rates in Asia after China and India”.

Indonesia’s entry into the G20 club has endowed Jakarta’s foreign policy with boldness and assertiveness on one side and a promising global threshold on the other. Since then, some local foreign policy experts began questioning Indonesia’s policy toward ASEAN, given the complex nature of the regional organization, which some people describe as a “paper tiger”.

“Indonesia should not let itself be held hostage to ASEAN,” Rizal Sukma, executive director of the Centre for Strategic and International Studies, said. From an economic point of view, the planned ASEAN economic integration by 2015 will benefit more countries such as Singapore, Malaysia, Thailand and Vietnam rather than Indonesia.

Being the Southeast Asia’s largest economy with 240 million people, Indonesia offers a perfect market for some small but rich ASEAN countries. At the same time, most of the countries in ASEAN produce similar goods and compete fiercely for markets. For example, the balance of trade in 2008 was heavily in favor of ASEAN countries, mainly Singapore, Malaysia and Thailand (see graphic). Indonesia exported US$27.17 billion worth of goods to nine ASEAN countries and imported $40.96 billion goods from there. There was a similar trend in 2009.

In the tourism sector, more Indonesian tourists regularly visit these nine ASEAN countries than it receives visitors from these countries. The only consolation is that ASEAN countries provide employment to around 2 million Indonesians, but mostly in the informal sector. As the most dynamic democratic country in the region, Indonesia, mostly, has to compromise on its ideals such as democracy and human rights for the sake of ASEAN unity as most ASEAN countries are either undemocratic or semi-democratic in nature. So, Rizal argues that Indonesia needs to formulate a post-ASEAN foreign policy. “A new world order requires a new foreign policy.

It is time to recognize that we need a post-ASEAN foreign policy for a post G8 world order,” Rizal said. But Marty, who played a key role in designing the ASEAN community concept when he was working as the director general for the ASEAN cooperation in the early part of this decade, strongly defended the central role of ASEAN in Indonesia’s foreign policy, while emphasizing that Jakarta can play an “influential role” outside ASEAN.

“We can’t leave ASEAN because it has become a house for Indonesia. However, it doesn’t mean we can’t progress or work outside ASEAN,” Marty said. It may be difficult for Indonesia to focus mainly on global affairs and ignore its neighborhood ASEAN. After all, Indonesia was one of the main founding members of ASEAN. On the global stage, Indonesia has not reached a point where it can compete with the US, China, the EU, India, Brazil and Russia to project its soft power.

But in the future, Indonesia can catch up with these big powers. If one of the main missions of Indonesia’s foreign policy is to “develop economic, trade, investment cooperation, transfer of technology and [find] development assistance to improve the welfare of Indonesian people]”, it should be realistic and engage with potential partners. But who are these partners? Since 1999, Indonesian trade has been growing at a tremendous pace, thanks to macroeconomic management and continuous economic reform under presidents Megawati Soekarnoputri and Yudhoyono.

The total trade of Indonesia in 2008 reached $266.21 billion, a huge increase from $72.66 billion in 1999. Actually, the two-way trade was more than doubled during the first term of Yudhoyono, increasing from $118.10 billion in 2004 to $266.21 billion in 2008, a good effort by Trade Minister Mari Elka Pangestu and her team. In terms of trade, foreign direct investments and tourism, Indonesia is heavily dependent on East Asian countries: Japan, China and South Korea. In 2008, Indonesia had combined trade of $85.78 billion, based on Indonesia statistics, with these three countries. With the inclusion of Taiwan and Hong Kong trade figures, the trade can easily surpass the $100 billion mark. The trio also had realized foreign direct investments worth $1.80 billion in Indonesia in 2008.

Then we have the rising star India, whose trade with Indonesia reached an amount of $10 billion in 2008. At present Indonesia’s policy on ASEAN is the right policy heading in the right direction, but it has to intensify its interaction with the Asia-7, Japan, China, South Korea, Singapore, Malaysia, Thailand and India, because these countries together with Indonesia constitute around 3 billion people, a huge market.

In international relations, it is not always about trade and investment. There are so many other things such as education, culture, and environment and so on. Marty is fully committed to implement the “diplomacy in all directions” strategy in order to achieve Indonesia’s foreign policy objectives and turn the country into an influential global player. At the same time, Indonesia can’t ignore the lonely superpower the US and the global player European Union. The friendship and cooperation with these two are a must for Indonesia in its path to prosperity. In fact, the 19th century was a British century and the 20th century was an American century. The 21st century is going to be an Asian century and it is going to be in the words of Yudhoyono, a “century of soft power”. Indonesia must be a leading player in this Asian renaissance.

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