Indonesia’s Regional Strategy: Quo Vadis, Economic Interests?

• CISS
• 19. August 2013

While other countries in Southeast Asia are busy with their preparation towards the single market in 2015, Jakarta is still focused on maintaining regional cohesion against a rising China with its assertive policy towards its neighbors. But does this effort in ensuring regional integrity has made Indonesia ignore its economic interests in the region?

1.       ASEAN and the South China Sea dispute

We still remember how Indonesia was trying to save ASEAN’s face in the international community after the failure to issue a joint communiqué at the 45th ASEAN Ministerial Meetings (AMM) in July 2012 in Phnom Penh, Cambodia. Soon after this incident, the Indonesian Foreign Minister Marty Natalegawa conducted a shuttle diplomacy to the Philippines, Vietnam, Singapore and Cambodia to maintain regional cohesion in order to face China in the case of South China Sea.

This successful intense shuttle diplomacy of Minister Natalegawa has created the six-point principles which became a new step for ASEAN to be agreed with China over the maritime dispute of South China Sea. As we all know, ASEAN as a regional grouping is lacking cohesion, especially during the last year under Cambodia’s chairmanship. China’s strong support to Cambodia concerning economic aid and development assistance has made the youngest member of ASEAN reluctant to a regional position. One thing for sure, Cambodia has been become a nemesis to the Philippines in the dispute over the South China Sea and other countries’ claims.

Indonesia as the founding member of ASEAN and giant of the region felt obligated to manage the mess-up left over in July 2012 even though Indonesia is not a claimant country itself. Under Indonesia’s Chairmanship in 2011, the South China Sea issue had been addressed during the ASEAN Summit 2011. It was agreed by the Member States in the Bali Concord II that the countries of Southeast Asia shall speak as a collective and with one voice in addressing this maritime dispute. Fellow ASEAN Member States, especially the claimant countries, praised Indonesia efforts to keep the regional grouping speaking with one voice. Ironically in Jakarta the issue over ASEAN’s dilemma facing China in the South China Sea has not been seen as concern but rather as benefiting Indonesia through its hard work in solving the puzzle.

2.       Indonesia’s Leadership, Regional Reality and Jakartan Amnesia

Since the New Order Era under the former President of Soeharto, Indonesia has made ASEAN the corner stone of its foreign policy. Indonesia strongly believes in enhancing cooperation among Southeast Asian nations which means that this cooperation is interpreted as highly beneficial for Indonesia interests. Jakarta considers the countries in the region as having the same objectives within this regional framework. Over time, Indonesia has succeeded in lifting the reputation of the country regionally and internationally through its active participation in regional issues and the South China Sea disputes in particular even though Indonesia is not a claimant country. Indonesia is well aware that some ASEAN countries feel uncomfortable in facing China on their own, such as the Philippines and Vietnam, therefore Indonesia sees regional integrity as important way forward in this regard.

But Indonesia seems to forget the fact that most of the non-founding Member States of ASEAN such as Brunei Darussalam, Vietnam, Lao People’s Democratic Republic [PDR], Myanmar and Cambodia entered the regional grouping following the trend in the region in the 1990s or simply just to pursue their economic interests. Cambodia and Lao PDR are an example of how two countries are using ASEAN as legitimate tools in enhancing the development of their national economies and at the same time keep relations to China for their own national agendas outside the regional framework. Meanwhile and especially in the beginning, Myanmar used ASEAN as a vessel to enter the international community. Most of the new ASEAN Member States are not ready to stand back in favor of common values when addressing a particular issue as a regional grouping – unlike the five founding Member States.

While Jakarta is busy thinking on how to keep regional cohesion, it keeps ignoring what is most important for the country in terms of its economic interest. Countries like Singapore, Malaysia and Thailand are busy pushing their companies to expand in the region, something that Indonesia is cautious to do. We can see how companies from these countries’ penetrated Indonesia market in almost every important sector, such as banking, raw materials and retail industries.

3.       Pursuing Economic Interests

In this year, under Brunei’s Chairmanship, Indonesia should be more relaxed in addressing regional problems. Brunei has shown its great capability in bringing the ten countries to speak with one voice, unlike last year. Since the last AMM meeting in July 2013, Brunei along with Thailand and Indonesia should be praised for their efforts in bringing the dispute countries with China to have an early discussion later on in September on tackling the issue in the South China Sea. Indonesia should see this as an opportunity to be more focused on addressing its economic opportunities.

What Indonesia would at best be doing in terms of maintaining regional integration without sacrificing its focus on economic expansion is to support the current ASEAN Chair, coordinate with Thailand as ASEAN-China country coordinator and assist Burmese officials with regards to their preparation for 2014 ASEAN chairmanship. Indonesia’s other solo maneuvers in this issue have taken too big a portion of government capacity.

The Trade Minister once said that at this stage Indonesia is not ready to face the AEC 2015, something that Jakarta should worry about. The AEC is two years ahead and Jakarta needs to prepare accordingly to ‘survive’ in this regard. Indonesia needs to strongly support and facilitate its companies and especially its small andmedium enterprises (SMEs) to enter ASEAN markets. They are the country’s backbone concerning economic growth. Additionally, the Indonesian government should actively raise awareness among its people on ASEANand the AEC.

If Indonesia would shift its focus from promoting regional integration to national economic expansion, it would bring benefits to Indonesia’s prosperity. Through this, Indonesia could achieve its national goal to become the fifth biggest economy in the world in 2030 as projected today.

by Felix Sharief[1]

Felix Sharief works as ASEAN Research Analyst at the British Embassy to the Republic of Indonesia, Timor-Leste and ASEAN at Jakarta. Previous experiences include posts at the ASEAN Secretariat and the House of Representatives of the Republic of Indonesia. In 2011 he received his BA from Universitas Nasional, Jakarta.