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  • Riley Revilla

Indonesia: Pawn or Player?

Indonesia’s history has been a long and twisted one. The country’s culture has survived two reigns of colonialism, first by the Netherlands, and then by Japanese occupation. Indonesia’s colonialist history and the resulting fusion of cultures are one I am intimately familiar with as it is the very makeup of my family. However the people of Indonesia refuse to settle for a future defined by past encroachments. Rather, they are striving for a future of economic vitality and self-sufficiency, which they hope will establish their place in the world order. Yet, economic development requires the support of outside funds, making Indonesia the answer to a question many hold – how does a country balance financial assistance while maintaining its sovereign autonomy?

As the 10th largest economy and the 4th most populated country in the world, Indonesia’s geographic context has guided its economy. As Indonesia has forged its path in the global markets it has come to rely heavily on exporting commodities and thereby participating in foreign trade. Focus on developing foreign trade has appeared to be successful, as between 2012 and 2019, Indonesia’s GDP has grown annually by an average of about 5.2%. However, further growth in Indonesia’s economy is constricted by practical barriers. Indonesia is severely underdeveloped when it comes to infrastructure. Indonesia’s lack of infrastructure is particularly problematic for the agricultural industries in the country and has led to extreme poverty for many of these rural residents. The lack of energy, facilities, roads, and effective transport has limited the growth of exports in Indonesia. Indonesia's economy contains a mix of both centralized planning and private rights. However, its underdeveloped infrastructure has been largely attributed to nationalistic attitudes that have favored central planning and consolidating contracts over foreign trade. Facing the dire complications of weak infrastructure, multiple administrations in Indonesia’s governance have attempted to address these challenges. Indonesia’s current leader, President Jokowi, has proven himself able to help build the infrastructure of Indonesia. 

President Jokowi has established four major goals for improving the infrastructure of his country, but the one that is most relevant to this conversation is improving the roads and railways in Indonesia. The Belt and Road Initiative, a project to develop infrastructure led by China, inserted itself into the Indonesian sphere in 2013 when its Maritime Silk Road policy was announced in Jakarta by Chinese President Xi Jinping. While the policy was originally envisioned as a physical link between Asia and Europe for developed infrastructure fostering trade, China has expanded its presence into various regions, including Africa and South America. Since relatively little of Indonesia’s state budget is spent on the development of infrastructure, the majority of the funding for their infrastructure comes from outside investment, leading to Indonesia becoming one of the biggest acceptors of BRI funds. When President Jokowi announced a lightning rail project, Chinese companies were able to secure many of the contracts associated with it, due to BRI subsidies to those companies allowing them to underbid their competitors. Chinese investment in the lighting rail gave the Indonesian government the resources it previously lacked to provide President Jokowi's promised infrastructure. Unfortunately, for both parties, this project has failed to reach its completion goal and has caused the Chinese strategy to move to only supporting infrastructure projects that are smaller and more efficient. Yet developing infrastructure has remained an important goal for President Jokowi’s administration. 

Developing infrastructure is vital for both economic and societal progress, and therefore President Jokowi has pursued infrastructure development in other manners. His administration has announced its intention to focus on developing the maritime sector. However, through maritime development, the administration has proven its strategic muster. The Indonesian government has developed a strict policy forbidding BRI investment in maritime ports. Further, the Jokowi administration has sought a diversity of foreign investors including those from the Middle East. While it has yet to be seen if these measures are effective, the U.S. and Indonesia continue to signal strong relations, suggesting that a major Chinese competitor has not deemed them as adversaries. Critics of the BRI have worried that the debt incurred by receiving countries will eventually lead to increased Chinese military and regional development. After all, President Xi Jinping has advertised this initiative as a manner of increasing China’s global prominence. Many BRI projects stipulate that Chinese companies must develop the projects leading to inflated costs that force countries to incur significant debt with the BRI as their only option for development. Indonesia has responded to this by courting a diversity of foreign investors including in the Middle East. Indonesia views its maritime thoroughfares as not only vital to developing the infrastructure they require but also strategic locations for further development. 

Through parallel goals for both land and sea infrastructure development, Indonesia has proven its muster for accepting foreign investment but strategically maintaining its governing autonomy. Indonesia’s moves are significant because of its ability to pursue its own development goals with the monetary support of China while maintaining friendly relationships with countries such as the U.S. which views itself as opposed to projects such as this. As Indonesia faces the coming administration of President Subianto and increasing infrastructure projects, it will continue to face the challenge of controlling Chinese investment


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