Why the United States needs to offer Indonesia more

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If the United States hopes to shore up its influence in Indonesia, it needs to offer something more substantial than platitudes about ‘international order’, Aristyo Rizka Darmawan writes.

In December 2021, Jakarta was the first stop on United States Secretary of State Anthony Blinken’s Southeast Asia tour. There he met with several senior government officials with the aim of ‘reaffirming American commitment to the region’ and ‘working together to tackle common challenges’, such as regional democracy, human rights, climate change, and COVID-19 recovery.

“The Indo-Pacific region will shape the trajectory of the world in the 21st century,” he said at Universitas Indonesia, one of the country’s most prestigious universities.

“It is the fastest growing region on the planet. It accounts for 60 per cent of the world economy and two thirds of all economic growth over the last five years. It is home to more than half the world’s people, and many of the world’s largest economies.”

The secretary’s visit was just one of many high-ranking American visits to Southeast Asia in 2021, with Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink, Deputy Secretary of State Wendy Sherman, and Secretary of Defense Lloyd Austin visiting the region earlier in the year.

Of course, these visits and come amidst intensifying US-China rivalry and China’s growing economic influence in Southeast Asia.

Importantly, in the last several years Indonesia has intensified its economic relationship with China. Under the leadership of President Joko Widodo, who is focused on economic opportunities, Indonesia is taking part in China’s Belt and Road Initiative, and it seems that China’s economic influence in Indonesia is getting more significant.

This strengthening economic influence also can be seen through the growing significance of the Renminbi (RMB) in Indonesia. Currently, around 10 per cent of Indonesia’s global trade uses RMB.

Part of the reason for this is simply that China is offering more to Indonesia in terms of investment than the United States.

Luhut Pandjaitan, the Indonesian Coordinating Minister of Maritime Affairs and Investment, openly stated that Indonesia is currently more interested in such opportunities coming from China because China’s options have simply offered more economic benefit. He noted that Chinese investment often does not carry as many requirements compared with investment from the United States.

What the United States needs to understand is that Indonesia’s cooperation with China is primarily economic.

The country is just less interested in democracy and human rights issues than it is in growth right now. Unlike its relationship with the United States, Indonesia’s relationship with China is transactional first, rather than ideological.

Secretary Blinken’s visit focused on issues like regional democracy and human rights, combating climate change, humanitarian support in Myanmar in the wake of its coup, and ‘paths to democracy.’

Of course, these are important issues, but the visit was a missed opportunity for Secretary Blinken to talk about the economic and investment issues Indonesia is focused on.

This is especially important because Indonesia’s relationship with China faces challenges, including maritime security disputes, and the Indonesian public has a broadly negative perception towards Chinese investment.

These issues sometimes put the Indonesian government in a difficult position with China and provide a space for the United States to step in – it just has to be willing to do so economically.

Indonesia is in a tricky spot. It wants to intensify economic cooperation because it needs investment, but also to protect its sovereign rights in the North Natuna Sea and show the Indonesian public that the country will protect its national interests.

These challenges mean that Indonesia is likely open to alternatives to China, and this is precisely where the United States can shore up its influence. It just needs to see its role more in terms of economic cooperation and investment.

However, there is a long way to go in the bilateral economic relationship. Currently, the United States is not even in the top five countries in investing in Indonesia.

Under President Widodo, Indonesia’s foreign policy is simply more interested in investment, not ideology or prestige. To effectively balance the increasing role of China in the Indonesian economy, the United States can only respond in kind. It cannot rely on sending high-rankings officials to the region to talk ad nauseum about the ‘rules-based international order’ – it must bring more to the table in terms of economic cooperation and investment.

Subject

International Relations