President of Indonesia Widodo Visited China and Japan

The visits of Indonesian President Joko Widodo to China and Japan conducted in a temporary tandem mode at the end of July this year seem to be a single important event that significantly characterizes the situation in the sub-region of Southeast Asia as a whole. At the same time, it should be noted that, in addition to China and Japan, other world players are involved in the struggle for influence in this subregion, which occupies a key position in the entire Indo-Pacific region represented by the US, India, and leading European countries.

The significance of the above event is also due to the fact that the state of Indonesia’s relations with China and Japan to a certain extent can be considered as a “model” for relations with them of other Southeast Asian countries taken both individually and all together in the format of the ASEAN regional association.  Although each of the Southeast Asian countries (and ASEAN as a whole) is balancing in the field of “tensions” created by China and Japan (as well as other leading players), it is possible to note a certain difference in “preferences” in relation to one of these latter.

In this regard, the Indonesian leadership seems to be particularly careful to ensure that each of its two main regional partners does not get the impression that Jakarta gives a very clear preference to one of them. The chronology of Joko Widodo’s last trip to Beijing and Tokyo was another evidence of this.

China has long been the undisputed leader in terms of trade volume among all external partners of the Southeast Asian countries. In Indonesia, in 2021, it reached the level of almost USD 125 billion and immediately increased by 60% compared to the previous (“Covid”) year. Moreover, the growth rate of Indonesia’s exports to China was noticeably ahead of the increase in the oncoming movement of goods and services. This made it possible to almost eliminate the previously observed noticeable negative balance for the first. By the way, it should be noted that until recently, the factor of a significant excess of imports over exports in trade with the PRC of almost all ASEAN countries served as one of several reasons for some, to put it carefully, discomfort in the latter’s relations with its great northern neighbor.

The alignment of the trade balance in Indonesia’s trade with China turned out to be the result of a sharp increase in prices for the main export product of the former, which is raw materials (mainly hydrocarbons). It is customary to link the same growth abroad with the so-called “Russian invasion of Ukraine”. Forgetting about the “green energy”, everyone urgently began to stock up on coal. Already in the first half of 2022, China purchased USD 8 billion worth of coal from Indonesia.

As for Japan, which is Indonesia’s third (after the United States) partner, Indonesia’s trade with it is developing almost as fast, however, at a significantly lower “initial” level.  Let’s not forget, however, that today Japan’s GDP is 2.5-3 times less than China’s. In 2020, Indonesia’s trade with Japan amounted to USD 24 billion, next year it amounted to USD 32 billion, and this year it may reach USD 40 billion. Indonesia trades with Japan with a noticeable surplus.

Seven years ago, NEO drew attention to the dramatically developing process of decision-making by the Indonesian leadership regarding the appointment of a winner in one of the largest national projects related to the construction of the Jakarta-Bandung high-speed railway on the island of Java with a length of 145 km. Chinese and Japanese companies fought for the contract (the value of which was then estimated at USD 5.5 billion).

The Indonesian leadership was fully aware of the weight of the political component of either of the two options for a decision, the adoption of which was postponed several times. Finally, in the fall of 2015, it was announced that the contract was signed with a Chinese-Indonesian venture company, in which China represents China Railway International.

This decision turned out to be a complete surprise for the Japanese side, with which representatives of Indonesia have been consulting since the end of the noughties on the topic of creating a modern railway and transport infrastructure, in the construction of which Japanese companies are considered (still and not without reason) one of the world leaders.  Apparently, that is why in Japan, until the last moment, they were in a state of absolute confidence that such a large-scale contract would be concluded with them. The value of obtaining it was also due to the fact that even then there were talks about the possibility of continuing the future high-speed railway through the entire island of Java.  Its length should increase to 750 km, and the cost of the entire project may exceed USD 15 billion.

It is claimed that the motives of the mentioned decision were entirely located in the business sphere. The Chinese side proposed the so-called “B2B scheme” (business-to-business) with minimal presence of the Indonesian government in the project, which allegedly determined the outcome of the tender.

We will point out the sharp delay in the implementation of even the initial version of the project, which has caused certain troubles in Sino-Indonesian relations. Trial trips of high-speed trains were planned to be held at the end of 2019. However, during the construction, some serious problems of a “natural” nature arose, and today doubts are expressed that this will happen even this year. What would the leadership of Indonesia, which is the host of the next G20 events in 2022, want?

Be that as it may, but the news about how a very promising tender in Indonesia ended in 2015 (as it was believed) was perceived by the Japanese government of the late S. Abe quite painfully. In order to smooth out the unpleasant impression of the outcome of the decision taken on it, Indonesian government officials often visited Japan at various (including the highest) levels.

In turn, Indonesia is one of those Southeast Asian countries (along with, for example, the Philippines), to which Japan has been constantly (since the beginning of the last century) showing special interest. The same S. Abe visited Indonesia as part of a tour of a number of Southeast Asian countries at that time a year after the failure with the “railway” tender. In the current year, the current Prime Minister F. Kishida also paid a visit to Jakarta during a long foreign trip that ended in Europe.

The PRC pays no less attention to contacts with representatives of Indonesia. This mainly happens at the level of foreign ministers, both in a bilateral format and within the framework of the constantly functioning ASEAN-China platform.  However, Japan and other leading world players also have a similar platform for working with Southeast Asian countries.

It should be noted that Indonesia itself is by no means in the position of a passive object of the games of the leading regional and world powers. The most populous country in the Muslim world, which is among the top twenty countries in terms of annual GDP, Indonesia enjoys well-deserved authority in Southeast Asia, and its leadership is active in the international arena, which was further evidenced by the discussed trip of President J.  Widodo to China and Japan.

In Beijing, the Indonesian president became the first foreign leader since February of this year, whom President Xi Jinping hosted in the (infrequent today) face-to-face format. Among the wide range of issues raised during the conversation, those related to the implementation of the Jakarta-Bandung railway construction project mentioned above were also discussed.

The very next day, J. Widodo arrived in Tokyo, where he held talks with Prime Minister F. Kishida on the whole range of problems and issues that accompany the development of both bilateral relations and the situation in Southeast Asia. During the final joint press conference, F. Kishida’s remark drew attention to the fact that the parties agreed to join the units of the Japanese Self-Defense Forces to the next annual Super Garuda Shield multilateral military exercises, which will be held in Indonesia in the first half of August. Of the total number of 4,000 military personnel involved in it, half account for the hostess of this event, and another 1,100 will be allocated by the United States.

By Vladimir Terekhov
Source: New Eastern Outlook

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