Archives November 16, 2020

Indonesia – EAEU relations: developing trade and economic cooperation

Hendra Manurung,  doctoral student, international relations, Padjadjaran University; Arry Bainus, professor, international relations, Padjadjaran University. Published as a submission to the MIWI Institute. Bandung, 14 September 2020.

Indonesia strengthens economic cooperation with countries in Eastern Europe and Central Asia which are members of the Eurasian Economic Union (EAEU), through the process of establishing a Free Trade Agreement (FTA) between Indonesia and EAEU. The path to this process was highlighted at the inaugural meeting between the Indonesian delegation and the Eurasian Economic Commission (EEC), the executive body of the EAEU (Indonesia Ministry of Foreign Affairs, July 10, 2020). The meeting was a follow-up to Indonesia’s proposal to form a Joint Feasibility Group (JFG) in the framework of the formation of the RI-EAEU FTA which was approved by the EAEU Trade Ministers on May 18, 2020.

East Europe and Central Asia, often also called Eurasia is a prospective market for leading Indonesian products. It can be done through the process of deepening trade and economic cooperation with Indonesian traditional markets, as well as seeking to open new markets for Indonesian products in prospective countries. The Eurasian Economic Union is an international organization for regional economic integration. It has an international legal personality and is established by the Treaty on the Eurasian Economic Union. It provides for free movement of goods, services, capital, and labor, pursues coordinated, harmonized, and single policy in the sectors determined by the Treaty and international agreements within the Union.

Further, the two parties discussed a number of issues in the Terms of Reference (TOR) of the Joint Feasibility Study Group (JFSG), including Objectives, Scope, JFSG Methodology, Timeline, and Publication of Terms of Reference and Joint Reports. The meeting agreed to review various inputs, exchange drafts, including a meeting plan to finalize the terms of reference.

The inaugural meeting was a step forward since the RI-EAEU FTA plan was initiated in 2017. The formation of the RI-EAEU FTA will encourage the expansion of Indonesia’s export market and increase Indonesia’s trade cooperation with EAEU. EAEU consists of Russia, Kazakhstan, Belarus, Kyrgyzstan and Armenia, which are rich in natural resources, agricultural products, and have technological advantages with large market potential, namely a population of more than 180 million, and GDP according to PPP of US$ 4.4 trillion or GDP per capita US$ 24,800.

In the international market, it is believed, Indonesia has a huge asset to develop a quality and sustainable economy. The markets and productive population of Indonesia reached about 150 million people will optimize the bargaining power of its own and will continue to be capitalized in developing economic cooperation with other countries for mutual benefit.

Indonesia’s economic diplomacy will continue to be encouraged and oversee Indonesia’s outbound investment policies abroad for the expansion and diversification of the Indonesian product market, as well as increasing the competitiveness of Indonesia’s industry at the international level and in the Asia Pacific region. At least, there are 285 Outbound Investment Indonesia today with a value of US$ 14.30 billion

In 2020, a number of economic cooperation negotiations will be a priority, such as the ratification of the IA-CEPA; ratification of the I-EFTA CEPA; RCEP signing; intensification of PTA / FTA / CEPA negotiations with African, South and Central Asian countries as well Pacific; exploring the FTA with the Eurasian Economic Union (EAEU), and encourage the implementation of economic agreements that have been signed with partner countries.

Economic diplomacy will also be continuously focused on enabling quality foreign investment to support Indonesia’s sustainable national development priorities, infrastructure development, human resource development, strengthening downstream industries, and the development of the outer, frontier islands, including the Natuna Islands.

Asian political stability and its dynamics of economic growth is a prospect for Russia to be engaged further. It is related to how Russia re-establishes political and economic influence progressively in the region in maintaining her eastward-focused integration drive, including building a southeastwards bridge to China and the Asia Pacific. In this context, therefore, the cooperative nature of Russian policies is the condition sine qua non for the establishment of the Eurasian Economic Union in 2015. Russia is perceived to consistently contribute its role as a unifier of the Commonwealth of Independent States (CIS).

Roman A. Romanov, representative of the Ministry of Foreign Affairs of the Russian Federation stated that, the progress of cooperation between the two countries especially in the economic, security, military, humanitarian, and cultural. During 2019, Indonesia and Russia have reached trade amounted to US$ 2.45 M, and is expected to increase after the signing of a strategic partnership (Indonesia Ministry of Foreign Affairs, Aug. 25, 2020).

Meanwhile, on the 14th ASEM Foreign Ministerial meeting in Madrid, Spain, Indonesian Foreign Minister, Retno Marsudi and Kazakhstan’s Foreign Minister, Mukhtar Tileuberdi met and discussing the efforts of the two countries in exploring opportunities for economic cooperation (Indonesia Ministry of Foreign Affairs, Dec. 17, 2019). Indonesia and Kazakhstan recorded a significant increase in trade value from US$ 60.3 million in 2018 to US$ 317.85 million in the January-October 2019 period. However, there is still a lot of potential for cooperation between the two countries that need to be explored, including in the banking, halal industry, agriculture, energy, and strategic industry.

Further, Jakarta also hoped that Astana would render its support as a member of the initiator of the Eurasian Economic Union (EAEU) towards the initiative of forming the Free Trade Agreement Indonesia – EAEU. Suppose that the cooperation within the EAEU framework is expected to further advance the regional economy, especially in Europe and Asia continent. Also, Indonesia expressed its wish for both countries to further explore the potentials of cooperation at the 2nd Joint Commission on Economic Cooperation. The Joint Commission is expected to open new frontiers of economic cooperation, especially in increasing business-to-business contact.

Kazakhstan also requested Indonesia to elevate its participation in the Islamic Organization for Food Security to a full membership. They also invited Indonesia to attend the Conference on Interaction and Confidence Building Measures (CBM) in Asia in 2020, in which Kazakhstan would hold chairmanship in 2020-2022.

Indonesia together with the Eurasian Economic Commission (EEC) signed a Memorandum of Cooperation in the framework of enhanced cooperation between Indonesia EAEU (Eurasian Economic Union). The signing was done by the Minister for Trade, Enggartiasto Lukita, and the Minister for Integration and Macroeconomics of the EEC, Sergey Glaziev, on the sidelines of the Trade Expo Indonesia in ICE BSD City, Tangerang (Indonesia Foreign Ministry, Oct. 18, 2019). The meeting is the implementation of President Joko Widodo in accelerating export done through the opening of new markets for Indonesian products, and EAEU countries are non-traditional (Indonesia Ministry of Trade, Oct. 18, 2019).

In Jakarta, on February 14, 2019, Indonesia pioneered the beginning of trade talks and economic cooperation with five Eurasian countries who are members of the Eurasian Economic Union (EAEU).

Indonesia was chosen to host the 2020 Parliamentary Meeting of the Eurasian Countries or the 5th Meeting of Speakers of the Eurasia Countries’ Parliaments / MSEAP. Indonesia in Southeast Asia has a very strategic position. That is why the Eurasian countries specifically asked Indonesia to host it in 2020.

Furthermore, the countries of the Eurasian region are countries that have prospectus relations with Indonesia from the side of trade as well as the other side of politics and culture.

In the midst of the global pandemic, for Indonesia, Eurasia can be an entry point in conducting and developing trade diplomacy. For example, about palm oil, there is currently a negative campaign on palm oil initiated by several European countries that are members of the European Union.

Indonesia and the EAEU have agreed to sign a memorandum of cooperation (MoC) to enhance economic cooperation through bilateral trade and foreign investment. The cooperation is mostly focused on trade and investment. Memorandum of Cooperation is a form of agreement to establish a Joint Working Group to discuss ways and means to increase trade and investment between the two parties. Indonesian Minister of Trade, Enggartiasto Lukita, signed the MoC with the Minister for Integration and Macroeconomics of the Eurasian Economic Commission (EEC) Tatyana D. Valovaya.

At this meeting, the two ministers agreed to increase bilateral cooperation regarding the establishment of a joint working group. Therefore, these ministers instructed the technical officials to immediately finalize the MoC. This meeting is also a follow-up to the previous meeting which took place in December 2017. Previously, EEC had also signed a similar MoC with several ASEAN countries such as Singapore, Thailand, Vietnam, and Cambodia. EEC is a unitary government body for economic integration in the Eurasia region (EAEU) which was formed in 2014. EAEU has members from countries in the Eastern European and Central Asian regions such as the Russian Federation, the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, and the Republic of Kyrgystan.

The trade value between Indonesia and EAEU in 2017 reached US$ 2.79 billion. In the same year, also, Indonesia’s exports to the EAEU amounted to US$ 1.25 billion. Indonesia’s main export products are palm oil (US$ 386.75 million), machine tools (US$ 178.16 million), coffee (US$ 78.97 million), palm seeds (US$ 77.22 million), and margarine (US$ 50.92 million).

Meanwhile, Indonesia’s import value from EAEU in 2017 was US$ 1.54 billion with the main products including semi-finished steel (US$ 419.18 million), mineral and chemical fertilizers (US$ 322.45 million), wheat and merlin (US$ 246.16 million), and aluminum (US$ 82.89 million).

It is hoped that the formation of a joint working group will encourage trade and investment relations between Indonesia and the EEC, the elimination of trade barriers, and collaboration in various sectors which are mutual interests of both parties.

Indonesia also realized in achieving high economic growth and the quality is now facing the challenge of protectionism, narrow nationalism, and a variety of false populism campaigns.

Indonesia considers that this negative trend must be transformed into positive energy. The rivalry is important to turn into cooperation and the trust deficit must be replaced by a strategic trust.

In the midst of increasing protectionist attitudes, Indonesia will build a coalition to continue to promote the paradigm of mutual benefit, justice, and not zero-sum. The keyword is collaboration. The collaboration will create opportunities, create new centers of economic growth, and can find solutions to global challenges.

It is also important for Indonesia and the countries that are members of Eurasia to uphold applicable international law as high as possible, especially in realizing world peace and global stability, especially in the Asia Pacific region.

Source: https://miwi-institut.de/archives/572

EMPOWERING INDONESIA’S DEFENSE DIPLOMACY IN ASIA PACIFIC
Presiden Rusia Vladimir Putin dan Presiden Indonesia Susilo Bambang Yudhoyono (https://en.kremlin.ru/)

Writer: Hendra Manurung (Hendra Manurung is currently pursuing a doctoral degree in international relations at Padjadjaran University, Bandung)

Indonesian Defense Minister Prabowo Subianto visited eight countries since being officially inaugurated by President Joko Widodo on 20 October 2019. On 23 October 2019, he visited Malaysia, Thailand, the Philippines, Turkey, China, Japan, France, and finally Russia. Prabowo carried out a number of missions. It began with the release of Indonesian citizens who were held hostage by the Abu Sayyaf group in the Philippines to increasing strategic cooperation in the field of bilateral defense.

However, the intensity of Prabowo’s visit invited criticism from several groups such as DPR members and defense military observers but received support from President Joko Widodo. The President emphasized that Prabowo’s working visit was carried out in the context of carrying out and intensify Indonesia’s defense diplomacy abroad.

One of the objectives of the Minister of Defense is to strengthen and modernize the main tools of the Indonesian weaponry system, by exploring the possibility of procurement from defense equipment producing countries that cannot yet be fulfilled by the domestic defense industry as well as offering Indonesian weapons system products that are already capable of being produced by the domestic defense industry, such PT. Pindad Bandung and PT PAL Surabaya to other consumer countries.

Indonesia Defense Diplomacy

Efforts to seize and defend Indonesian independence involve all components of the nation in various ways. For example, the army and the people take up arms on the battlefield, and diplomats are fighting at the diplomatic negotiating table with diplomats from other countries, for example in the General Offensive on 1 March 1949.

This Indonesian heroic military action in reclaiming Dutch-controlled Jogjakarta was also intended to show the international community that Indonesia and the TNI still existed. The success of the Indonesian military attack then became ammunition for diplomats to thrill the negotiating table.

As a result, the Netherlands recognized Indonesia’s sovereignty in a Round Table Conference on 27 December 1949. This is because diplomacy was originally intended to eliminate conflict, ease tensions, avoid war, and end the war (Simamora, Opportunities, and Challenges of Defense Diplomacy: 2013).

Indonesia also had the experience of having a formidable defense weaponry system during the struggle against Dutch colonialism and after proclaiming independence on August 17, 1945. Among them, the ownership of various types of modern combat aircraft at that time, such as the TU-16-KS bomber, the Mig-15 fighter plane / 17/19/21, Ilyuhsin, and attack helicopters. Also, the Indonesian warship, the destroyer class KRI Irian, which became the largest ship in the Southeast Asia region, were all purchased from the Soviet Union (currently is the Russian Federation). The defense equipment was used by the Indonesian armed forces for propaganda to reclaim West Irian from the hands of the Dutch, 1962 to 1963.

The superiority of Indonesian defense equipment in the Asia Pacific region is used optimally as a major support for diplomacy negotiation against the arbitrariness of Western countries against the territory of the country that was once colonized.

However, apart from the shrewdness of President Soekarno who took advantage of his closeness to the Soviet Union as a bargaining power to garner support from the United States, diplomats used it well until West Irian was finally captured. Thus, defense diplomacy has been carried out by the country’s leaders since the beginning of independence and during the war after independence.

Defense diplomacy is actually a new vocabulary in the world of international relations. The term defense diplomacy first appeared in the UK Department of Defense’s Strategic Defense Review which was published in 1998. The main focus of SDR’s version of defense diplomacy aimed at the countries of the former Soviet Union and former members of the Warsaw Pact is to carry out reforms in the security sector and conflict prevention. For this reason, as explained by Cottey and Forster (in Sulayman: 2016).

Defense diplomacy can be defined as the use of armed forces and related infrastructure during peacetime as a main supporting tool to pursue the main objectives of foreign policy and national defense.

Obviously, Article 1 Paragraph 1 of Law Number 3 of 2002 concerning State Defense explicitly states that national defense is all efforts to defend the sovereignty of the Republic of Indonesia.

The post-Indonesian proclamation, as the largest archipelagic country in the world that has a commitment and concern for the implementation of international world order and lasting peace, Indonesia certainly avoids using any hard power in facing threats from other countries. Indonesia places diplomacy as the first line of defense. This is also parallel with Indonesia’s defense doctrine which is defensive, not offensive.

However, defense diplomacy to maintain and achieve national interest cannot be separated from how much national power one has. One of the nine national powers, referring to Morgenthau, is military capabilities. Mearsheimer said the military is the actual power for a country.

Therefore, military power needs to be increased in attack and defense capacity in line with the need to strengthen defense diplomacy in international relations. Indonesia was able to carry out high-profile diplomacy which was very calculated during the Old Order era (1945-1966), one of which was inseparable from the power of defense equipment it had through the support and military assistance of the Soviet Union.

In the early days of reform after the fall of the New Order on 20 May 1998, the condition of the national defense equipment was appalling. At that time, Indonesia could not maintain and modernize defense equipment due to the Washington D.C embargo decision which was lifted in 2005. For this reason, the government is determined to strengthen our defense equipment. One of them is the minimum essential forces (MEF) which are targeted to be achieved 100 percent by 2024.

Indonesian defense diplomacy mission of the current defense minister showed his goodwill to many countries, one of which is to strengthen bilateral defense relations and cooperation strategically. This includes enhancing bilateral relations through defense cooperation and boosting military capacity to contribute to peace mission operations in countries facing conflict.

Various shortcomings in the procurement of defense equipment in the past are valuable lessons not to be repeated, for example, the dependence on defense equipment in one particular country.

The eight countries visited can illustrate that the Indonesian government is building strategic defense cooperation, including efforts to increase the modernization of defense equipment. Everything is done through the procurement of modern, efficient, transparent, and scalable defense equipment. However, it is also offered for domestic products to be used by other countries to support accelerate the growth of the domestic defense industry.

In the early days of reform after the fall of the New Order on 20 May 1998, the condition of the national defense equipment was appalling. At that time, Indonesia could not maintain and modernize defense equipment due to the US embargo which was lifted in 2005. For this reason, the government is determined to strengthen our defense equipment. One of them is the minimum essential forces (MEF) which are targeted to be achieved 100 percent by 2024.

In the midst of the United States and China rivalries in the South China Sea region from 2017 to the present time, the Indonesian defense diplomacy mission done by Prabowo showed his goodwill to many countries, one of which is to strengthen defense relations positively. This includes enhancing bilateral relations through defense cooperation and increasing military capacity to contribute to peace mission operations in countries facing conflict.

Various shortcomings in the procurement of defense equipment in the past are valuable lessons not to be repeated, for example, the country dependence on defense equipment in one particular country.

The eight countries visited can illustrate that the Indonesian government is building strategic defense cooperation, including efforts to increase the modernization of defense equipment. Everything is done through the procurement of modern, efficient, transparent, and scalable defense equipment. However, it is also offered for domestic products to be used by other countries to help accelerate the growth of the domestic defense industry.

Intensive care and how to start a road map towards defense industry independence must indeed be initiated and implemented by all Indonesian stakeholders of the national defense system. This is confirmed to be in line with the presidential instruction to reduce imports and dependence on defense equipment from major powers in the Asia Pacific region.

However, preferably, for defense equipment products which the domestic defense industry cannot yet provide, it is better if the purchasing mechanism from abroad should be pursued in the interest of a strong national defense and not easily underestimated.

Therefore, in the procurement of defense equipment, both from within and outside the country, Indonesia must prioritize four principles or the so-called politics of procurement of the main tools of the national weapon system, namely: efficiency, geopolitics, geo-economy, geo-strategy, budget efficiency, and transfer of military weaponry technology, and the ability to sell Indonesian weaponry to various countries.