INDONESIA – UK COOPERATION POST BREXIT: CHALLENGES & OPPORTUNITIES
Writer: Hendra Manurung (Hendra Manurung is currently pursuing a doctoral degree in international relations at Padjadjaran University, Bandung)
Brexit has made Britain will be more open to the world and independent, particularly in implementing its foreign policy from London, and mostly in strengthening closer relations with other countries, including with Indonesia continuously.
Britain’s exit from the European Union made it more globalized. The global UK means new relations with the European Union and closer bilateral relations with other countries, including Indonesia
Post-Brexit in June 2016, the UK is one of the important trading partners in Europe and a major foreign investor in Indonesia.
Brexit offers enormous economic opportunities for Indonesia after officially left the European Union on 31 January 2020, after forty-seven years joining since 1973.
It was after being delayed four times. The decision was very historic for the government of British Prime Minister Boris Johnson due to his success in realizing the British people’s decision in the Brexit referendum on 23 June 2016.
It reflects the will of the majority of UK citizens and is bound to create a new economic and political order in the UK and Europe.
Previously, the European Parliament approved the agreement to withdraw Britain from the European Union (Brexit) on 31 January 2020. However, the parliament warned that Britain should not make too many demands related to negotiations on economic affairs on the grounds of maintaining good relations in the future.
Despite concerns, there will be economic turmoil in Europe during the transition period for Britain’s exit from the European Union at the end of 2020. During the transition period, Britain and other EU countries will continue to apply the same business rules to try to negotiate a broader trade agreement.
England is an important priority for strengthening Indonesia’s economic diplomacy in the European region. The two countries agreed to increase economic cooperation in potential fields such as trade and investment, creative industries including digital technology in the financial sector mostly financial technology, energy, especially renewable energy, education and human resource development, maritime, and others.
This was stated during the visit of the British Minister for the Asia Pacific, Heather Wheeler to Jakarta in January 2020, which is seen as a reaffirmation of both commitment to partnership and friendly relations between Indonesia and the UK (Kemlu.go.id, 14/1/2020). Apart from bilateral issues, efforts to strengthen bilateral cooperation of the two countries were also discussed on global and regional issues of mutual interest.
It is a very good signal to boost the intensity of mutual beneficial cooperation in both countries in various fields in order to achieve economic growth and people’s welfare. Minister Heather Wheeler’s visit to Indonesia is the first time since taking office since July 2019.
This is important in relation to how to improve bilateral trade performance, including investment and education through the Trade Review mechanism. This is a concrete step in preparing comprehensive economic cooperation between both countries after Brexit in June 2016, so that it can provide greater economic benefits for the two countries.
Post-Brexit, Britain will no longer be bound by European Union rules in developing closer relations with other countries. Thus, the UK is able to more freely increase the volume of trade with Indonesia from both directions.
After Brexit, Britain can strengthen economic cooperation with Indonesia, reduce trade barriers such as tariffs, and so on, and expand market access between the two countries.
For twenty years Britain was the largest importer of Indonesian timber among the European Union countries.
Post-Brexit, the UK will continue to import according to the FLEG-T VPA scheme or an agreement between the European Union and Indonesia regarding the sale of sustainable timber in accordance with the regulations of the buying European country.
Britain and Indonesia are already doing business on WTO terms, so trade relations between the two countries remain the same even after Brexit. The two countries have signed an agreement similar to the EU treaty on legal timber, to ensure sustainability. This was followed by launching a Joint Trade Review, to find out where future opportunities together lie.
Brexit has also provided an opportunity for Britain to open up again to immigrants from other countries. Recently the UK implemented a policy that allows international students to live and work for two years after completing their studies in Western European countries.
The positive impact of Brexit will benefit Indonesia in the trade sector. This is because the export opportunities for business actors are increasingly open, especially CPO commodities to the UK and they no longer depend on the European Union.
The negative impact is that the economy of the Blue Continent will be depressed. Under these conditions, it will automatically have an impact on Indonesia because the European Union’s demand for domestic products will decrease.
Indonesia perceives that in this Brexit situation, of course, Great Britain must rebuild all its trade relations with many countries again, because previously it could be in unity with the European Union. So this is also an opportunity and opportunity for Indonesia or other countries that have traditionally traded with the European Union.
Apart from Brexit, there is some geopolitics development in the world which might also raise concerns in the Indonesian national economy. Among them are the outbreak of COVID-19 throughout the world, the trade war between the US and China, COVID-19 pandemic and the discovery of the vaccine, decline of global multilateralism, and the risk of US geopolitical competition with its allies with Iran, Syria, and Russia in the Middle East. Thus, Indonesia and Britain should always be aware of these dynamics of world economic growth.
The spread of the Coronavirus has a more dangerous impact on the economy than Britain’s departure from the European Union or Brexit. Up to the present time, still, there has been no definite effort to control the outbreak of viruses originating from Wuhan, China at the end of December 2019.
Obviously, it is clear that there will be real differences indirect positive trade relations between Indonesia and the UK, compared to trade relations that tend to be conventional as has been done together with the European Union.
“No country is able to overcome this crisis alone. In this connection, we have no other option but to count on the WHO to be a platform of cooperation among countries,” stated by Retno L.P Marsudi, Indonesian Foreign Minister at the Video Conference Ministerial Meeting for Alliance for Multilateralism.