Nov 4, 2014 - mostly dominated by China, Japan, and India. ... Cambodia, the Philippines, and Thailand have toggled between elected and unelected ...... peso fell by only five percent in 2013, while the rupiah dropped by 18 percent.
Joko Widodo National Leaderships on Indonesia World Maritime Policy
Abstract President Joko “Jokowi” Widodo’s vision to make Indonesia the world’s maritime axis has prompted advanced developed countries, to strengthen their countries’ bilateral partnership with maritime power. On 5 July 2014, Joko Widodo, as presidential candidate has expressed his idea on “Indonesia’s visionary position on world maritime axis and hub for regional maritime”. His statement signaled country’s powerful bargaining position as world largest archipelago with its Sea Lanes of Communications strategic possesses led to many countries compete to dominate the maritime route around Asia Pacific. Sooner or later, modernization of maritime and air power should be accelerated to overcome underdevelopment quality and quantity of main weaponry system. Thus, Joko Widodo’s idea of Indonesia’s world maritime axis is a clear signal for others, which this country would back up into a national maritime power with concentrated economic growth, as diplomatic bargaining power, and political military strategy on the territorial dispute management acquisition, and control of maritime border areas. Elected president, Joko “Jokowi” Widodo prioritized Nawa Cita concept as Nine Priority Agenda, which the state defense budget allocation will be increased to 1.5 percent of gross domestic product alone. Thus, through this research, the writer is eager to elaborate why Indonesia is interested to become a world maritime axis ? The quality of Indonesia’s sea and air military power Indonesia is a still biggest reason for national contribution to revitalize its potential efforts in establishing a new balance of power in order to keep the peaceful harmonious stability on the whole region. Therefore, in the period of the next two decades, Asia will be a center of the world economy due to its strongest economy which is mostly dominated by China, Japan, and India. In 2050, Indonesia is predicted to be recognized world major economy. To conclude, impact of current Indonesia’s transformational leadership on how to strengthen regional cooperation and Southeast Asian geopolitical mandatory is automatically has caused surrounding arena to be prone to foreign threats. Indonesia’s world maritime axis must be supported throughout Indonesian national assets that could realize the idea of a living nation for global resources, together with human resource land that already sluggish and less proactive. Mental revolution that proclaimed by elected president would have to be read in the spirit of old mental orders yet business as usual.
Keywords: indonesia, jokowi, leadership, maritime power, bargaining position, global resources
Introduction The origins of the United States’ ‘pivot’ to Asia – later renamed the ‘rebalance’ – can be traced to the early days of the Obama administration. After he was elected president in late 2008, Barack Obama directed his national-security transition team to conduct a strategic assessment of the international landscape and US security interests. The team addressed the question ‘Where is the United States overweighted in terms of its presence and resources and efforts, and where is it 1|P a ge
Electronic copy available at: http://ssrn.com/abstract=2510986
underweighted?’ The obvious conclusion was that the US was disproportionately invested in the Middle East, while US interests were expanding in the Asia-Pacific. Guided by that assessment, the Obama administration embarked on an effort to rebalance US presence, posture and engagement throughout the world.
To some extent, the shift in US focus to Asia was a logical consequence of the winding down of the wars in Iraq and Afghanistan, but it was also driven by other factors. These included: the growing importance of the Asia-Pacific region to the United States’ economic future; the perceived need to promote cooperation with China on a broad range of regional and global issues; the imperative to manage effectively China’s reemergence as a great power; and the belief that boosting US presence and relationships in the region was essential to ensure regional security. Since the end of the Cold War, most political theorists have assumed that as countries develop economically, they will also become more democratic—especially if a vibrant middle class takes root. The triumph of democracy, once limited to a tiny number of states and now spread across the globe, has been considered largely inevitable. Beginning in the mid-1980s, the so-called third wave of democratization swept through Asia, bringing vibrant multiparty politics to former autocracies such as South Korea and Taiwan. Yet today, there are, the 16 countries of East and Southeast Asia now include only six functioning democracies, which is a ratio worse than the worldwide average of six democracies for every ten countries. The region hosts some of the world's most resilient authoritarian regimes; meanwhile, Cambodia, the Philippines, and Thailand have toggled between elected and unelected governments, and China's economic success and political stability have made the country a model studied enviously by strongmen around the world. What is it about Asia that makes it so hard for democracy to take root ? Part of the explanation may lie with culture. Yet discussions of culture can sometimes distort, rather than illuminate, the relationship between values and governance. That has certainly been the case during the long-running dispute over whether traditional Asian values are compatible with democracy -- a debate Manurung's book attempts to settle by separating myths from facts and assumptions from evidence.
Family Values
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Electronic copy available at: http://ssrn.com/abstract=2510986
The so-called Asian values debate was launched in the 1990s by the leaders of Malaysia and Singapore, who feared that the end of the Cold War and American pressure on China over human rights and democracy in the wake of the Tiananmen Square incident would destabilize the region. In a 1994 Foreign Affairs interview with Fareed Zakaria ("Culture Is Destiny," March/April 1994), Singapore's then ruler, Lee Kuan Yew, warned Western countries "not to foist their system indiscriminately on societies in which it will not work." Lee claimed that Western-style democracy, with its emphasis on individual rights, was not suited to the more family-oriented cultures of East Asia. In a speech given a few years earlier, Lee had argued that Asian societies would thrive not by adopting Western economic models, social norms, and governing strategies but by preserving what he described as the five relationships that are most important to Confucianism: "Love between father and son, one; two, duty between ruler and subject; three, distinction between husband and wife; four, precedence of the old over the young; and five, faith between friends." On 9 July 2014, nearly 135 million Indonesians went to some 480,000 polling stations and picked a new president -- just the third to be directly elected in the country’s history. (Indonesia overthrew its longtime dictator, Suharto, in 1998, but his initial successors were chosen by the legislature.) Their choice: Joko Widodo, known universally as Jokowi. A former small-town mayor from central Java, Jokowi first burst onto the national scene when he was elected governor of Jakarta in 2012. A populist and technocrat, Jokowi is neither rich nor wellborn; he dresses simply, is a self-professed metalhead with a special fondness for Metallica, and worked in the family furniture business before entering politics. His wild popularity and rapid ascent -from provincial unknown to the leader of the world’s third-largest democracy -- have drawn comparisons to another president who spent part of his middle-class childhood in Indonesia: Barack Obama. But high expectations can be a curse as well as a blessing, and Jokowi faces huge challenges: endemic corruption, a once-promising economy that has gone into a tailspin, and a lingering threat of Islamic extremism. The center of the world economy has been moving to Asia even faster than anticipated. As a result of the world financial crisis, this process accelerated. Rather than 1989 to 1991 at the end of the Cold War marking the critical point, as many in the western countries has decided, some eyeing the emergence of the G-20 with eight states from the enlarged 18 nation of East Asian States (EAS) consider this to be the actual turning point 1. As the Cold War ended, Asia Pacific Economic Caucus was formed in 1989 in Canberra, Australia, bringing together states from four main continents (Asia, Australia, America, and Europe) on both sides of the Pacific region. Joko Widodo, a commoner who was born in a Javanese slum, was sworn in on 20 October 2014 as president of Indonesia, completing an improbable political rise from Surakarta hometown 1
Manurung, Hendra. (2013). “Indonesia Economic Diplomacy Strategy”. Jakarta: The President Post Indonesia. 12 November 2012.
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Mayor, and Jakarta Governor to leader of the world’s fourth most-populous nation. He’s 53 years old, and the first Indonesian president not to have emerged from the country’s political elite or to have been an army general. He succeeded Susilo Bambang Yudhoyono, who stepped down after serving two five-year terms in 2004-2009 and 2009-2014. Indonesia is a world’s emerging democracy after United States of America (U.S.A) and India, is the world’s largest Muslim-majority nation and has the largest economy in Southeast Asia with 5.5-6.0 % economic growth. Indonesia government needs to emphasize on the fundamental point that a peaceful and prosperous Asia-Pacific benefits the peoples of Indonesia and of the region. Indonesia Ministry of Foreign Affairs is totally committed to the country’s strategic position on world maritime axis and, in particular, is dedicated to ensuring that Indonesian economic engagement with the region continues to be robust and reflects that overall commitment and policies consistency. On 9 July 2014, electoral presidential candidate debate in Indonesia powered up a national discourse about the country’s intent, capabilities, and roadmap as a maritime power in the IndoPacific region. Indonesia’s newly installed president, Joko Widodo, popularly known as Jokowi, promised in his election manifesto in May 2014 to 3 (three) main agenda, they are : 1) Focus on strengthening Indonesia’s maritime security; 2) Expand the canvas of regional diplomacy to cover the entire region of the Indo-Pacific; 3) Project the Indonesian navy as a respected regional maritime power in East Asia 2. Also, Jokowi announced in June 2014 that he aimed to transform Indonesia into a “global maritime axis” (poros maritim dunia)3. He reaffirmed his vision after being declared victorious winning presidential election in July 2014 and called upon all citizens to “work together to develop Indonesia into a global maritime axis, a global civilization hub”4. While taking the oath of office to become Indonesia’s seventh president on October 20, 2014, Jokowi reiterated his call to transform Indonesia into a maritime nation and invoked the slogan of “Jalesveva Jayamahe” (in the ocean we triumph)5.
“Jokowi-Jusuf Kalla Vision-Mission and Action Program”. Jakarta: http://kpu.go.id/koleksigambar/VISI_MISI_Jokowi-JK.pdf, accessed on August 20th, 2014, p. 13. 2
May
3
rd
4
rd
2014.
Retrieved
from
“Jokowi supports Palestinian independence”. Republika Online, June 23 , 2014. Retrieved from http://www.republika.co.id/berita/en/national-politics/14/06/23/n7m2m7-jokowi-supports-palestinian-independence, accessed on August nd 22 , 2014. “President-Elect Jokowi Calls for United Indonesia”. Tempo, July 23 , 2014. Retrieved from th http://www.en.tempo.co/read/news/2014/07/23/055595130/President-Elect-Jokowi-Calls-for-United-Indonesia, accessed on August 20 , 2014. “Jokowi’s Inaugural Speech as Nation’s Seventh President”. The Jakarta Globe, October 20 th, 2014. Retrieved http://www.thejakartaglobe.beritasatu.com/news/jokowis-inaugural-speech-nations-seventh-president, accessed on October 22 nd, 2014. 5
from
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Thus, Jokowi’s leading confidence articulations are an important step forward in Indonesia’s national leadership effort towards developing a grand maritime strategy in Asia Pacific region. His strategic vision goes beyond the idea of merely achieving maritime security and seeks to transform Indonesia into a maritime power. He is the first president in democratic Indonesia to publicly promulgate a maritime security doctrine, taking the debate out of the pages of the policy documents and placing it into the domain of a broader politico-strategic discourse. In light of debates and discussions, this paper attempted to describe and analyze Jokowi’s leadership and what does it mean for Indonesia’s maritime power in the coming years. While the East Asia-Pacific region offers enormous opportunities, there are certainly critical challenges as well. Indonesia has clear shared interests to address these challenges by working together towards greater energy and environmental security. For example, rapid economic and population growth has created enormous strains on the region’s food, water, forest, marine and energy resources. In many areas, the increased use of fossil fuel for industries and transportation has resulted in dangerous levels of pollution that in turn pose dangers to people’s health and accelerate climate change. On the political and security fronts, the resurfacing of long-standing territorial disputes threatens the stability of the region. How Indonesia responds to these challenges will determine its longterm ties to the region, as well as the Asia Pacific regional political economy stability beyond implementation of Free Trade Area regime in year 2020. Through the only leading idea on Indonesia’s world maritime axis, President Joko “Jokowi” Widodo recognized that Indonesian economic ties to the region are the fundamental underpinning of its bilateral; relationship and, for the overall strategic balance of power to be successful as Indonesian people must get the economic component right. Joko “Jokowi” Widodo Leaderships Whereas globalization has a long lineage, the last four decades of the 20th century were a period of rapid structural change. In the 1970s, the international economy consisted of a handful of industrial countries that exported manufactured goods to a multitude of developing countries, which in turn sent abroad their primary products, mainly agricultural commodities and natural resources. The elected Indonesia’s President Joko Widodo took the oath of office during a nationally televised special session of the People’s Consultative Assembly 6, a legislative super body
Cochrane, Joe. (2014). “New Leader Takes Oath of Office in Indonesia”, October 21st, 2014. Retrieved from http://www.nytimes.com/2014/10/21/world/asia/joko-widodo-is-sworn-in-as-indonesian-president.html?_r=0, accessed on 3 November 2014. 6
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dominated by the House of Representatives7, with a Quran held above his head 8. Jokowi’s vice president, Jusuf Kalla 9, also took the oath of office during the session. Among the foreign dignitaries attending the ceremony were Prime Minister Lee Hsien Loong of Singapore, Prime Minister Tony Abbott of Australia and John Kerry, the American Secretary of State10. Supposed that new Indonesia’s leadership under Jokowi, will implement Indonesian maritime power in order to challenge People’s Republic of China (PRC) “New Silk Route Strategy” in building roads, pipelines, railways and ports to bind itself to region. The presidential inauguration provided a respite for Indonesia from a tense political period that has endured since the country’s July 9th, 2014 presidential election. Joko Widodo defeated Prabowo Subianto, a former general and son-in-law of General (ret) Suharto, the late authoritarian president who was forced from office amid pro-democracy demonstrations in 1998. However, Prabowo Subianto leads a coalition of opposition parties that control a majority of seats and all the leadership positions in the House of Representatives and that has vowed to challenge Jokowi’s policy agenda at every turn. Some opposition leaders have vowed to be obstructionist and have even called for corruption investigations against the new president from his time as mayor of Surakarta, in Central Java, and as governor of Jakarta. Following a meeting last Friday between the pair to ease tensions, Prabowo Subianto attended Monday’s inauguration11. Joko Widodo referred to him as “my good friend”12, during his first presidential speech. Researcher identified and characterized the unlikely presidential victory by Jokowi over Prabowo Subianto as a battle between a commoner and someone from Indonesia’s political elite and authoritarian past. The new president has promised more “people-centric” government programs in a country where, despite membership in the Group of 20 major economies, more than 100 million people live on $2 a day or less, and current social disparity between the rich and poor is at a record high.
7
Ibid.
8
Ibid.
9
Ibid.
10
Ibid.
Cochrane, Joe. (2014). “New Leader Takes Oath of Office in Indonesia”, October 21st, 2014. Retrieved from http://www.nytimes.com/2014/10/21/world/asia/joko-widodo-is-sworn-in-as-indonesian-president.html?_r=0, accessed on 5 November 2014. 11
12
Ibid.
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Jokowi, a former carpenter and small-business man, made mention of the masses that rallied around him during the election campaign in his 10-minute inaugural address13, during which he called on national government officials and the Civil Service to work to improve the lot of the country’s poor14. “This is a truly historic moment for all of us to come together”15, the new president said. “Through hard work and cooperation, we will be able to help all Indonesians”16, he added later. Despite having a minority governing coalition, Jokowi has said he expected members of Prabowo Subianto’s coalition to eventually switch sides and join his administration 17, in that way giving him a majority and increasing his ability to pass legislation18. After the swearing-in ceremony, Jokowi’s presidential motorcade traveled through central Jakarta to greet the public before he was taken to the Presidential Palace in a traditional horsedrawn carriage19. A number of inaugural events were planned for later in the day and evening 20. Jokowi also gave an indication in his address of his foreign policy 21 plans to turn Indonesia into a “maritime power”22, noting that the country is the world’s largest archipelago 23. However, the new president has promised more government programs for farmers, fishermen and other traditional laborers, and more spending on public health care and social services for the poor. Despite of implementing plan of Indonesia’s maritime power, central government needs to ratify the Bill on Indonesia’s Maritime Affairs. Therefore, ratification of the Bill on Maritime Affairs was underscoring off roadmap for making significant leap toward sustainable exploration of marine resources. 13
Ibid.
14
Ibid.
15
Ibid.
16
Ibid.
17
Ibid.
18
Ibid.
19
Ibid.
20
Ibid.
21
Ibid.
22
Ibid.
23
Cochrane, Joe. (2014). “New Leader Takes Oath of Office in Indonesia”, October 21st, 2014. Retrieved from http://www.nytimes.com/2014/10/21/world/asia/joko-widodo-is-sworn-in-as-indonesian-president.html?_r=0, accessed on 5 November 2014.
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So, for the next five years all the endeavors will put Indonesia in equal position with other countries in the world. Thus, to harness marine potentials as far as over 300 miles is progressive decision to the Joko Widodo - Jusuf Kalla government. Thus, the effort to put Indonesia in equal position with other countries like People’s Republic of China (PRC), Malaysia and Singapore is an urgent matter, which needs stronger bargaining position on border management affairs related to territorial dispute issues. Since 1990s’, Singapore and Malaysia had already mapped out zones at the bottom of the ocean, while Indonesia had not gone that far. What Malaysia and Singapore did was attributed to International Sea Expert, Professor Hasyim Djalal. Moreover, to draw zones at sea bottom signified effort to build and empower Indonesia’s strategic maritime zone by 2020 and beyond. At that time Hasyim Djalal held the position of Chairman of the International Seabed Authority. For some years, Indonesia was not too concerned about it but now with the Bill on Maritime Affairs in 2014, Indonesia can begin to map out the sea bottom24. On 26 September 2014 25, one of the key substances agreed by Commission IV of Indonesia’s House of Parliament26, was underscoring Indonesia as an archipelago. This was most relevant, moreover to refer to the International Sea Law Convention 1982. Beside sea by territory, Indonesia could also manage jurisdiction Law and Sea Bottom zones. At Ministrial level there was already agreement and all the substance of Bill. At last minute, State Ministry of Marine Affairs and Fisheries (Kementerian Negara Kelautaan dan Perikanan) did not have any obstacle on crucial Articles. Other substance was stipulation above 12 miles including all the authority. “In case of the Java Sea, the Arafura Sea, the Tomini Gulf was stipulated by Presidential Regulation and space planning at sea would be our authority. For example in Southern Java right could be 12 miles. But in Java Sea, water width could be 40 miles or more and there was enclave. All the potentials must be safeguarded by strengthening of space planning”27. Indonesia Maritime Security The Asia-Pacific includes some landlocked countries, such as Laos, but the largest, most powerful and most active states all have significant coastlines, and the region includes the world’s most expansive archipelagos. For centuries, the maritime domain has been a medium through which regional countries have traded, communicated and fought. It has been a key historical component to Asia’s development, and continues to be so today.
24
Business News. 29 September 2014.
25
Ibid.
26
Ibid.
27
Ibid.
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In a region where much of the economic growth over the past three decades has derived from trade with the developed countries of Europe and North America, the sea remains the most frequently used conduit: more than 90% of all global trade is sent by sea. For this reason, China and other Asia-Pacific countries that now find themselves increasingly reliant on the maritime domain are developing new policies, bureaucratic structures and fleets to better manage and influence this arena. The issue of maritime security has significant relevance to the stability and growth of the AsiaPacific region. Perhaps more than any other region in the world, maritime-security concerns, ranging from disputed territories and waters to piracy, crime and the regulation of the sea, are of prime importance to Asia’s security more broadly. Water security may be one of the defining global issues of the twenty-first century. Worldwide, water use rose twice as fast as the population over the twentieth century, and further population growth and economic development will place increasing demands on this critical natural resource. Water security is inextricably bound with both food and energy security. It cuts across the entire range of social and economic activity and scales from the local to the global. There is growing international recognition that increasing pressure on freshwater resources may limit socioeconomic development and threaten human and national security.
Although freshwater is both relatively abundant and renewable on a global scale and over sufficiently long timescales, many regions, countries and populations have faced or are facing both short-term and sustained water shortages, affecting human health and economic activity. Resources are unevenly distributed between and within countries, as well as from month to month or season to season. Moreover, water availability varies locally or regionally from year to year with normal fluctuations in the climate, especially the two- to seven-year El Niño–Southern Oscillation (ENSO) cycle, which during its warmer El Niño phase is associated with drought in Southeast Asia, India and Australia, and in its cooler La Niña phase, with heavy rainfall. The Asia-Pacific region accounts for a large and growing share of the world’s energy-demand growth. With imports growing to meet national demand, which has outpaced domestic production, the region is rapidly becoming the new centre of gravity for global energy markets. These dynamics have made energy security a key policy concern for many Asian governments. At the same time, national naval capacities are growing rapidly in the Asia-Pacific region. Although the naval-power build-up is not primarily driven by the need to secure energy supplies, the Chinese and Indian governments, for example, have identified energy and resource security as one rationale for developing naval power, in particular ‘blue-water’ capabilities.
In itself, large-scale reliance on imported energy is not a source of energy insecurity. For most countries worldwide, most of the time, imports are a reliable solution to the economic challenge of fuelling growth. More specifically, access to seaborne energy markets appears to significantly 9|P a ge
increase the ability of an economy to cope with energy-supply crises. Moreover, there is no evidence that a country should need any military or diplomatic capabilities to secure all the energy it can pay for. As hydrocarbons are traded globally, competition for energy resources is dealt with by the price system. The boom in energy consumption from emerging economies, in a context of slow supply growth, has not triggered any armed conflicts but, rather, has led to a large increase in the average price of oil. Indonesia is an emerging power of the 21st century, in both Asia and the world, but it is not moving that way in the traditional manner of other powers. The term "emerging powers" recognizes the growing status – primarily economic but also political and strategic – of a specific group of nations. Most, if not all of them, were once categorized (and in some cases still are) as part of the "third world" or "global south”. Indonesia belongs in this category. It is the fourth-most populous country in the world, after China, India and the United States. It is also the world’s largest Muslim-majority country and the third-largest democracy. Its economy is currently the 16th largest in the world (although one more recent estimate puts it at number 10), and McKinsey & Company, the global consulting firm, has estimated that it could become the seventh largest by 2030. Since the fall of the Soeharto dictatorship in 1998, Indonesia has held three direct presidential elections, all of which were judged to be free and fair. Between 2000 and 2010, its economic growth surpassed all other emerging economies except China and India, and was ahead of Russia, Brazil, and South Africa, which make up the other BRICS countries. But the Indonesian story suggests it is taking a different path to emerging-power status than other nations. This path is not based so much on military strength or economic resources; rather, it lies in the ability of a country to develop a positive, virtuous correlation of three factors: democracy, development and stability, while pursuing a foreign policy of restraint toward neighbors and active engagement with the world at large. This is the key lesson from the story of Indonesia that this essay seeks to present. Indonesia has achieved its growing status in global affairs in a very different manner than other emerging powers in the developing world, including the BRICS (Brazil, Russia, India, China and South Africa). Two things set Indonesia apart. First, while the rise of other BRICS countries was related to, first and foremost, economic growth and military spending, Indonesia came in on the back of democratization and regional engagement. Each of the BRICS is a significant military power, some regionally and others such as China and Russia globally. Even non-BRICS emerging powers such as South Korea, Nigeria and Saudi Arabia had acquired significant regional economic and military clout before their diplomatic and political contributions came to be recognized. Indonesia is sometimes compared with the Scandinavian countries of Norway, Sweden and Denmark, or with Australia and Canada, which are called "middle powers." But these are wealthy Western nations, and some, such as Sweden and Australia, possess significant military power.
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By contrast, Indonesia is still militarily and economically a weak state, in particular compared to some of its neighbors. Yet it enjoys comparable or even greater regional leadership and clout than any of the other emerging powers in the developing world. For a country that is neither the strongest military nor economic power even in its own immediate region, (even tiny Singapore scores better on both counts), Indonesia has done more as a mediator and facilitator of Asian conflicts than the region’s major powers – China, Japan and India – combined. The second point of difference relates to the position of an emerging power within its own region. The Indonesian story suggests that the key to global status and recognition lies in good regional relations. Marty Natalegawa, Indonesia’s foreign minister, likes to describe Indonesia as a "regional power with global interests and concerns." We can modify this description slightly to say that Indonesia pursues a "regionalist path to its global role." According to Natalegawa, many rising powers suffer from a "regional trust deficit" with their neighbors. Indonesia is different. There is much truth to this. Relations between powers such as India, China, Japan, South Africa and Brazil with their respective neighbors are marked by considerable mistrust and conflict. Indonesia, on the other hand, is universally acknowledged as a regional “elder” and enjoys far more cordial relations with all its neighbors. Thus, a distinctive feature of Indonesia’s role as an emerging power is that while it is not the dominant military or economic power in its own region, it is respected and expected to play the role of mediator and facilitator in regional crises and conflicts. Some have argued that the BRICS should be expanded to include Indonesia. But one does not find too much enthusiasm within Jakarta’s foreign policy circles for this idea. As Hassan Wirajuda, who served as Indonesian foreign minister from 2001 to 2009 and is Strategic Review’s editor-in-chief, told me: "We don’t bother much about it ... We have our own game, ASEAN, [and] East Asia." He pointed out that while Indonesia is not part of the grouping, "the growth of BRICS has declined, while Indonesia’s is growing more rapidly. What is the meaning of BRICS, or not being included in the BRICS?" Noting that Indonesia was projected to have the world’s seventh-largest economy by 2030, Wirajuda said that "it is more important to be part of East Asia – the center of gravity of the world; the region of the 21st century." Although pitched at the global level, Indonesia’s focus has remained very much on developments in Southeast Asia. Not all emerging powers are counted as regional powers, however. Are South Korea and Argentina, while recognized as emerging powers, true regional powers? These uncertain and contested categorizations are important, as they affect discussions about the global order. World Major Power Relations While Indonesia does not see itself as a global power, it does seek to influence the relationships among the major global powers through its role in the Asia-Pacific region (now being extended to the Indo-Pacific, which signifies the inclusion of India). This is because the region is home to some of the most materially powerful actors in the contemporary international political system. 11 | P a g e
But how can Jakarta approach strategic relationships in this region? Obviously, it cannot do this as an individual actor. But being a regional multilateral player gives it an advantage that greatpower status would not. Multilateralism would be fruitless if it simply gave primacy to great powers. That would marginalize ASEAN, and thus Indonesia as ASEAN’s anchor. Indonesia’s preferred approach to this issue is "dynamic equilibrium." The idea of dynamic equilibrium is a powerful example of Indonesia’s regionally based approach to the global order. The term is of recent origin but has been frequently mentioned in speeches by President Susilo Bambang Yudhoyono as well as Natalegawa. In a speech in Tokyo in December 2013, Natalegawa described the idea in these words: 1) 'Dynamic,' because change is a constant and indeed inherent in the region. The region’s architecture must therefore be constantly adaptive. 'Equilibrium,' because such a state of constant change does not suggest a permanent state of anarchy or the uncertainty common to a diffuse multi-polar system. Nor, on the other hand, of the imposed order of an unchecked preponderance of a single power. Instead, countries of the region develop norms and principles, codes of conduct and as the case may be, legal frameworks, to build a spirit of partnership and cooperation in addressing issues of common interest."
2) Marty Natalegawa, who is generally associated with the "dynamic equilibrium" idea, said it was inspired by acute tensions within the relationships among the major powers, especially the United States and China, and China and Japan. In addressing such tensions, the approach not only rejects hegemony by any single power in the region, be it the United States or China, it also departs from the conventional balance of power approach. Unlike policy makers in neighboring Singapore, Indonesians do not like to use the term balance; equilibrium is their preferred concept. The goal is not to create order through military buildups, alliances and arms races, but by keeping ASEAN in the middle, like the "conductor in an orchestra."
Democracy and foreign policy Across Asia, continuing national efforts to strengthen military capabilities have taken place against the backdrop of rising strategic tensions among major powers in the region, including the United States. Asian states’ growing defence budgets are purchasing increasingly sophisticated military systems that enable armed forces in the region to deploy more substantial forces over greater distances, and to locate and engage targets at longer range with greater precision and accuracy.
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Purchasing new military equipment by no means automatically translates into improved military capabilities. But when supplemented by developments in doctrine, training, command control communications computer processing/intelligence, surveillance and reconnaissance (C4ISR), logistics support, and joint-service operations, and where national defence industry is able to adapt, integrate and even produce advanced systems, it is clear that many Asian armed forces are improving their all-round capabilities. While most Asia-Pacific states have restricted their defence modernisation to conventional weapons, there are important nuclear and long-range missile dimensions to the military programmes of China and India, as well as North Korea. Policymakers and analysts alike have envisaged several divergent models for the evolution of the Asia-Pacific region’s security order. Many commentators have argued that a US-led hegemony has been the prevailing mode of security order in the region for at least the last four decades. Some argue that the US-led order endures and will do so for the foreseeable future, while others suggest that it is under increasing strain as a direct consequence of China’s rise.
Others have predicted the emergence of a Chinese-led form of hegemony based on the hierarchical tributary system of ancient China. Alternatively, figures such as Henry Kissinger, former US secretary of state, and Zbigniew Brzezinski, former US national security adviser, have suggested that a new ‘group of two’ (‘G2’) could be established if Sino-American economic cooperation was translated into the strategic realm to tackle a range of important international problems, including climate change, Indo-Pakistani tensions, the Arab-Israeli dispute, nuclear proliferation and conflict in failed states. Another variant of this condominium idea is one in which more than two major-power players share power on a largely informal basis. Others have looked to the notion of the balance of power, as practiced in Europe in other centuries, to provide an understanding of how Asia’s regional order is evolving.
The Regional Security Assessment 2014 has presented detailed analyses of contemporary security concerns in the Asia-Pacific region, most of which have featured in discussions at previous Shangri-La Dialogues (SLDs) and the first two meetings of the Fullerton Forum: Shangri-La Dialogue Sherpa Meeting. There has been no intention to present a fully comprehensive overview of Asia-Pacific security, and some important regional security matters have not been examined in detail here. Examples include the 13 | P a g e
dynamics of relations within Southeast Asia and the role of the military in humanitarian and disaster relief. Perhaps the most important single thread running through this Strategic Dossier concerns the ramifications of China’s rise as a political, military and economic force, particularly for its neighbourhood. Changes in Beijing’s political and military leadership are likely to make Chinese power an even more important factor in the Asia-Pacific; President Xi Jinping’s vision of Chinese resurgence includes not only continued strong economic growth and adroit foreign policy, but also an important role for the People’s Liberation Army in defending what the Chinese Communist Party sees as its ‘core interests’.
Any framework to understand and explain Indonesia’s foreign policy and role in the world has to appreciate the impact of its democratization. Indonesia also offers an important and reassuring example of how democratization can affect and reshape a country’s foreign policy. As Natalegawa put it, democracy’s impact on Indonesia’s foreign policy has been in both process and substance. In terms of process, he said, foreign policy decision-making is now "more diffuse, there is a more diverse constituency for foreign policy, a sense of public ownership and participation in the policy-making, even in the post-decision [implementation] phase. It is much more important for foreign policy makers during the dissemination phase to earn the support of the public, to get feedback, sell the policy. So overall, the system is much more inclusive." In terms of substance, the impact of democratization can be seen in Indonesia’s support for democracy and human rights, including placing support for and recognition of democracy and human rights within the ASEAN Political-Security Community and the ASEAN Charter. Indonesia was a main backer of the ASEAN Intergovernmental Commission on Human Rights, and the creation of the Bali Democracy Forum. Mister Ketut Erawan, executive director of the Institute of Peace and Democracy at Udayana University in Bali, which is the implementing agency for the Democracy Forum’s agenda, said democracy has two main functions in foreign policy: "It can be instrumental, and it can also promote identity change." A country’s democratic credentials can be used to address foreign 14 | P a g e
policy and security challenges. For Indonesia, this has been important in persuading the United States to remove sanctions against its armed forces for human rights abuses during the Soeharto era, which in turn has normalized defense relations with the US and enabled the purchase of advanced weapons systems to help modernize the Indonesian military. Democratization can furthermore attract more international development assistance and support for economic programs. At the same time, being a "democratic country" has dramatically altered Indonesia’s image in the world, according to Wirajuda. "Democracy has made Indonesia accepted by the international community, both developed and developing countries – especially with the developed world." Indonesia Geopolitics The term “Indo-Pacific” has become increasingly common in the lexicon of geopolitics.
In terms of geography, it refers to an important triangular spanning two oceans, the Pacific and Indian Oceans, bounded by Japan in the north, Australia in the southeast and India in the southwest, notably with Indonesia at its center. Thus as a result, in this largest archipelagic state in the world, amid its archipelagic waters, are found some of the most strategic sea lanes in the world: connecting the Indian and Pacific Oceans. Serving as highways for the movement of global trade, as well as of people and the associated ideas and cultural expressions they bring forth.
In the political and economic domain, it refers to an area encompassing some of the most dynamic economies in the world, with a rising role not only in the evolving global economic architecture, but also in the political arena as well.
Today, the Indo-Pacific region is an economic power in its own right. It serves as the engine for global economic growth.
The region has an aggregate population of some 3 billion. It is home to the world’s largest democracies. Five of its 30 countries are among the 20 largest economies of the world. These account for about two-thirds of global trade.
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Not least, the term Indo-Pacific brings into focus the reality of the interconnection between the futures of the Indian and the Pacific Oceans.
Whereas in the past one may identify distinct and separate regional cooperative architecture for the Indian and the Pacific Oceans, the future could see an emphasis on architecture that connects these two areas: Indo-Pacific frameworks. As a matter of fact, some of the forums are already reflecting such connectivity.
The 27 countries of the ASEAN Regional Forum (ARF), for example. And more significantly, perhaps, the East Asia Summit (EAS) which, despite the nomenclature, at Indonesia’s initiative, includes India, Australia and New Zealand as original members.
For Indonesia, given its geography, the future course of the Indo-Pacific region is in our profound interest.
And today, I wish to highlight one particular and specific challenge: How do we maintain the “pacific” in the Indo-Pacific? In other words, how many countries in the region work in common to maintain the peace and stability that have served them well?
A key objective, indeed, given that the many decades of peace and stability in the area have been instrumental in making possible the pursuit of economic development, progress and prosperity by the countries of the region, a “peace dividend”.
Yet, multi-faceted challenges await.
Let me highlight three; and offer some thoughts in response.
First and foremost, challenges stemming from “trust-deficit”. 16 | P a g e
On the Korean Peninsula, for example, while the Indo-Pacific region has long “factored-in” the challenges there-in, recent developments may suggest a significant leap in the nature of the threat; the sharpening of distrust and its attendant cycle of tensions. And the stakes are getting ever higher.
A nuclear-capable DPRK, for example, may alter the security equation in the region — proliferation pressures not unlike in the Indian subcontinent may ensue. In the absence of some kind of renewed efforts to promote dialogue and security — to promote trust and confidence — countries in the region may feel compelled to pursue guarantees of their own security at the expense of the other and, indeed, ultimately, to itself.
Not wishing to oversimplify, I believe that at the heart of the various complex and inter-related challenges on the Korean Peninsula, like many a potential conflict-situation, lies the issue of “trust deficit”. Worst-case assumptions of the other’s intention feeding action-reaction, a vicious cycle of increasing tensions and of deepening distrust. A situation where the perceived advantage of pre-emptive action leads a hitherto minor incident to escalate to a major crisis, and even, open conflict.
Essentially, I believe that means must be brought to disrupt the often apparently relentless rush toward conflict — to end the sense of inevitability of conflict. Trust and confidence must be built and nurtured. The exercise of restraint must be rewarded; reciprocated. Mutual restraint. Hence communications need be established: formal and informal; governmental and non-governmental.
The establishment of lines of communications, especially in times of crisis, are not signs of weakness or acquiescence; rather they are means to decipher and convey intent, without prejudicing or sacrificing principled position.
A “pacific” Indo-Pacific requires, therefore, modalities to build mutual trust and confidence. To substitute an all too often vicious cycle of tensions with a virtuous cycle of trust and confidencebuilding.
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Second, unresolved territorial claims.
Ours is a region not exempt from these. Maritime: from the East China Sea to the South China Sea. Land borders: affecting major countries of the Indo-Pacific region sharing long common land boundaries. By their nature, they often defy prompt resolution.
Decades-long and painstaking negotiations are not uncommon. Further burdening already complex legal and technical issues are past history. Often, current issues are not contributing to conditions conducive for the peaceful and negotiated resolution of unresolved territorial claims.
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Trust and confidence must be built and nurtured. The exercise of restraint must be rewarded.
I believe that unresolved territorial claims, disputes even, do not have to equate conflict. In this connection, where the realities of territorial disputes are evident, this must be acknowledged by the parties concerned. Without, however, prejudicing or compromising the principled position of each of the parties.
In this manner, the claimant parties do away with the constant testing and prodding of the other’s resolve and intentions; of dangerous and destabilizing “show the flag” measures that may invite response from the other side — escalating minor incidents to full blown crisis; and risking miscalculation of intent.
A “pacific” Indo-Pacific, therefore, requires a commitment from parties to a territorial dispute to respect certain code of behavior or conduct in the affected area. In the South China Sea context, this has meant the drawing up of a regional code of conduct between ASEAN and China. 18 | P a g e
Elsewhere it may involve less formal arrangements or understandings. Miscalculations or unintended crisis. However, the essence remains: Avoid miscalculations or unintended crisis.
Ultimately, however, where a territorial dispute is prevalent, a “pacific” Indo-Pacific must commit to peaceful settlement of disputes in accordance with the principles of international law and the Charter of the United Nations.
Third, managing the impact of change. Change permeates the Indo-Pacific region.
Change and transformation within countries: political and economic — have ramifications far beyond their borders. As a matter of fact, the Indo-Pacific has been witness to some of the most fundamental process of change in recent decades. Reform and democratic change have been on the march — for example from the Republic of Korea, the Philippines, Thailand, Indonesia and, today, in Myanmar. Further, Southeast Asia collectively, through ASEAN Political Security Community, has made democracy and reform key aspects of community-building.
Equally impactful has been the economic transformation of the Indo-Pacific region, turning the economies of the region into drivers of the global economic growth.
As change occurs, a new type of challenge has arisen. Essentially, whether the region will witness a relationship among countries marked by competition or partnership. The region certainly has its fair share of important “bilaterals” with potentially profound implications to the region’s peace and stability. In addition to the most commonly cited, for example China-US and US-Russia ties, others are equally significant. To cite a few: China-Japan, China-India, JapanRepublic of Korea, Japan-Russia and Russia-China. What’s more, these relationships, competitive or otherwise, do not take place in a vacuum. They are inter-linked and affect one another.
In my view, a “pacific” Indo-Pacific region requires a new paradigm in the region’s inter-state relations. One not unlike that that has evolved in Southeast Asia through ASEAN. Thanks to the latter, the Southeast Asia region has put behind it a region that was once marked by inter-state 19 | P a g e
rivalry; a region torn apart by the East-West divide. Instead, we are seeing a region engaged in a process of community-building, including in the political and security domains.
I believe that a fresh perspective from the Indo-Pacific region entails one, that promotes a “dynamic equilibrium”.
The word “dynamic” suggests recognition that change is inherent and a constant in the region. It is a natural phenomenon that cannot and should not be artificially resisted. At the same time, “equilibrium” reminds that this state of constant change does not imply an anarchical state of affairs: either due to the unchecked preponderance of a single state, or due to the disorder or uncertainty associated by a multipolar region. Instead, peace and stability in the region ought to be brought about through the promotion of common security, prosperity and stability. A recognition that security can only be enjoyed sustainably by states if it is viewed as a common good and not one that is obtained at the expense of the other. A dynamic equilibrium thus is marked by an absence of preponderant power not through the rigidity, rivalry and tensions common to the pursuit of a balance of power model. Instead, through the promotion of a sense of common responsibility in the endeavor to maintain the region’s peace and stability.
To reflect such an approach, I am of the view that we should be ready to work towards an IndoPacific wide treaty of friendship and cooperation. A commitment by states in the region to build confidence, to solve disputes by peaceful means, and to promote a concept of security that is all encompassing; underscoring that security is a common good.
A treaty, not unlike the Treaty of Amity and Cooperation in Southeast Asia, which has been such an instrumental part in that region’s evolution from one marked by conflict to one which is on the eve of a community. A treaty which provides flesh and strengthens the commitment already expressed by the East Asia Summit participating countries through the so-called “Bali Principles” on the Principles for Mutually Beneficial Relations agreed at the East Asia Summit in 2011.
The Indo-Pacific must continue to be a net contributor to international peace and security. This requires an Indo-Pacific region that is marked by mutual trust and confidence; a region which 20 | P a g e
demonstrates a commitment to the pursuit of peaceful settlement of disputes; and a region which embraces change as a force for common good.
If the countries of the region accomplish these three goals, I am sure that the Indo-Pacific region, which enfolds both the United States and Indonesia, will rise above all the challenges it is confronting today.
And the world will be so much the better for it.
(The writer is foreign minister. The article is his keynote speech at the Conference on Indonesia in Washington, D.C., on May 16, 2013, http://www.thejakartapost.com/news/2013/05/20/anindonesian-perspective-indo-pacific.html). Indonesia’s future challenges As recently as 2008, the economies of Southeast Asia received roughly less than half as much foreign direct investment as China did. Four years later, in 2012, they pulled to within spitting distance ($111 billion versus $121 billion). This surge in international interest reflects the region’s attractive demographics and, even more so, its impressive recent economic performance. The ten countries of the Association of Southeast Asian Nations (ASEAN) represent a collective market of 620 million people, significantly larger than that of North America, Latin America and the Caribbean, the eurozone, or the Middle East and North Africa. They are home to a young, large, and growing labor pool, as well as a growing and increasingly consumption-oriented middle class. The ASEAN countries posted a combined GDP of over $2.2 trillion in 2012 -larger than Russia’s GDP and almost the same size as Brazil’s -- and many economists expect that number to double by 2020. ASEAN’s five core countries -- Indonesia, Malaysia, the Philippines, Singapore, and Thailand -- have been growing as fast as any other regional grouping in the world over the past five years.
Impressive as this pack has been, two of its members have stood out as particularly promising. Giant Indonesia soared during the last half decade, boasting high growth, low inflation, an extremely low debt-to-GDP ratio, strong foreign exchange reserves, and a top-performing stock market. But it is the Philippines, the region’s other archipelago, that is now providing the biggest upside surprise. The Philippine economy expanded by 6.6 percent in 2012, exceeding most economists’ predictions, and was among the fastest-growing economies in the world in the first 21 | P a g e
half of 2013, expanding by 7.6 percent. (Despite the destruction of Typhoon Haiyan, which had just ravaged the country as of this writing, the Philippines’ growth rate for all of 2013 is expected to remain above 6.5 percent.) The Philippine Stock Exchange Index has posted record highs since President Benigno Aquino III came into office in 2010, and approvals for foreign investment have more than doubled in that period. The country’s inflation is low, its foreign exchange reserves are high, and its public debt is steadily declining. As a result, all three of the major credit-rating agencies upgraded Philippine sovereign debt to investment grade in 2013: the first such rating in the country’s history. Past performance, however, is not necessarily indicative of future prospects. So what is to be expected of these two island nations in the years ahead?
JAKARTA'S STRAITJACKET
Indonesia, with more than 250 million citizens, isn't just the largest country in ASEAN; it is the fourth largest in the world. Thanks to abundant natural resources, a massive domestic market, and solid macroeconomic policymaking, it has grown by more than five percent a year on average for more than a decade. In the five years leading up to 2011, it more than doubled its exports (from $84 billion to $204 billion), and many experts started calling for it to be added to the BRICs group of major emerging markets.
Today, however, the picture looks far less rosy. Indonesia's current account went into deficit in the fourth quarter of 2011, its trade balance followed suit the following spring, and the rupiah was one of Asia's worst-performing currencies in 2012, with its value dropping by almost six percent. Those trends accelerated in 2013, as the country's trade and current account deficits ballooned and as the rupiah slumped still further. Indonesia quickly went from being hailed as a new economic superstar to being dubbed by Morgan Stanley as one of the world's "fragile five" countries, owing to the vulnerability of its currency to foreign capital outflows. The weak rupiah is raising the cost of imported goods, exacerbating inflationary pressures, and eroding Indonesian purchasing power -- significant factors for an economy whose growth is overwhelmingly consumption-driven.
Some of these problems can be attributed to the retreat of capital from emerging markets in anticipation of changes to the U.S. Federal Reserve's policy of quantitative easing. But Indonesia's currency and stock market were hit far harder than those of its peers in mid-2013, and Indonesia did not recover as quickly when the Federal Reserve ended up keeping its foot on the stimulus pedal last fall. Investors correctly saw Indonesia's deficits as symptomatic of 22 | P a g e
broader structural imbalances in the country's economy, and they remain concerned that Jakarta has no strategy for responding to its numerous challenges.
Among these are the fact that Indonesia's export sector is overly dependent on commodities, a handful of which, including coal, rubber, palm oil, and mineral ores, account for over 50 percent of the country's exports. Indonesia was a major beneficiary of the commodities boom between 2009 and 2011, when revenues for key resources rose exponentially. But those same commodities experienced precipitous price drops throughout 2012 and 2013, and prices are expected to remain low for some time. The decline in prices has largely been a function of decreased demand from China, yet increases in supply have also played a role, due to the proliferation of small miners in Indonesia who get licenses at the local level.
The biggest source of Indonesia's recent problems, however, has been its shrinking exports of oil and gas, thanks to declining production and rising consumption at home. Indonesia has been a net importer of refined oil since 2004, but for most of the years thereafter, it has remained a net exporter of crude oil and natural gas. In 2013, however, Indonesia experienced huge crude oil deficits, and the revenue it took in from exporting surplus domestic gas also dropped dramatically. The declines in crude oil production and natural gas exports highlight the problems that plague Indonesia's energy sector, including regulatory uncertainty, corruption, and a trend toward criminalizing commercial disputes. Rising resource nationalism has also paralyzed a number of major oil and gas projects, as the government and powerful domestic business interests have tried to squeeze foreign contract holders. With a young and growing middle class, Indonesia will have to either improve its investment climate in order to increase production at home or else be condemned to an ever-greater reliance on imported energy.
Manufacturing, meanwhile, has also fallen behind: exports of electrical appliances, iron and steel, chemicals, cars, auto parts, and computers all declined in the first nine months of 2013 compared with the same period in 2012. At the same time, Indonesia has started importing significantly more of just about everything, especially oil and gas. Indonesia's fuel subsidies are among the highest in the world, which encourages profligate consumption. And as the rupiah weakens, the import bill is going up.
The absence of sufficient domestic processing capability to make refined fuels and petrochemicals represents another structural problem. Indonesia needs 1.3 million barrels of refined crude oil per day, but its existing refineries produce only 770,000 barrels a day. Meanwhile, Indonesia's failure to attract the investment necessary to expand value-added manufacturing and processing industries at home has left the country increasingly dependent on 23 | P a g e
a growing range of imports. From 2007 to 2012, for example, imports of textiles, electrical appliances, iron and steel, chemicals, cars, auto parts, computers, fertilizers, processed food, and feed increased significantly. Indonesia is going to have to learn how to make much more of what it needs at home if it is to turn its rapidly growing consumer class into an economic opportunity rather than a burden.
Indonesia needs domestic investment not just to correct its growing imbalances but also to create more and better-quality jobs. With over half the population now under the age of 30, the proportion that is of working age will rise significantly over the next decade. Attracting jobcreating investments in manufacturing will require a more flexible labor regime, improved infrastructure, lower transportation costs, education reform, and more legal and policy certainty.
Jakarta is starting to make headway on some elements of this agenda, specifically allocating more of its budget to infrastructure spending, passing needed eminent domain laws to accelerate infrastructure projects, and bringing a growing number of corruption cases against powerful politicians and officials. The government has also made progress on reducing the overall level of poverty. But after years of complacency on economic reform, fed by the commodities boom and easy credit, the government now faces a long to-do list. With legislative and presidential elections looming in 2014, however, leadership is in short supply, nationalism and populism are on the rise, and the appetite among the major political parties for reform appears limited. This suggests a period of stagnation and further backsliding is ahead, at least until a new administration takes office in October 2014.
THE THRILLA IN MANILA
The Philippines enjoys some of the same strengths as Indonesia. With the second-largest population in ASEAN, at 106 million, the Philippines has also enjoyed consumption-led growth and similarly benefits from high domestic demand. Thanks to reforms put in place after the 1997–98 Asian financial crisis, the Philippines, like Indonesia, has a strong banking system, with large amounts of capital on hand and a low incidence of loans in default. Respected technocrats run key economic portfolios in both countries and produce sound macroeconomic management.
The two economies also share many of the same challenges. They are both vulnerable to severe natural disasters. They have low tax-to-GDP ratios, limiting government revenue. They both suffer from inadequate infrastructure, high logistical costs, and rigid labor regimes, which have 24 | P a g e
restricted the expansion of their manufacturing sectors. The Philippines' exports are nearly as dominated by electronics as Indonesia's are by commodities, and shipments of electronic components and semiconductors, which account for over 50 percent of Philippine exports, have slumped due to a drop in global demand. As a result, the Philippines has run a substantial trade deficit in recent years.
Unlike Indonesia, however, the Philippines' current account has been in surplus since 2003, ending an era of perennial balance-of-payments crises. Indeed, the Philippines' current account surplus exceeded that of the rest of Asia in 2012 and is projected to keep growing. This success is the result of two key factors: the substantial flow of remittances from the more than ten million Filipinos working abroad and a dramatic expansion in the Philippines' service sector, thanks to huge growth in business-process outsourcing.
A high birthrate and a lack of jobs at home has for years sent millions of Filipinos to look for work abroad. Almost ten percent of the population now lives overseas, and remittances from this group, which represent nine percent of GDP, have grown by double-digit rates since 2002. With the working-age population forecast to expand for the next 50 years, the outflow of people will continue, as will the money they send home. These remittances help keep consumption up, especially among the poor and the unbanked, and they are among the sources of foreign exchange least sensitive to economic shocks. During the Asian financial crisis, for example, remittances helped stabilize capital flows and shield the peso from depreciation. Similarly, the peso fell by only five percent in 2013, while the rupiah dropped by 18 percent.
Another distinctive feature of the Philippine economy is the large role of the service sector, accounting for 57 percent of GDP in 2012. The Philippines is now the second-largest center of business-process outsourcing in the developing world, after India. The industry is estimated to have created about 800,000 jobs, originally mostly in lower-end call centers but increasingly also in fields such as engineering, medicine, and accounting. The government deserves credit for facilitating this growth through investments and fiscal incentives.
Still, the Philippines continues to struggle on a number of key fronts. High economic growth has yet to translate into more jobs and less poverty. Unemployment has stubbornly remained above seven percent -- higher than in any other core ASEAN state -- for the past six years, and underemployment has stood at roughly 20 percent during the same period. With over one million Filipinos entering the labor force each year, the service sector alone cannot absorb them all, especially since the manufacturing and agricultural sectors have been shedding jobs. No surprise, 25 | P a g e
then, that poverty has barely declined in recent years or that the country's per capita GDP is the lowest among ASEAN's core five.
To reverse these trends, the country has to create jobs for semi- and unskilled workers in manufacturing and agriculture. But doing that, in turn, will require attracting more foreign investment, which for the Philippines is currently among the lowest in Asia, reaching only $2 billion in 2012 (compared with the $20 billion that went to Indonesia).
Investment in the Philippines has stayed so low because the country's economy remains one of the most restrictive in the world, with constitutional provisions limiting foreign ownership of Philippine companies to 40 percent in a broad range of sectors. Manila must address this problem, as well as regulatory bottlenecks, infrastructure shortcomings, and confusion about the overall direction of its economic policies. The land reforms that were passed during the administration of the current president's mother, Corazon Aquino, for example, have not had their intended effect, as uncertainty over property rights has limited investment in the agricultural sector. The Philippines is one of the most mineral-rich nations on earth. However, policy flipflops have ground mining investment to a halt, and infrastructure projects have suffered a similar fate.
Manila's to-do list, then, is nearly as long as Jakarta's. But whereas Indonesia has not passed any meaningful reforms in nearly a decade, the Philippines, under Benigno Aquino III's bold leadership, has taken real steps to address some of its challenges. In the first three years of his six-year term, Aquino has been relentless in fighting corruption and has implemented reforms to improve transparency and efficiency in government spending and tax administration. Despite fierce opposition from the Catholic Church, he won passage of a landmark reproductive health bill to help the country's poor gain access to birth control. He liberalized the aviation industry by adopting an "open skies" policy, enabling the entry of long-prohibited foreign carriers and giving the Philippines' underperforming tourism industry a boost. He has challenged vested business interests by passing a sin tax on tobacco and alcohol to reduce the overall consumption of these products and to improve government finances, implemented a conditional cash-transfer program to provide a social safety net for the poor, and expanded access to education and health care. On the political side, he reached a framework agreement for a new peace deal with the country's largest insurgent group. For these and other reasons, Aquino enjoys unprecedented popular support for a president halfway through his presidency, as shown by his coalition's decisive victory in the May 2013 midterm elections.
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The president is also well received abroad: his record has earned the Philippines significantly improved scores on a number of global surveys. During his tenure in office, the Philippines has moved up 26 spots on the World Economic Forum's Global Competitiveness Index. The Philippines beat Indonesia on Transparency International's 2012 Corruption Perceptions Index, moving up 24 spots (to 105); Indonesia fell 18 spots (to 118). And the Philippines jumped 30 notches on the World Bank's 2014 Ease of Doing Business Index, reversing years of decline and again surpassing Indonesia.
As a result of these improvements, the Philippines is well placed to withstand the expected return to volatility in global capital and equity markets when the U.S. Federal Reserve ends its quantitative easing in 2014 (as it is expected to do). The Philippine central bank will have significantly more leeway than its Indonesian counterpart, for example, to maintain a flexible monetary policy and to take measures to spur growth. Although the Philippines is unlikely to continue booming at the pace it managed in early 2013, which was driven in part by electioninduced stimulus measures, growth is expected to remain above six percent in the coming years. (Typhoon Haiyan may impact this forecast.) By contrast, the World Bank and the International Monetary Fund have significantly downgraded Indonesia's 2013 and 2014 growth forecasts, to just over five percent.
THE REFORM IMPERATIVE
Indonesia's many strengths, including its size, natural resource wealth, strategic location, consumer-driven economy, and resilient financial system will continue to attract investment and bolster the country's economic prospects in the years ahead. But the next president will need to return to a path of reform if Indonesia is to retain its competitive edge.
The Philippines, on the other hand, has momentum behind its reform efforts and a popular president with three years left in his term. This provides a compelling platform for growth moving forward. But to make the most of the country's opportunities, Aquino will first need to manage the humanitarian disaster wreaked by Typhoon Haiyan as quickly, efficiently, and compassionately as possible. Then, he will need to push forward with structural reforms, especially constitutional changes necessary to promote foreign investment. The president has shown little enthusiasm for this project thus far, but a range of forces, especially the evolution of public opinion, may well push him toward change.
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All major business groups now support the relevant constitutional amendments, reflecting a change in the country's political economy, as Filipino oligarchs now feel that they have more to gain than lose from the introduction of new foreign capital and competition. The shift in opinion on liberalizing the economy also reflects public support for the Aquino administration's decision to draw closer to Washington, a result of Manila's strained relations with Beijing over maritime boundary disputes. Support is growing among Filipino elites for joining the U.S.-led TransPacific Partnership, a regional free-trade agreement that would also help open up the Philippine economy. This stands in stark contrast to Indonesia, where no constituency speaks in favor of joining the TPP and where the polity as a whole is turning more nationalist and increasingly favoring protectionism.
In the end, it may be this evolving public consensus in favor of openness and transparency that provides the most promise in the Philippines. Revelations in late 2013 that legislators had siphoned off huge sums of pork-barrel funds for personal use and that the office of the president had also misused discretionary funds sparked a public outcry so strong that Aquino may have to go even further than intended in fighting corruption in order to maintain his moral authority. If he does, the president could leave his country with an impressive and lasting legacy -- unlike the outgoing Indonesian president, Susilo Bambang Yudhoyono, who will leave behind nearly a decade of missed opportunities to advance economic and political reform when he steps down in 2014. What is liberalism? The debate never ends, but Fawcett identifies a core set of liberal ideas: respect for the individual, civic equality, suspicion of power, faith in progress, and the search for an ethical order amid the great conflicts generated by a modernizing world. Fawcett traces the liberal tradition from its origins in nineteenth-century Europe, to its historic union with democracy early in the twentieth century, to its near-fatal collapse after World War I and the Great Depression, and culminating in its triumph and spread in the decades after World War II. Fawcett shows how early liberals welcomed the coming of Western advancement and believed that social change could be steered in a progressive direction through science, the accumulation of knowledge, trade, international cooperation, and healthy political institutions. As Fawcett’s compelling history reveals, the twentieth century turned out to be much more unstable and dangerous than the early liberals anticipated and has forced liberals ever since to temper their expectations for human betterment with a world-weary search for small steps that can keep the liberal international system on an upward trajectory. Why does Indonesia matter to the world? Why does the rest of the world care about Indonesia? To be sure, the country’s size, population, strategic location and economic potential are important. Also important is its traditional reputation as a society that tolerates and accommodates religious and ethnic diversity (recent indications of growing intolerance notwithstanding). Yet the nature and purpose of its political system, which informs and shapes its foreign policy, is also crucial. That foreign policy and role – Indonesia’s participation in international affairs, in ASEAN, and in the Asia Pacific – has a major bearing on how the world looks at Indonesia and how much it matters in regional and world affairs. 28 | P a g e
Despite its promise and achievements, Indonesia faces crucial challenges in realizing its role as an emerging power, especially its "dynamic equilibrium" approach. First, Indonesia’s external environment is becoming more complex and challenging. The early post-Cold War sense of optimism about the regional order has dissipated, and China’s recent assertiveness in the South China Sea has sparked anxieties in Asian capitals, including Jakarta. Indonesia now accepts that China’s with Indonesia’s Natuna Islands chain, thereby setting the stage for a more confrontational relationship with China. While Indonesia continues to stress its role as a moderator and facilitator in the South China Sea disputes, a further deterioration of the Natuna situation would negatively affect this role. Another challenge to Indonesian’s position as a regional mediator comes from the US policy of rebalancing, also known as the "pivot," toward the Asia-Pacific. The US has been careful in seeking defense ties with Indonesia, partly because there are plenty of other countries willing to provide it with military access. Moreover, the Obama administration has been careful to not force its agenda on ASEAN and in ASEAN-led regional forums, where Indonesia plays a central role. Washington continues to adhere to the principle of ASEAN centrality. But if relations between America and China deteriorate further, it will test Indonesia’s stance. Hence, much depends on Jakarta’s ability to secure a code of conduct in the South China Sea, which is by no means assured. If it is unable to do so, it will call into question the viability of Indonesia’s "million friends and zero enemies" policy, which its critics already regard as "only dreaming." A third challenge relates to foreign policy capacity and leadership. Natalegawa admitted to this challenge, saying disarmingly: "I fear we are not firing on all cylinders." With democratization, and the consequent advent of multiple domestic stakeholders, ownership and participation in foreign policy-making, the instantaneousness of social media, and a 24-hour news cycle, he said he has little time to think and has gotten use to "making policy on the run." The Indonesian Foreign Ministry needs more than diplomats; it needs broader expertise on complex transnational issues that increasingly confront the country and Southeast Asia. Fourth, Indonesia’s role as an emerging power is affected by domestic politics. Until now, a good deal of the country’s international reputation and credibility has rested on its ability to make progress on three fronts: democracy, development and stability. Indeed, Indonesia serves as a striking example of how these three elements, which are often in conflict in developing countries, can be made into a virtuous cycle. But none of the three can be taken for granted. It is possible that Indonesia under the guidance of a future leader will go from strength to strength, or it might become less active and more inward looking in its foreign policy and its domestic politics might take an authoritarian turn. There are many domestic challenges that can potentially derail the country’s recent achievements, including its democratic vitality, economic performance, domestic stability and international role. Corruption remains a major problem, although there has recently been growing vigilance and prosecution of corrupt officials. There remain pockets of internal strife in regions such as Papua, as well as the potential for terrorist attacks.
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A fifth challenge is leadership style. Western nations not familiar with Indonesia’s low-key and impartial approach are sometimes exasperated by its refusal to speak loud and clear and tendency to take a balanced position on contentious issues such as humanitarian intervention. As one senior Western diplomat, who did not want to be identified, told me: "To play a global leadership role, you sometimes need to take sides." This was in reference to Indonesia’s overly cautious approach to Western military intervention in Libya. In this view, Indonesia’s neutral approach can sometimes be a handicap in global governance. A related issue is presidential leadership. There are concerns within the country, but perhaps more internationally, about how leadership change will affect Indonesia’s foreign policy and regional role. It can only be expected that some presidents of Indonesia will be more active in foreign policy than others. This may not only be due to domestic preoccupations and constraints, as happened immediately after the fall of Soeharto, but also a matter of personal preference and interest. But President Yudhoyono’s very active engagement in foreign policy makes the issue more moot. Will Joko Widodo, who will be sworn in as Indonesia’s seventh president on Oct. 20, be as interested and involved in foreign policy, and in pushing Indonesia’s profile around the world? Much depends on the team the president will assemble, including his foreign minister, to run and conduct foreign policy.
Indonesia’s ability to avoid collapse and rebuild itself is one of the most impressive stories of the early 21st century. Its journey since Soeharto resigned is all the more inspiring at a time when the world was witnessing failing nations, recurring economic crises and growing radicalism and terrorism. The course charted by Indonesia in foreign policy seems well set to continue to guide its regional and global roles. Observing Indonesia at different levels does create the sense, however, that while there were too few expectations for the country in 1999, now there are too many. No one can dismiss the possibility that Indonesia might not be able to live up to them. But it also seems reasonable to believe that Indonesia’s leadership is likely to continue to receive international recognition and support as long as its democracy continues to progress alongside development and stability. Ultimately, these domestic factors will decide Indonesia’s regional and global role as an emerging power.
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Hotel Indonesia Square, Jakarta
China’s Peaceful Arise China is back. Nearly two centuries after it lost its traditional place at the center of Asian affairs, Beijing has begun giving shape and substance to its renewed leadership on the regional stage.
On 10 – 11 November 2014, this was on full display at the recently concluded meeting of the Asia-Pacific Economic Cooperation (APEC) forum, a grouping of 21 economies from both sides of the Pacific. As this year’s host, Beijing not only rolled out the red carpet for leaders from the rest of the region, it also announced a series of major initiatives designed to place China at the center of Asia’s economic future. Chinese President Xi Jinping articulated his vision for an “Asia-Pacific dream” of shared development and prosperity, notable less for its inflated rhetoric than the concrete proposals and resources China is putting forward to realize it. Backed by promises of nearly $100 billion in overseas loans and investments, Beijing used this year’s APEC meeting to establish a new multilateral infrastructure lending bank, launch a “Silk Road Fund” to connect China with its westward neighbors, and advance progress toward a region-wide Free Trade Area of the AsiaPacific (FTAAP). In doing so, Xi apprised his visitors that, “China has the capability and the will to provide more public goods to the Asia-Pacific and the whole world.”
China’s renewed regional activism is coming more rapidly than anyone expected. Having gone decades without seeing another power quite so capable and confident, Washington will have to adjust accordingly, following four principles.
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First, economics is king in Asia and will have to feature front and center in U.S. policy in the years to come. Although the region’s military competitions and territorial disputes are all too real, the fact remains that leadership and influence will flow from the wallet, not the gun. For that reason, the Obama administration is right to be striving hard to conclude negotiations on the Trans-Pacific Partnership, an agreement among 12 countries that would cement high standards in regional trade. To do so, the president will have to work closely with the new Republican Congress to pass Trade Promotion Authority.
But more broadly, U.S. trade policy and economic statecraft can no longer be the sole purview of the U.S. trade representative, or even the Treasury Department. The president, the national security advisor, and the secretary of state should consider economics, trade, investment and development core elements of U.S. foreign policy. That will require the United States to be entrepreneurial in putting forward meaningful initiatives that serve the region’s needs and play to the United States’ strengths, in areas such as clean energy, finance, and higher education. Playing defense against China’s economic activism is a losing strategy.
Second, Washington needs to take more seriously its own pledge—repeated by U.S. President Barack Obama on his recent trip to Asia—that it welcomes the rise of China and is willing to make room at the table for Beijing. Moving from a G-7 to a G-20 world was a significant step in the right direction. But the U.S. Congress’ unwillingness to pass quota reforms at the International Monetary Fund, which would elevate China’s voting share to a level more in line with its economic power, has reinforced perceptions in Beijing that the existing system is stacked against it. Who can blame China for considering alternative or competing institutions if its voice is unfairly blocked in existing ones?
Third, Washington should not be shy about pushing back on Chinese initiatives when they run counter to broadly accepted international practices. But it should do so in ways that are transparent and principles-based. This should be a key takeaway from China’s recent efforts to establish a new Asian Infrastructure Investment Bank (AIIB), which Washington has refused to join until Beijing provides more clarity on how the bank will uphold basic environmental, procurement, and other standards.
Although governments in Australia, South Korea, and across Europe all had similar apprehensions about the bank, U.S. concerns were never expressed with sufficient clarity or volume, leading to exaggerated stories of Washington’s backroom lobbying and knee-jerk obstructionism to stymie China’s efforts. Next time, leading U.S. officials should be willing to go on the record about appropriate governance and lending standards. 32 | P a g e
Finally, the United States should be willing to work with Beijing to shape Chinese initiatives. Although leaders in Beijing are loath to admit it, they have a lot of learning to do. In fact, despite the appearance of near limitless Chinese determination and money, the AIIB and the FTAAP fell far short of Beijing’s original ambitions. Both were substantially rolled back as it became clear that they would a butt up against prevailing norms—norms that have served China’s interests well over the past 30 years of rapid growth.
In that sense, both the United States and China should walk away a little bit humbled and a little smarter about how to pursue their interests in the twenty-first century. Washington will have to learn to live with Chinese power and influence, and Beijing should be careful not to throw the baby out with the bathwater as it tries to reshape the global economic order. Revitalization on Indonesia’s Maritime Power Until very recently, it was assumed in the intellectual debate in Indonesia that Indonesia does not need to define its national identity on maritime power or that a definition would appear all by itself. It was supposed to emerge from the people. But it never did. The nation has rejected its Indonesian maritime power identity and never did reconnect to the pre-revolutionary one (1966present). Since Soeharto’s presidential ruling country in 1966, neither society nor the intellectual class has found an Indonesian maritime world axis idea that would bring the country together, assure, and implement its Nusantara Vision progress. It has been “running in place”. Researcher convinced that only those who do not wish or cannot ponder the future of the nation, and do not associate themselves with it, would benefit from the fact that we’re neglecting Indonesia national identity on maritime power and the unified idea that it would produce, along with the national strategy that stems from it. This situation serves above all the interests of those who prefer doing corruption and country’s economy stagnation. The realization that the country maritime power has been marching in place for the past forty eight years and is sliding back, in part because we lack understanding who we are in globalization and free trade area momentum, what do we want to be for nation future and where we want to go shared only by a majority of the elite politicians and member of the Indonesia’s Parliament House (Dewan Perwakilan Rakyat – DPR) However, Joko “Jokowi” Widodo idea is needed to be implement through Indonesia global maritime axis revitalization in order to enhance inter-island connectivity potentials, and 33 | P a g e
upgrading sea-port infrastructure within the Indonesian archipelago, which encompasses 17.506 islands and spans almost 6 million square kilometers (Wawasan Nusantara). Still, most of these islands remain unconnected to their neighbors and several benefits from only loose or intermittent contact. This lack of connectivity is more pronounced in the outer islands of Eastern Indonesia, such as Maluku and North Maluku Province. As a result, many of these islands have acted as self-sufficient economies, not contributing to or benefitting from national economic production and distribution processes. Similarly, Indonesia’s eastern sea-port infrastructure has suffered from neglect and financial constraints over the years. Many of the ports are in bad shape and impede the country’s internal and external maritime commerce in the form of revenue losses, time-lag, procedural document delays and inadequate port facilities. Based on World Bank report, shipping a container from Padang to Jakarta costs more than 3 (three) times as much shipping the same container from Jakarta to Singapore 28. As a consequence, Indonesia’s maritime trade and commerce has failed to utilize its full potential. The nascent doctrine envisages that the revamping of the country’s maritime infrastructure, including the development of better ports and ships, could transform Indonesia into a hub of regional maritime trade and commerce. Inter-island connectivity, it is hoped, would enable effective internal utilization and prevent external poaching of maritime resources. An inter-connected archipelago could leverage Indonesia’s choke points and maritime corridors to enhance trade and commerce. Still many major supermarkets in Jakarta, Bogor, Depok, Tangerang, and Bekasi (Greater Jakarta within Jabodetabek region) sell oranges from China rather than from Kalimantan, for the simple reason that it is much cheaper. It is actually cheaper to transport goods from China to main big cities in Java then it is from Kalimantan. Consequently, logistics and connectivity have become buzz words to describe what Indonesia could be doing better to improve trade and competitiveness. Through a presidential instruction (Instruksi Presiden - Inpres No. 5/2008), the Government recognized that sound logistics are crucial to the efficient distribution of goods throughout the archipelago. The need for urgent action seemed to be confirmed when Indonesia’s ranking in the World Bank’s Logistics Performance Index fell from 43 in 2007 to 75 in 2010 29. The urgency of the situation has not gone unheeded: in his Independence Day speech on 17 August 201030, President Susilo Bambang Yudhoyono stressed the need to bring down logistics
28
Henry Sandee. (2014). “Promoting Regional Development in Indonesia through Better Connectivity”. The World Bank News and Broadcast. Retrieved from http://go.worldbank.org/Z6VE3IDAF0, accessed on September 24 th, 2014. 29
World Bank Report. (2014). “World Bank’s Logistics Performance Index 2007-2010”.
30
Ibid.
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costs and boost domestic and international trade. Subsequently, the connectivity agenda was born, with emphasis on three levels of connectivity in Indonesia: 1) Intra-island, which is connected to transport networks within an island; 2) Inter-island, which is connected to air and sea networks between islands; 3) International connectivity which is connected to international sea and airports, and the government agencies that oversee international trade. Thus the concept of Indonesia’s archipelago connectivity accepted that economic growth is by nature imbalanced. Then challenge is to connect remote west-to east regions to the major economic growth poles, and raise people living standards across space. While growth will likely continue to be uneven, better connectivity across regions would go a long way towards improving access to social services and economic opportunities. Indonesia has much to gain from its growing integration with the global economy. But to really take advantage of these opportunities, there’s much that needs to be done at all three levels of connectivity. At the intra-island level, Indonesia is paying a high price for poor connectivity. The traffic jams in Greater Jakarta are now notorious and deterring investment. Poor road quality across Java’s northern highway route (Jalur Pantai Utara/Pantura) and the lack of a Trans-Java Expressway has added much more land transportation costs on moving goods by road across Indonesia’s main island. However, it is predicted adding more than 30 (thirty) percent cost on goods transportation yearly. Meanwhile, the World Bank Report 201031 on Logistics Performance Index rates the rail network in Java Island as being far worse than average in the ASEAN+6 group. In terms of inter-island maritime connectivity, inefficiencies abound. The cost of shipping a 40 foot container from Padang to Jakarta is US$600 32, while the cost of shipping the same container from Jakarta to Singapore is only US$185 33, despite being further away. High-quality products such as shrimps from eastern Indonesia cannot be processed in Java because this would make them too expensive to sell either in Jakarta or to export to other Asian markets. As for international connectivity, Indonesia’s main sea-ports are inefficient. Tanjung Priok, which the country’s main international sea-freight gateway is, closed full container capacity. Average dwell time of containers here is five days compared with three days for major regional sea-ports in Singapore and Malaysia. Road infrastructure access to the port is also becoming increasingly congested and crowded by daily traffic jam during working hours. Most Japanese and Korean investors has complained many times to President Susilo Bambang Yudhoyono since 31
World Bank Report. (2014). “World Bank’s Logistics Performance Index 2007-2010”.
32
Ibid.
33
Ibid.
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2004 up to year 2014 regarding to “no traffic on sea-port accessible road”, from their manufacturing plants in the greater Jakarta area. Even, due to bad roads infrastructure and traffic hours, mostly they complained on calculating long transportation hours. For example, if they transport product goods from Cikarang plant to be exported thorough Tanjung Priok sea-port (+/- 60 Kilometres), then it will take 6 (six) to 7 (seven) driving hours. It is unbelievable situation. The logistics and connectivity challenges that Indonesia faces are almost overwhelming. However, there’s growing consensus in Indonesia about the priorities that could have the most impact on reducing logistics costs. Intra-island priorities include developing a Trans-Java Expressway, which would require accelerated land acquisition. Improving railway services is another priority. There is also an urgent need to expand humanized commuter services in Greater Jakarta to increase passenger numbers from under half a million to 3 million per day. Inter-island priorities focus on reducing shipping costs of sea transport. This not only requires strengthening competition among shipping lines, but also improving the performance of ports. For example, productivity in eastern Indonesia ports is so low that ships find it more attractive to return empty than waiting to be loaded. Expensive cargo-handling costs also contribute to the high price of inter-island shipping. International priorities include making Indonesia’s main sea gateways more efficient and better connected to main production centers. Dry ports, where the clearance of export and import containers takes place, would also help reduce congestion in Tanjung Priok. Decision is made and action is being taken. Recently, the Government introduced 24/7 working hours services of public agencies in key commercial ports in order to serve more ships in less time. The National Single Window (NSW), which helps simplify trade activity in five major seaports, is another measure that is in full swing. More action on other measurable priorities is still needed. With greater archipelago connectivity, consumers would get lower and more stable prices on good quality of products. Reliable transport management services would help make Indonesian goods more competitive, and make markets more accessible regionally and internationally. Businesses could diversify into new products and exports. Job opportunities would no longer be limited to the big cities. Also, manufacturing centers in Java would be better connected to the commodity rich outer islands, and hopefully put an end to the current situation of having commodities processed more cheaply overseas. In turn, greater connectivity would have a positive impact on poverty reduction and regional development throughout Indonesia. However, it will require strong coordination on the priority actions, and monitoring for successful implementation. The ASEAN Economic Community will 36 | P a g e
be effective in 2015. To benefit fully from economic integration in the region, Indonesia needs to firstly improve access to goods and services domestically. Even though the idea of Indonesia as a global maritime axis may come as a novelty to many, it is not a new idea. The transport department of Indonesian government has set up a three pronged archipelago belt project, such: the Northern, Middle and Southern Archipelago Belts, which is able to connect different parts of Indonesia 34. Maritime connectivity was an important agenda item for Indonesia during the APEC Focus Group Discussion in April 2013 35. ASEAN also has sought to achieve inter-island connectivity through its plans of developing a “nautical highway system” or proposed “ring shipping route” in maritime Southeast Asia as a part of the Master Plan on ASEAN Connectivity36. Though the idea of interconnecting thousands of Indonesian islands has long existed, it received serious governmental attention for the first time in the Defense White Paper of 2003,37 and was further elaborated in the Defense White Paper of 200838. Elected President Joko Widodo and Vice President Jusuf Kalla had for long been building maritime vision. This was a signal to maximize exploration of sea resources. Effort at sea was also in line with Jokowi - JK Vision. In the end, the Maritime Law served as strengthening point of Indonesia’s strategic position on world’s maritime axis. The Java sea zone would be legalized by the Government’s Regulation. Other substance was substance was zoning of straits and gulf, protection of marine resources based on Blue Economy39. The conservation content and management and bio life at sea was in line international agenda. During the 12th convention of World’s Bio Diversity in early October 2014 in Pyong Chang South Korea40, there was agenda for that subject. Sea conservation would strengthen Indonesia’s important role in the world’s forum. When zoning was stipulated, Indonesia can read the chess board. Not only fish potentials, but also mineral and gas resources and blue economy conservation. All would realize vision of the elected President that Indonesia is world major maritime axis. The Indonesian Marine Bill is the strategic maritime roadmap41.
“Archipelago Belt Aims to Connect Nation,” The Jakarta Post, May 30, 2014, http://www.thejakartapost.com/news/2014/05/30/archipelagobelt-aims-connect-nation.html, accessed on October 23, 2014. 34
A Fitriyanti Pewarta, News Focus - Big Agenda, Maritime Infrastructure Towards Indonesia, APEC Connectivity,” Antara News, April 9, 2013 http://www.antaranews.com/en/news/88298/news-focus--big-agenda-maritime-infrastructure-towards-indonesia-apec-connectivity, accessed on October 22, 2014. 35
36
“Master Plan on ASEAN Connectivity”. Jakarta: ASEAN Secretariat, 2013, p. 40-43.
37
Ibid.
38
Ibid.
39
Ibid.
40
Ibid.
41
Ibid.
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The visionary policy of Jokowi - JK was crystallizing into marine-based development without disregarding green economy on land. Land based development had been contributing significantly to national development, but to fulfill need from land alone would be difficult in the future. Indonesia’s nature to be an archipelago country offered enormous potential. To become a leading maritime country is materializing well. Indonesia consisted of 30% land and 70% sea. Geographically Indonesia is flanked by two continents: Asia and Australia, and two oceans i.e. the Indian Ocean and Pacific. Currently, all are invaluable asset and capital for country’s economic development. Thus, all parties must support Jokowi - JK visionary resolution to enhance maritime power development. One aspect of crystallization of the policy was the plan to built Sea Toll. Regardless of the policy was a historical momentum. It is valuable gift that Indonesia being an archipelago country. When Jokowi – JK installed as President and Vice President on 20 October 2014, Indonesian government are constantly inspired to control, command and manage the sea territory. The central government needs to ensure the availability of strategic commodities at affordable prices, reduce logistics costs to facilitate the competitiveness of export products, and prepare the country for better market integration within Association of South East Asian Nations (ASEAN)42. Presidential Instruction No. 5/2008 was issued requiring the release of a National Logistics Blueprint (NLB)43. Moreover, this new agenda proposes to develop industrial maritime clusters based on natural resource endowments to develop certain economic sectors, improving national connectivity to better link development growth centers and reduce transaction costs, and advancing national technological capacity. ASEAN Economic Integration 2015 Through the collapse of the Bretton Woods system of fixed exchange rates in 1971, a deep recession began in the United States in 1973, the year of the first oil shock, and ramified widely, initially in the West and then in the socialist and developing countries. After the Vietnam War, there was oversupply in primary commodity markets, and by the late 1970s, the hopes of a new international economic order, a package of proposals for international reform put forward by leaders from developing countries, were dashed. Marked by the simultaneous fall of commodity prices and the rise of real interest rates, the debt crisis of the early 1980s emerged44. Although the United States was no longer the world’s major creditor45, but now its chief debtor46, it 42
43
“Master Plan on ASEAN Connectivity”. Jakarta: ASEAN Secretariat, 2013, p. 40-43. Presidential Instruction Number 5 Year 2008 of Republic Indonesia on National Logistics Blueprint (NLB).
44
Mittelman, H., James, O., Norani. (2004). Capturing Globalization. New York, U.S.A: Routledge, p.3-5.
45
Ibid.
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maintained a position altogether different from that of developing countries whose balance of payments reflected deep structural problems 47. Indonesia’s President Soeharto led one of the most durable and effective authoritarian regimes of the second half of the twentieth century (1966-1998). Yet his rule ended in ignominy, and much of the turbulence and corruption of the subsequent years was blamed on his legacy. However, more than a decade after Soeharto’s resignation on May 20th 2014, Indonesia still in democratic state transition and the time has come to reconsider the place of his ruling regime in modern Indonesian history, and its lasting impact. In these regards, Indonesia has now been dramatically transfigured. Basic political freedoms in areas like the rights of organization, assembly and expression have been greatly expanded. Freedom House in 2006 for the first time declared Indonesia to be ‘free’. The last national elections in 2009 were contested by 38 political parties representing a range of interests and each vigorously contesting for its share of power. There has been a boom in civil society organization with a proliferation of new labor unions, farmers, ethnic or regional groups, and a plethora of NGOs coming into being. Far-reaching decentralization has led to a dramatic flowering of democratic competition at the local level. The Indonesian National Armed Forces has formally disengaged from politics. It is now hard, for example, to imagine Indonesia undergoing that classic symptom of authoritarian backsliding experienced by Thailand in late 2006: the coup d’etat. After global economic crisis in 2008, slower growth is to be expected with an ultra modern economy that has a shrinking population. And Indonesia has continued to contribute to the peace and stability of the region. If the nation is to recover fully, Jokowi must not only identify and attempt to reverse what has gone wrong, but he also must try to understand how he can achieve new gains by the end of his first term. That is to say, huge challenges remain unaddressed and rising to them requires a hard look at himself, as his responses, his messages, his management, and his team. Therefore, Jokowi must start by devoting special attention to the instances that knocked his foreign policy off the rails. And one stands out, even in the minds of some of the president's most prominent loyalists. Indonesia is a natural leader of ASEAN as well as the biggest country in Southeast Asia. For decades since the association was established on 8 August 1967, Indonesia has played an important role maintaining geopolitical stability in the region. This leadership has recently become more demanding due to border territorial disputes within ASEAN and People’s Republic of China (PRC) territorial claims in the South China Sea. 46
Ibid.
47
Ibid.
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Indonesia assumes leadership on ASEAN economic matters, albeit, some would argue, not sufficiently actively. Still, at the Bali Summit in 2003 48, Indonesia was bold enough to introduce the establishment of an ASEAN Economic Community (AEC) by 2020 49, which is later accelerated to 201550, as the central ASEAN economic objective and, more recently51. Then continue to Bali ASEAN Summit in 2011, putting in place the Regional Economic Comprehensive Economic Partnership (RCEP) by 201552. But, progress toward establishing the ASEAN Economic Community (AEC) has been modest. While there have been some notable achievements, critical targets for lying a robust foundation of a fully integrated and equitable ASEAN are yet to be achieved. With 2015 now just the year after next, time is running out, and the need to address the challenges and obstacles to realizing the ASEAN Economic Community (AEC) was acknowledged and approved to be implemented by ASEAN Leaders at 2012 ASEAN Summit in Phnom Penh Cambodia53. The RCEP is a new regional trade agreement built upon the ASEAN-centered free-trade agreements (FTAs) involving, all six ASEAN Dialogue Partners (Japan, China, South Korea, Australia, New Zealand and India) 54. Because of its structure, RCEP is perceived as a new trade bloc that consolidates all of ASEAN’s ‘plus-one’ FTAs55, with the objective of creating a broader and deeper engagement with significant improvement over the existing Free Trade Agreements’ (FTAs)56. This means harmonizing the trade and regulatory rules between ASEAN members and their FTA partners and minimizing trade-diverting effects. It is important for ASEAN to make convincing progress in RCEP negotiations 57, set conveniently to conclude and coincide with the commencement of the ASEAN Economic Community (AEC) in 201558. ASEAN has now arrived at a critical juncture where the AEC’s credibility will require ASEAN to choose the path of bold action to improve the rules governing ASEAN FTAs. Therefore this is deeply linked with RCEP’s goals, and while it is not necessary for ASEAN to first complete all of its AEC Blueprint measures to conclude the RCEP, 48
“Master Plan on ASEAN Connectivity”. Jakarta: ASEAN Secretariat, 2013, p. 40-43.
49
Ibid.
50
Ibid.
51
Ibid.
52
“Master Plan on ASEAN Connectivity”. Jakarta: ASEAN Secretariat, 2013, p. 40-43.
53
Ibid.
54
Ibid.
55
Ibid.
56
Ibid.
57
Ibid.
58
Ibid.
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meaningful progress, in at least some of the more difficult areas, like services liberalization, is important. This is critical for ASEAN if it is to reach the required ASEAN common position visà-vis the dialogue partners for RCEP negotiations. Moreover, deeper intra-ASEAN integration is a prerequisite for a broader East Asian integration led by ASEAN. ASEAN functions as a ‘hub’ with linkages or spokes to countries (the dialogue partners); at the same time, the hub serves as a platform for networks of production involving all countries connected through the hub or ASEAN connectivity. In short, now is the time for ASEAN to really focus on its economic integration agenda, and Indonesia, as the most influential country in ASEAN should take a leading role in this. Given the impending 2015 ASEAN Single Market deadline, Indonesia should focus on issues that are difficult to solve but critical for AEC’s realization. As a number of studies have suggested, non-tariff measures and services liberalization stand out. As a regional institution, ASEAN has been successful in tariff elimination but not so in reducing barriers stemming from non-tariff measures. Significant non-tariff barriers applied by ASEAN member states can negate the positive impact of tariff elimination. And dealing with non-tariff measures is even more important, given that some of them can be used for short-term protectionist purposes, especially during downturns. Services liberalization, meanwhile, is critical, especially for services needed as inputs for production such as logistics, transport and business services. Probably the biggest challenge for ASEAN in services liberalization (pursuant to the ASEAN Framework Agreement on Services) is how ASEAN member states can arrive at substantially more open commitments for foreign commercial presence in domestic economy. On this, a more open investment regime is necessary to create incentives for firms to invest across ASEAN countries. But there are obstacles to Indonesian leadership in ASEAN too. For one, Indonesia faces a number of domestic economic challenges. Issues in infra-structure development, a high dependence on natural resources for generating income, a more rigid labor market, and continuing development gaps between regions within Indonesia are just some of the key concerns. All these are known to have eroded the country’s overall competitiveness in the past decade or so, especially in comparison with other ASEAN countries. These challenges also indicate that the country’s economic structure is and or will be changing, and will likely still be doing so for many years to come, continuing the process started in the early 2000s. The best way forward would be for Indonesia to engage both challenges, either in domestic economic reform and reform of ASEAN leadership together. Commitment to achieving AEC and RCEP by 2015 will have the effect of instilling discipline at home for implementing the necessary domestic reforms. Even if the 2015 deadlines are not met, a decisive resolution to Indonesia’s domestic issues will benefit the country’s competitiveness, regardless of whether the region is fully integrated. At the same time, improvements to competitiveness will create momentum for increasingly bringing Indonesia into a more integrated region. 41 | P a g e
In 2015, a little more than a year from now, Southeast Asian nations will enter into the ASEAN Economic Community (AEC), a regional trade zone akin to the European Union (E.U)59. Most Southeast Asian people from developing countries might still worry on ASEAN Single Market (ASM) impact in the future. While, some ASEAN diplomats point to progress yardsticks that show 80% of the pact has been completed, but as in all trade negotiations60, many of the most difficult elements have been left for the end, and some say the finish line is still far in the distance. Therefore, ASEAN member states needs to take several more years to have the ASEAN Economic Community (AEC) fully in place, citing “major delays61” in aligning ratified agreements with countries national laws, and a lack of regulatory and financial capacity among some member nations. Others perceive the ASEAN Economic Community (AEC) is more likely end date would be in 2025. Joko Widodo has suggested he knows Indonesia isn’t yet ready to compete in a grouping that would open its near U$D 900 billion economy62 to regional businesspeople and inflows of skilled and unskilled workers. ASEAN connectivity is important to be considered along Indonesia’s world maritime axis. Because, through its connection Indonesia will benefit advantages such: 1) To reduce business transaction cost; time and travel cost, which is impetus to ASEAN Economic Community 2015 Building Process; 2) To connect the ‘core’ and the ‘periphery’ in ASEAN, which is narrowing the ASEAN member states development divide; 3) To access further connectivity with other region, which Indonesia is able to maximize ASEAN strategic geographical location, and to maintain ASEAN centrality challenging Asia Pacific Free Trade Area 2020 (proposed by Xi Jin Ping, China’s President on APEC Beijing Summit, on 9 - 10 November 2014) Joko “Jokowi” Widodo Realist Ambition The main concern of Indonesian President Joko “Jokowi” Widodo’s vision to turn Indonesia into a maritime power is to develop the country’s maritime resources for its economic prosperity, not to beef up its naval power. Mr Widodo had spoken twice of his vision to make the sprawling archipelago of about 17,000 islands into a world maritime axis. First, while campaigning for the presidential election, second during his inauguration speech on 20 October 2014. “We have for too long turned our backs on the ocean, the straits and the bays. This is the time for us to restore
59
Kompas. (2014). “Jokowi Attends ASEAN Summit 2014”. Jakarta: 13 August 2014.
60
Ibid.
61
“Master Plan on ASEAN Connectivity”. Jakarta: ASEAN Secretariat, 2013, p. 9.
62
Kompas. (2014). “Jokowi Attends ASEAN Summit 2014”. Jakarta: 13 August 2014.
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it so we will prosper like our ancestors,” he said 63. “This is the time to return to Jalesveva Jayamahe,” he added64, citing the motto of the Indonesian Navy, which is Sanskrit for “In the sea we will triumph”65. The tradition of political realism is realpolitik, power politics, which has a long history that is typically traced back to the great Greek historian Thucydides in the 5th century BC. Although dominant attitudes towards realism have varied, realist arguments and orientations have been central to the Western theory and practice of international relations. In particular, modern international society, whether dated from the era of Machiavelli at the turn of the sixteenth century or that of Hobbes in the mid-17th century, has been closely linked to realist balance of power politics. Thus, the significance relevance between realism and international theory is especially strong in the 20th century. International relations first emerged as an academic discipline before and immediately after World War I (1914-1918), largely in reaction against realist balance of power politics. Then this discipline was reshaped immediately before and after World War II by selfidentified realists such as E. H. Carr and Hans Morgenthau (1945-1990). Some prominent scholar practitioners, such as George Kennan and Henry Kissinger, have called themselves realists. Therefore, for most of the post-World War II era realism has been the dominant paradigm in the Anglo-American study of international relations (1990-present). Even in our post-Cold War era of globalization, realist theories, although much less dominant, still provide a substantial context and motivation for many of the most important theoretical debates in the field. This research presents a sympathetic but fundamentally critical assessment of the character of realism and its contribution to the study and practice of international relations, globalization, and leaders’ rational decision. My proposing approach is critical yet engaged. Researchers approached realism largely on its own terms yet challenge many of its characteristic reasonable arguments and conclusions. Thus, researcher is more concerned, however, to challenge exaggerated claims for these insights that would constrict international political theory and practice to the realm of power politics. Realists understand, and correctly emphasize, the fact that Indonesia’s maritime power under Joko “Joowi” Widodo has been, and will long remain, a central part of international relations. Most realists, however, systematically slight other no less important dimensions of international politics. Demonstrating this is one of my central concerns. Based on given data above, researcher attempted to identify that Joko Widodo, or Jokowi, has promised to make Indonesia as a world leader in maritime affairs. In particular, he christened the 63
Jakarta Globe. (2014). “Indonesia Far From Becoming ‘Maritime Axis’, Academic Says”. Jakarta: 21 August, 2014.
64
Ibid.
65
Ibid.
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doctrine of global maritime axis. Thus, at domestic level, Jokowi will seek to boost Indonesia’s maritime resource development and infrastructure, through, among other things, the development of an inter-island marine highway. Joko Widodo wants to develop Indonesia’s oceanic resources and enhance its maritime channels to improve the lives of the people economy. It is also important of countries working together in Southeast Asian region to protect important trade routes like the Straits of Malacca. The cargos and sea lanes are not just important for Indonesia but they are also important for Singapore and the world because 60 per cent of goods, which utilize the Malacca Straits as the medium to distribute these goods and services. While, at international level, he envisions the further development of the country’s naval and maritime security capabilities, placing maritime and border issues, such as securing Indonesia’s maritime resources and sea lines of communication, which is at the heart of the country’s diplomacy. Also, he planned two short term agenda within 5 (five) years his presidency (20142019), i.e.: 1) Jokowi significantly seeks to unlock Indonesia's seafaring potential. This maritime potential has much to do with bilateral trade, energy development, and fisheries modern management. It also has much to do with the country’s national security. After all, Indonesia is a biggest archipelagic nation. Its contacts to other countries is via waterways; similarly, now that Indonesia is mostly past its messy and turbulent period, the major, existential security threats come via the seas, from foreign countries with competent offensive maritime capabilities. This national security component is only heightened nowadays, given Indonesia’s broader neighborhood in Asia, a locality filled with increasingly nationalist countries with steadily improving power projection capabilities, some of whom have longstanding waterway and territorial disputes and grievances with each other; 2) Indonesia’s new maritime doctrine raises questions as to whether Jokowi plans to devise a conventional axis that's been witnessed throughout history, one that is essentially grounded in alliance politics, or simply a policy extension of Indonesia's broadened strategy of free and active country foreign policy. Of these two agenda, researcher identified Jokowi wants to follow the latter. That is to say, Jokowi would like to upgrade and explicitly recognize Indonesia's position as a world maritime power, but in a way that keeps Indonesia firmly as a friendly and sovereign independent country. Possessing better maritime capabilities doesn't necessarily mean that Indonesia will turn aggressive or acquisitive. Of course, those things could, at least in realist theory, happen. But that's highly unlikely, given the foreign policy goals of Jokowi, the presence of other dominant powers in Asia, and, quite frankly, how the nation perceives itself: “as friendly and peaceful, a force for country political goodwill”. Therefore, Jokowi has more than enough ammunition of domestic political issues on his agenda, including Indonesia's economic growth improvement; handling the fuel subsidy dilemma; and uprooting corruption; and to prevent any radical changes in Indonesian foreign policy. 44 | P a g e
Instead of a qualitative improvement in Indonesia’s maritime capabilities means that the country can more effectively leverage itself as the regional leader, mostly in bilateral relations, in multilateral settings and platforms, and in ASEAN, which aspires to be throughout Asia. A stronger Indonesia can more confidently and productively pursue its national interests and the interests of its friends and partners in Southeast Asia. Moreover, a more capable Indonesia can function better as a regional mediator on knotty issues like the various disputes in the South China Sea. It might raise another question, why Indonesia needs transformational leader such Joko “Jokowi” Widodo ? Since May 20th1998, after Indonesia national reform, a good leader is needed by nation who has long dream that a stronger Indonesia is a country that nations like Vietnam and the Philippines and China, or the major parties involved in the current round of hostilities there, will take very seriously, earning their respect and listening intently to what Indonesian President have to say. Which is good, considering that Jokowi has recently stated that he'd like to see Indonesia get more involved as a problem solver in the South China Sea. If he invests in the time and requisite tools, his dream can turn into a reality. In general, the history of regional and international powers tells us that possessing strong land and/or sea capabilities and resources does many things for such countries. Notably, these countries are respected, have a voice in the world, and play an important part in shaping the rules and norms of regional and world bodies. This is where Indonesia is headed: not a world of militarism or confrontation, but a world in which Indonesia is able to carve out a large niche for itself as a builder and shaper of mutually beneficial rules and norms. Should Indonesia manage to cultivate enhanced status and position, it will be in a prime position to spread and entrench, as via treaties and institutional mechanisms, its message of regional cooperation, stability and world peaceful harmony. To some extent, this has already been happening. Led by the tandem of outgoing President Susilo Bambang Yudhoyono and Foreign Minister Marty Natalegawa, Indonesia has seen its profile in its region and world steadily rise. Sure, Indonesia’s crucial geostrategic location, its developing democratic political system, and its strong economic growth over the past decade have stimulated considerable interest in the country, from world powers, neighboring countries, international organizations, businesses, investors, consumers, and so on. But the other reason Indonesia has been making a name for itself on the world stage is because it’s widely seen, in particular, in Southeast Asia, the broader Asia, and the West, among other places as a force for good. For instance, Indonesia has been a key troubleshooter within ASEAN. Through Foreign Minister Marty’s diligent efforts, Indonesia has kept ASEAN relatively cohesive and worked to limit the influence of outside powers on ASEAN. While there are policy differences among ASEAN member states, and some members have strong ties to Washington and Beijing, Marty has done a good job of ensuring that ASEAN hasn’t fractured into competing blocs. As one example, his laudable efforts in brokering a last minute 6-point statement in the aftermath of the tumultuous 2012 ASEAN ministerial meeting were vital in helping ASEAN to remain unified in the face of internal and external pressures. 45 | P a g e
Thus, all of these accomplishments are good, especially for an emerging power. But Jokowi wants to go beyond them. One logical place to start is to commence working toward getting China on board with a code of conduct for the South China Sea. This would be a smart decision, for a number of reasons. It fits with his stated political preferences. It would validate Indonesia’s self-identity as a regional mediator and power. It would go a long toward solving the region’s tensions, which would be beneficial for all disputants, Asia, and given the amount of trade that passes through the South China Sea, which is arguably the entire world. There are also national security and sovereignty issues at play here for Indonesia. In particular, there are questions about whether China’s 9-dash line passes through parts of Indonesia’s Natuna Islands. Not only are the Natunas prized as Indonesian possessions, but also because of their rich oil and gas resources. Its fish-rich waters are routinely plundered by foreign trawlers. Lying just inside its 200-nautical-mile exclusive economic zone is the East Natuna gas field, one of the world’s largest untapped reserves. Then, at this point, Indonesia’s official position is that there is no dispute with China over the Natuna Islands and that it is not one of the five countries that are currently challenging China’s claims to the South China Sea, though the Indonesia military has issued more strident tones over the Natunas in recent months, broaching the idea of sending more troops there to protect the islands. So far China has not made claims to the Natuna Islands, seemingly accepting that they are a part of Indonesia. Nevertheless, given its vague and ever-expanding 9-dash line, it’s possible, especially as its power and ambitions rise over time, that China might contest the islands in the future. Such a scenario would put Indonesia into direct hostilities with Beijing, which would not be a good thing in bilateral relation. It would also undercut Indonesia’s ability to function as a neutral mediator in the South China Sea; that, by extension, would harm Indonesia’s position as a leader in Southeast Asia and ASEAN. And of course, the very foundation of Indonesian foreign policy, the idea that Indonesia is a free and independent country, a friend to all and an enemy to none, would stressed to the breaking point. It is precisely because of these future possibilities that Jokowi should get ahead of the game and begin to work on getting all involved and concerned countries to recognize that lowering tensions in the South China Sea is essential and that work on a code of conduct for the sea should begin as soon as possible. However, what if Jokowi really does want to develop a maritime axis of seafaring powers, either in addition to or instead of the ideas mentioned above? In this case, Jokowi will probably challenge international pressure, especially from the Western countries, to develop such an axis along democratic lines. In other words, for its own self-interested reasons, the West will likely want Indonesia to put together an axis that is primarily, if not completely, democratic, including such countries as India and Japan. Of course, developing stronger military and defense and economic and political ties to Tokyo and New Delhi is a healthy thing for all involved. But leaving Beijing out of this axis would be self-defeating. It would only alienate China, as it would probably fear the worst at being left out. Indeed, China would likely think this axis was directed at it. Such a move by Indonesia, given the attitudes and interests of Japan and India, 46 | P a g e
risks signaling to Asia, if not beyond, that are planning a transition away from its free and independent foreign policy to an alignment that leans in the direction of containing China. Does Indonesia want to be in this position? The answer would depend on Indonesia’s national interests, countries’ recognized maritime identity, and historical background. A better move would be to include all of Asia’s powers in a potential maritime axis. Put simply, if Jokowi goes this route, China should be in. This would reduce China’s anxieties and insecurities. It would serve as a good forum for all parties to communicate and exchange ideas with each other on maritime issues, which is crucial given that these issues are so sensitive to countries in Asia and have political, economic and security repercussions for entire globe. It would also provide ample opportunities for all sides to parlay cooperation on discrete maritime issues into collaborative efforts on a wider range of issues, even non-maritime issues. This kind of structure, this axis, with close contact and free flowing information, creates an environment in which trust can more easily thrive, misperceptions are limited, and inter-state bonds are strengthened. This would be excellent for Indonesian national security as well as the security for Asia and the world at large. Indonesia’s new Foreign Minister Retno Marsudi has said President Joko Widodo will mention the concept of “maritime axis” 66, which relates to the country’s future sea development, at regional and international forums. After talks with her counterparts from China, Germany and Saudi Arabia in Jakarta on November 4th 201467, Retno Marsudi said Indonesia will utilize upcoming international forums such as the ASEAN Summit in Myanmar on November 12-1368, the APEC Economic Leaders’ Meeting in China on November 20-1169, and the G20 Summit in Australia on November 15-1670, to introduce and explain Joko’s maritime vision71. Apart from mentioning the maritime axis concept, Indonesia needs to prepare the standard procedure and rule of engagement over maritime areas that are yet to be included in any border agreement. Therefore, Indonesian Ministry of Foreign Affairs continuously must emphasize for stronger bilateral and regional cooperation to establish maritime connectivity and to facilitate sea lane expansion.
“Indonesia To Introduce Maritime Axis Concept at International Forums”. (2014). November 5 th 2014. Retrieved from http://en.vietnamplus.vn/Home/Indonesia-to-introduce-maritime-axis-concept-at-intl-forums/201411/57562.vnplus, accessed on 6 November 2014. 66
67
Ibid.
68
Ibid.
69
Ibid.
70
Ibid.
71
Ibid.
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The concept must be put forward in bilateral, regional and international meetings, to bring to reality the maritime vision of the government. Indonesia boasts over 17,500 islands with coastal areas stretching 92,000 km and abundant marine resources which are estimated to generate U$D 257 billion per year. The past few decades have produced an extraordinary period of prosperity in the East AsiaPacific region. It has lifted hundreds of millions out of poverty across the entire region and fostered dynamic, innovative economies that today are fueling global growth. The World Bank recently projected that the East Asia-Pacific region will contribute 40 percent of global growth this year 72, and some forecasters expect that nearly 50 percent of world growth over the next two decades will be generated in this region73, yielding hundreds of millions of new middle class consumers74. Thus, more active participation into the economic dynamism of the East Asia-Pacific is vitally important for regional major power interests, including Indonesia’s core interest. Joko “Jokowi” Widodo’s realist ambition of transforming the Indonesia’ archipelagic state into a global maritime axis, though difficult, can still be achieved. Even though some pressing challenges Indonesia still needs to overcome. The ocean has a large variety of offerings, not just fish. Indonesia should tap into the vast potential it provides. The national fisheries sector currently serves as the main economic backbone for the archipelago, followed by agriculture, energy, and mineral resources and services. Land only accounts for one third of Indonesia’s total territory. Therefore, a change of people mind-set is needed to perceive the ocean as Indonesia’s future economy. However, the prime geographic location has allowed the country to enjoy a fishery potential of up to 60 million metric tons a year, which can easily turn the nation into a global leader in the region fishing industry. The writer identified that Jokowi’s visionary plan is still very much in its initial stages of development, as it has the foundation to turn into a great success, besides the nation’s population of 250 million people makes for a strong domestic market. With more than 17,000 islands and some 81,000 kilometers of shoreline, Indonesia is the world’s largest archipelagic state.
Marciel, Scot. (2014). “Economic Aspects of the Asia Rebalance”. December 18th, 2013. Washington, D.C. Retrieved from http://www.state.gov/p/eap/rls/rm/2013/12/218291.htm, accessed on 2 November 2014. 72
73
Ibid.
74
Ibid.
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Banking on those statistics, Maritime and Fisheries Minister Sharif Cicip Sutardjo has set Indonesia’s maritime economic potential at “Rp 3,000 trillion [$257 billion] per year” 75. Within this spectrum, Indonesia claims sovereignty over more than 17,000 islands. In this sense, the contribution of the maritime sector to Indonesia’s national economic growth cannot be overstated. Apart from revenue generated through oil and gas, fisheries and marine tourism, more than 90% of Indonesian international trade is still ocean dependent. Still, lack quality of human resources in fisheries industries and fishermen competence based skills as a long-running issue preventing the maritime and fisheries sectors from being managed optimally. This includes the quality of fishermen, most of whom never made it past elementary school. In the future, Indonesia local governments have to prepare vocational schools to educate capable fishermen. Also majority of the workers in the fisheries sectors lack the necessary training to safely and effectively operate the necessary machinery. The researcher urged the central government to compare Indonesia’s maritime and fisheries modern equipment to those utilized by other Southeast Asian countries. The fisheries industrial sectors still cannot be improved due to the Indonesian fishermen lack necessary technology. The machines they use are lagging behind those found in other countries. The archipelago’s seaweed farms provide an effective example of fisheries sector. According to a World Bank report, the farming and cultivation of seaweed have grown into the primary source of income for “tens of thousands of Indonesian farmers” in North Sulawesi. However, despite the country’s status as one of the world’s largest producers of seaweed, farms are still unable to process the aquatic plant on their own. Thus, if I may point to a fellow island nation, the Philippines, and its growing status as a maritime country in the Southeast Asian region, due largely to its growing handle on the necessary technology. Therefore, the private sector must start playing a larger role. Jokowi’s program should encourage the involvement of private firms in developing our maritime industry. While, as a consequence of Indonesia’s maritime security is paramount for national interest where the wide open marine environment is vulnerable to various threats, risks and challenges. It is not an easy task to secure the whole area with tight security measures in a similar manner as on land.
75
Jakarta Globe. (2014). “Indonesia Far From Becoming ‘Maritime Axis’, Academic Says”. Jakarta: 21 August, 2014.
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Policing water is not confined to water alone but is closely tied with land and air as well. The biggest challenge now is the non-traditional threats, particularly the smuggling of goods, weapons, drugs, piracy and, most importantly, terrorism. Recently, the sudden intrusion in Lahad Datu which has provoked Indonesia territorial dispute with Malaysia triggered a great realization that Indonesia’s territorial waters are still porous and requires serious and decisive attention at all times. The decision to establish the National Board for Border Management (Badan Nasional Pegelola Perbatasan - BNPP), as the Indonesia’s Government Special Agency is expected to further strengthen and manage Indonesian maritime borders with neighboring states in Southeast Asia. Nonetheless, in bolstering Indonesia’s total maritime security in view of the sizeable amount of water, this special area needs to be expended to other hotspots in future where the locations are deemed to be the breeding ground or transit point for illegal immigrants, human trafficking, smuggling of goods and weapons. Overlooking such unlawful acts over time may lead to other major consequences that could threaten our national security and sovereignty. For this, the Indonesia’s National Armed Forces (Tentara Nasional Indonesia - TNI), a paramilitary agency which shoulders the sole responsibility in maintaining coastal surveillance, can function effectively if the whole agency performs under the command of the Defense Ministry. Thus, Indonesia’s security matter can be further strengthened if both enforcement and naval forces work hand in hand. Nevertheless, the effective enforcement mechanism will not come cheap. It requires better assets, equipment and manpower. Of course, all these involve a huge realization of financial budget commitment. With a well structured planned strategy and coordination within government agencies and neighboring countries, we are capable of maintaining law and order at sea. Apart from the special border management agency, the Government may also in future consider strengthening the Maritime Affairs State Ministry potential to take charge of all maritime-related matters for measurable inter-departmental coordination and transparent policy making direction. The sovereignty and its territorial integrity over the Indonesian archipelago have been developed in line with its geopolitical and national geo-strategy for the fulfillment of the Indonesian 1945 constitution, especially related to maintain the integrity of its sovereign territory, to provide people education and social welfare, and as well as to participate in maintaining regional stability and worldwide peace. Geopolitical speaking, as an archipelagic state, Indonesia is located in a 50 | P a g e
strategic cross-road of the world between two oceans, the Pacific and Indian Ocean, and between the two continents of Asia and Australia. This strategic position is one of the world’s main crossroads connecting the West and the East and is also well known since the ancient time. Thus, the implication of the above circumstances made Indonesia to have a unique concept of materializing the vision of one unite territorial integrity and sovereignty over its lands and waters, in which the diversity of the Indonesian religions, ethnics, social-cultures, economics, ideology and politics are in existence and have to merge and survive as one nation. Therefore, that since its independence this vision is an important element and motivation in every effort and opportunity in multilateral and bilateral diplomatic forum, and in the national legislation as well. Politically, it is importance for Indonesia to have “a comprehensive maritime outlook” to revitalize its national sovereignty and territorial integrity. The Wawasan Nausantara or the Nusantara Vision is a conceptual approach toward the above vision. So far Indonesia succeeded in bringing the concept of Nusantara Vision in legal forms throughout various international conferences, diplomatic relations and conventions. It was started from the politically unite nation but with its geographical land based broken to the present unite nation with its legally solid geographical marine based territorial integrity over the lands and waters. President Joko “Jokowi” Widodo has again demonstrated his proper sense of working priorities76. Only around a week after presiding over the first plenary session of his Cabinet, Jokowi and Vice President Jusuf Kalla met on Tuesday with provincial governors in a joint working conference with the Cabinet 77. Earlier last week, the President proclaimed his big-bang bureaucratic reform for business and investment licensing by making an impromptu inspection of the Investment Coordinating Board (BKPM) 78. He instructed his ministers to cooperate in making the BKPM a truly one-stop service center for investment licensing in a stronger bid to reinvigorate investment 79. However, business and investment licensing does not end only at the National Investment Coordinating Board (BKPM). In fact, the number of permits that have to be obtained from provincial and regional governments by businesses before starting operations is no less than those from the National Investment Coordinating Board (BKPM).
76
The Jakarta Post. (2014). “Jokowi and regional leaders”. Jakarta: 16 November 2014.
77
Ibid.
78
Ibid.
79
Ibid.
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Unless Jokowi’s loud and clear message about expedited business licensing reaches all regional government leaders, the reform will fail because most investment ventures are implemented outside Jakarta, on outer islands, where most natural resources are located from Sabang to Merauke (see Map 1 Indonesia’s Regional Border management issued by National Board for Border Management, BNPP, 2014). Therein lays the strategic importance of the meetings between provincial governors, Jokowi and the whole Cabinet80. He extolled the vital role of private investment in reinvigorating the economy81. Both Jokowi and Kalla, who used to be businessmen themselves, are fully aware of the hassles from so many layers of bureaucratic requirements, which the rivers of red tape that investors must wade through82. Map 1: Indonesia’s Regional Border Management
Source: www.bnpp.go.id/2014
Therefore, President Jokowi must work hard, while the iron is still hot, otherwise the business community will become skeptical and apprehensive that “it would be back again to business as usual”. Businesses do not expect miracles, given the uphill challenges encountered in the inefficient and corrupt bureaucratic system. But they expect at least concrete action and steady, if small, progress as well as the right signals on policy direction in the long term.
80
Ibid.
81
The Jakarta Post. (2014). “Jokowi and regional leaders”. Jakarta: 16 November 2014.
82
Ibid.
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As recognized that a complicated government bureaucracy and regulatory environment has been one of the main barriers to new investment to Indonesia and is one of the main sources of economic inefficiency. Business-friendly regional administrations will contribute greatly to national economic growth because most of the country’s abundant natural resources, such as forests, agriculture, fisheries, mining and tourist attractions, are located mostly in main provinces and regencies. But local administrations and regional legislative councils should realize that the most important element of business-friendly policies and more conducive investment climate should be good institutions and bylaws that can serve as risk-management tools for investors in a highly complex market economy. Provinces or regencies with poor natural endowments should not be put off by their limitations because investors often see policy variables as the main factors that influence their decisions to set up business in particular areas. Indonesia’s Foreign Investment Every day the global news media carry stories of events involving foreign governments and their populations. Usually featured under the heading of ‘international affairs’ or ‘world news’, these stories all too frequently tell of political violence, lives and livelihoods lost, human rights violated, infrastructure damaged, and hopes for the restoration of peace and prosperity dashed. Thus, war rather than peace makes the news headlines, and understandably so, because the violent conflict of war so visibly ravages human societies. ‘If it bleeds, it leads’83, as the cynical media adage goes84. For more than two thousand years of recorded history humans have been fascinated and frustrated by war and its political economy consequences, so we should not be surprised by its continuing preeminence. But human societies are ravaged by so much more than war. Chronic underdevelopment, poverty, human rights violations and environmental degradation are equally devastating, if less visibly so. Occasionally, however, the plight of the world’s impoverished populations becomes headline news when famine or natural disasters, such as droughts, earthquakes, floods, tsunamis or avalanches, strike, compounding already fragile or impoverished political societies85. Sympathies will be aroused in faraway places, and celebrities, humanitarian organizations, the 83
D., Richard, B., Anthony, G., Jim. (2007). An Introduction to International Relations: Australian Perspective. Cambridge, U.K: Cambridge University Press, p.25-26. 84
Ibid.
85
Ibid.
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United Nations (UN) and canny politicians will talk the talk of collective grief, human community and global responsibility86. Thus, excitement will die down after a flurry of activity and the poor souls will inevitably be cast back to the margins of international attention as developed countries return to more pressing domestic matters, such tax cuts, democracy and elections and so on. And so the daily round of international relations goes on, war and peace, poverty and underdevelopment, global attention and global neglect. This common sense understanding of globalization, free trade, regional economic integration, international relations only scratches the surface of all that the discipline of International Relations covers. 1) The study of international relations is not to be equated with ‘current affairs’. It is important not to reduce international relations to the lead stories of the global news media. News, by its nature, is ephemeral. Each day brings a new story to tell, and news reports are also independent of each other. That is to say, news agencies do not necessarily concern themselves with explaining how different stories ‘hang together’ or relate to each other, and they are usually content solely with reportage. International Relations, by contrast, seeks to go beyond the ephemeral and common-sense to reflect more deeply on events, structures, processes and actors to offer explanations, interpretations and normative analyses 87; 2) The study of international relations is not reducible to what happens in other countries, even though it may include it. Political machinations in other countries, especially powerful ones, always hold particular interest; Washington politics is never far from the headlines. But in International Relations, any interest in the politics of other countries will be determined by how it impacts on or plays out in the international sphere or how it is shaped by international forces88; 3) International Relations are not reducible to foreign policy analysis, though once again, it includes it within its scope89. The geographies of human settlement have become the modern theaters of international and regional conflict, especially in territorial dispute issues. The search for national security is today a source for urban insecurity. The Asia-Pacific region is increasingly making headlines as China asserts its claims to various islands and maritime territories in the region. 86
Ibid.
87
D., Richard, B., Anthony, G., Jim. (2007). An Introduction to International Relations: Australian Perspective. Cambridge, U.K: Cambridge University Press, p.25-26. 88
Ibid.
89
Ibid.
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Through conception of Indonesia’s state law or Archipelago islands which Indonesian fought through the statement "Juanda Declaration" dated December 13, 1957. It is finally resulted in the receipt of the United Nations Convention on the Law of the Sea (UNCLOS) decision, which signed in Montego Bay, Jamaica, on December 10, 1982. Then Indonesia ratified the 1982 Convention on the Law of the Sea by Law No. 17 year 1985 dated 13 December 1985. This means that conception “Indonesia’s Archipelago” became one of the principles accepted and recognized in the new international law of the sea. However, recognition of the principle of the Indonesian archipelago in the Convention 1982 Law of the Sea should also be paid to facilitate and respect the legitimate interests and rights of the user specific state waters of the island nation, as Rights of passage of foreign ships and aircraft through archipelagic sea lanes, “The Right of Archipelagic Sea-lanes Passage”. Also, implementation of the right lanes archipelagic sea has accommodated under Article 53 Paragraph (1) Convention on the Law of the Sea 1982 which can be implemented through archipelagic sea lanes that determined by the island nation together the International Maritime Organization / IMO). Determination of Indonesian archipelagic sea lanes (ALKI) in addition to a positive impact on national development activities for people’s welfare, can also pose a potential foreign threat of territorial claim to Indonesia's national interests. Geographically, Indonesia has an open position that every moment can be an opportunity for other countries to come in and conducting their activities in Indonesia with a variety of associated impacts. Through potential ALKI threats would affect the aquatic environment and the surrounding security islands territorial border issues, as well as otherwise. Therefore, Indonesian government needs to strengthen its border security efforts on Indonesia’s Archipelagic Sea Lanes (ALKI) requirement of specialized human skills ability to handling any territorial disputes, conflict prevention, and deterrence through mutual cooperation and comprehensive coordination involving the role of all the relevant authorities in the country as well as through cooperation with other countries in terms of technical support associated with increased border management and security control in the Indonesia’s Archipelagic Sea Lanes (see Map 2 ALKI). Map 2: Indonesia’s Archipelagic State Lanes (ALKI)
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Source: www.bnpp.go.id/2014
Supposed that determination of Indonesia’s archipelagic sea lanes; will have a good impact on people welfare, mostly those who live along Indonesian outer islands coastal territory. Therefore, to define Indonesia’s sea lanes as sovereign territorial rights lanes implementation of archipelagic sea lanes by the international law of the sea convention (Alur Laut Kepulauan Indonesia, ALKI). This is a determinant lane for the cost of service and may be used by a foreign ship or aircraft is above the sea for cruise and flight conducted peacefully in the normal way. Determination ALKI intended to cruise and international flights can manage continuously, quickly and with no obstructed by territorial waters and air space of Indonesia. Indonesia’s archipelagic sea lanes (ALKI), is set to connect the two of marine-free, i.e. the Indian Ocean and the Pacific Ocean include: 1) ALKI I, crossed the South China Sea - Karimata Strait - Jakarta Sea - Sunda Strait; 2) ALKI II, Sulawesi Sea crossing the Makassar Strait - Flores Sea - Lombok Strait; 3) ALKI III, crossed Pacific Ocean – Moluccas Strait - Seram Sea – Banda Sea. Largely in response to China’s expanding naval capabilities and vocal territorial claims, the U.S. last year announced a strategic “pivot” towards Asia, which will be a realignment of its military power to the region90. According to Robert Ross, ”While some of America’s allies in the AsiaPacific were reassured by this renewed commitment to preserving the status quo, this strategy has served to fuel Chinese insecurities and hastened China’s desire to resist and urgently develop its military capabilities91. So, in East Asia, the regional order is in flux. 90
Manurung, Hendra. (2013). “Russia: The Asia Pacific Global Power”. Jakarta: The President Post Indonesia. Vol. 2 No.1 January 2013.
91
Ross, Robert. (2012). “The Problem With the Pivot in Foreign Affairs”. Washington D.C: The Foreign Affairs. November/December 2012, p.27.
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Indonesia needs more investment to realize its economic and developmental ambitions. But it also needs the right kind of investment partners (see Map 3 ALKI). Indonesia has vast economic potential. It is a country blessed with an abundance of resources from spices to rubber and copper to oil, but its human resources are even more impressive. Indonesia has a rising middle class with youthful working age demographics.
Map 3: Indonesia’s Archipelagic Sea Lanes Based on PP Number 37 in 2002
Source: www.bnpp.go.id/2014
In fact, in a recent report, the McKinsey Global Institute predicts that by 2030 Indonesia could be the world’s seventh-largest economy, overtaking both Germany and the United Kingdom92. The prospects for Indonesia look bright. This optimism is shared by the American business community. Last year, an American Chamber (AmCham) study entitled Partners in Prosperity: US Investment in Indonesia found that from 2004 to 2012, US foreign direct investment in Indonesia totaled US$65 billion93. That total is 92
The Jakarta Post. (2014). “Indonesia needs value-added partnerships”. Jakarta: 6 November 2014.
93
Ibid.
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much larger than official data indicate, making the United States the largest foreign investor in Indonesia over that period94. Furthermore, the study found that US companies plan approximately U$D61 billion in new investment in the country over the next 3-5 years if the investment climate is right. The study shows that American businesses are committed to supporting Indonesia’s economic ascent, but there are a number of policy challenges that need to be worked through for this long-term valueadded investment to be realized. Thus, the recent election of Joko “Jokowi” Widodo as the new President ushers in a new opportunity for Indonesia. Indonesia now embarks on a new journey with a new government, and a leader who has laid out ambitious goals for economic growth and development. Indonesia will need more investment if is to realize these goals and achieve its true potential. Such growth will not come from domestic consumption and Indonesia’s own productivity and exports alone. Indonesia now needs investors who give back to the country’s communities and add value. Indonesia needs to committed, responsible and long-term investment partners that can help the country achieve developmental goals. Across sectors as diverse as energy, mining, ICT, consumer goods, agriculture and finance, all sectors that President Jokowi has discussed in his economic growth agenda, there is now a critical need for investment that can increase human skills, bring in new technology, develop infrastructure, increase production, incorporate Indonesian partners into regional and global supply chains, and foster new spin-off enterprises. Many countries may offer investment, but US companies lead the way in offering the kind of value added investment that Indonesia needs. During his inaugural address, President Jokowi emphasized the concept of “Gotong Royong”, which is the joint sharing of burdens. He also outlined repeatedly how Indonesia needs business and investors that can contribute to national development goals and provide benefits through mutual cooperation. No country is as well placed to contribute to Indonesia’s development as America. US companies directly employ approximately 183,000 Indonesians at good wages, and provide topnotch employee benefits and welfare. US companies directly and indirectly support more than 1.7 million Indonesian jobs, supporting livelihoods and providing opportunities for millions of families. American businesses are also helping to develop Indonesia’s human capital and the skilled workers it needs. From 2007 to 201295, US companies’ average employee-training budgets 94
Ibid.
95
The Jakarta Post. (2014). “Indonesia needs value-added partnerships”. Jakarta: 6 November 2014.
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increased by 150 percent96, providing a new generation of Indonesians with new skills and educational development. Beyond business, US companies are also responsible corporate citizens, contributing $5.8 million in 2012 for Corporate Social Responsibility (CSR) programs 97, an increase of 95 percent since 200798. US companies have a strong track record of long-term partnerships and commitment to Indonesia, stretching back all the way to 1924 when geologists from Standard Oil of California (today’s Chevron) were trekking through the jungles of Sumatra. It is a story of investment and mutual cooperation that continues to this day. In a few days, the US business community will come together with our Indonesian counterparts and government partners to discuss how American investment can continue to help Indonesia and its new government meets its economic and developmental ambitions at the “Indonesia Investment Summit.” It is an occasion where the US business community’s commitment to Indonesia will be reaffirmed. Also some experts from Paramadina Public Policy Institute, as well as Indonesian Chamber of Commerce and Industry (Kadin), Indonesian Employers Association (Apindo) and Investment Coordinating Board (BKPM) in partnership with AmCham plan to put forward policy recommendations designed to foster value-added investment and thereby support the new government’s efforts to achieve its policy goals, with clear benefits to Indonesia’s economy, its people, and society at large. American business is committed to working in partnership with the new government to support Indonesia on its journey, and help Indonesia realize its boundless potential. Impact of Jokowi Transformational Leadership It is more than a metaphor; the theme of capturing opens questions about large-scale historical change, and turns attention to some of the most vexing aspects of globalization: control, autonomy and agency. To what extent, and how, is the set of processes known as globalization being governed? If it is being governed, or if elements of it are subject to governance, then one would like to know whether there is effective management, what strategies are employed, and with what results. The tasks of control are both manifold and challenging in different arenas, i.e. at the global, regional, national and local levels. Moreover, there are the matters of defining the criteria of control, identifying who is doing the defining, and determining which national interests are at stake.
96
Ibid.
97
Ibid.
98
The Jakarta Post. (2014). “Jokowi, Zuckerberg and broadband”. Jakarta: 6 November 2014.
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The act of capturing establishes a hierarchy between the captor and the captive. A hierarchy entails an ordering and a division of labor and power. The captors are of course on top, and the captured are at the bottom of the heap. Both within and between countries, there are many different shadings of this relationship. Thus, such structures must be contextualized and, today, are integral to an epochal transformation known as globalization. On July 22, 2014, Indonesia's Election Commission declared Joko Widodo, 53, the winner of Indonesia's July 9, 2014, presidential election. The Election Commission reported that Widodo defeated former General Prabowo Subianto by more than 8 million votes in a bitterly contested election in which 135 million people, which was 70% of registered voters, cast their ballots. Although Prabowo has filed a protest to Indonesia's Constitutional Court alleging electoral fraud, political observers believe Widodo, popularly known as "Jokowi," almost certainly will take office on October 20, 2014 becoming Indonesia's second directly elected President. In a region where some citizens, notably in Thailand, are questioning the benefits of democracy, public opinion polls show that Indonesians increasingly consider democracy to be both effective and part of their national identity99. The nation has developed a vibrant media and civil society, and conducts hundreds of local and provincial elections each year. Nationwide parliamentary elections on April 9, 2014 were one of the world's largest democratic exercises, electing thousands of legislators at national, provincial, and sub-provincial levels. With a population of 251 million, Indonesia is the largest nation in Southeast Asia and the world's most populous Muslim majority country. Its size and its economic vibrancy have led some observers to describe Indonesia as a global "swing state"100, whose voice will be disproportionately influential in global debates over issues such as trade and investment liberalization, non-proliferation, maritime security, and human rights. But where is the next government likely to take Indonesia? Widodo has little track record on foreign policy, security, or broad macroeconomic policy. Born to a relatively poor family in Central Java, he started a small furniture business, and then served as governor in the mediumsized city of Solo and the capital city of Jakarta. Widodo will become the first Indonesian president who was not politically active during Indonesia's authoritarian period and who has no ties to either the military or to elite business families. Despite high public approval ratings, Widodo will face a Lower House of Parliament in which nearly two-thirds of the members come from parties that supported his opponent. Many analysts argue that infighting between President Susilo Bambang Yudhoyono's government and parliament constrained Indonesia's ability to pursue major economic reform or combat high-level corruption over the past decade. 99
http://www.iri.org/sites/default/files/2013%20September%2017%20Survey%20of%20Indonesian%20Public%20Opinion%2C%20June%2019 27%2C%202013.pdf 100
http://www.cnas.org/sites/default/files/publications-pdf/CNAS_GlobalSwingStates_KlimanFontaine.pdf
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Unless some part of Prabowo's coalition defects, a real possibility 101, Widodo could have an even tougher time than his predecessor. Recently the media carried the news of a blusukan or an impromptu visit, made by President Joko “Jokowi” Widodo and Mark Zuckerberg, which is CEO of Facebook102. The visit signaled their shared hopes that Indonesia should use advances in information and communication technology (ICT) to boost its economy. Their visit to Tanah Abang, the crowded Central Jakarta market in the heat of mid October 2014 reflected that the Internet will play a significant role in implementing Jokowi’s vision delivered in his presidential campaign this year 103. Citing “egovernment”, among other things, Jokowi will also use the Internet to improve several basic public services and increase transparency in his new government 104. On 20 October 2014 was a blessed month for Indonesia. It witnessed the transition period to a new president and new government to rule the nation, to carry on efforts so that Indonesia becomes a developed country by 2025, as stipulated in the MP3EI, the Master Plan for Acceleration and Expansion of Indonesian Economic Development. Nowadays Indonesia has become among the most populous countries both in terms of population and also in the ownership of mobile telephones after China, India and the European Union. It is estimated that today Indonesia has about 300 millions active mobile telephone numbers with over 120 percent penetration rate. In addition Indonesians are among the most loyal users of Facebook and Twitter and any kind of brand new applications on social media such as Path, LINE and WhatsApp. Ten telecommunications operators and a couple of cable TV providers have successfully empowered and connected all Indonesian cities with affordable mobile Internet facilities. However in terms of using ICT for more productive economic activities, Indonesia still lags behind peer countries due to limitations in connection speed and local content. Therefore, the launch of the Indonesia Broadband Plan (IBP) as stated in Presidential Regulation No. 96 /2014 in Jakarta on October 15th 2014 marks an important milestone in Indonesia’s ICT history105. The IBP sets the target of broadband deployment for a minimum speed of 2 megabits per second (Mbps) for fixed broadband and 1 Mbps for mobile broadband 106. Providing a highspeed Internet service will ensure people maximize the benefit of using ICT for their economic,
101
http://online.wsj.com/articles/indonesia-parties-show-signs-of-moving-behind-election-winner-1406220561
102
The Jakarta Post. (2014). “Jokowi, Zuckerberg and broadband”. Jakarta: 6 November 2014.
103
Ibid.
104
Ibid.
105
The Jakarta Post. (2014). “Jokowi, Zuckerberg and broadband”. Jakarta: 6 November 2014.
106
Ibid.
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educational, health and other activities. The IBP also details five priority areas i.e. e-government; e-education; e-health; e-logistics; and e-procurement until 2019 107. On February 2014 in Barcelona108, thousands of telecommunications CEOs and government officials listened as Zuckerberg unfolded the reason why he priced WhatsApp at US$19 billion109, one of the biggest deals on earth for a start-up company. He said WhatsApp was a great benefit for Facebook and he also valued the half-billion people connected to the application110. Being connected and a networked economy have been the main reasons for Zuckerberg ‘s expansion of his business around the globe 111. It could be also one of the main reasons why he met Indonesian President Jokowi. Jokowi successfully won over people when he declared a series of different ICT applications such as electronic Identification Card (e-KTP or e-ID), e-procurement, e-education, etc. Moreover, he has also showed his concern for creative economic activities such as music, animation and entertainment. He further assured voters that he would increase the transparency of his governance by using different ICT applications. So, the rare event of the young billionaire Zuckerberg meeting the newly elected Indonesian president should be treated as a good signal for both sides 112. While the Facebook CEO expands his business, Jokowi could also draw benefits for the nation’s ICT ecosystem 113. Indonesia has a big chance to improve its local ICT products, services, hardware and other equipment. On July 2014, Indonesia launched the first Indonesian 4G/LTE hand set manufactured locally in Batam, Riau Island Province114. Producing more local smart phones will definitely eliminate the need for imported products costing billions of rupiah. Last September in Brussels 115, witnessed by the Indonesian Ambassador to Belgium116, the Grand-Duchy of Luxembourg 117, and the
107
Ibid.
108
Ibid.
109
Ibid.
110
Ibid.
111
Ibid.
112
The Jakarta Post. (2014). “Jokowi, Zuckerberg and broadband”. Jakarta: 6 November 2014.
113
Ibid.
114
Ibid.
115
Ibid
116
Ibid.
117
Ibid.
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European Union118, a German IT company signed a memorandum of understanding (MOU) with a local company from Bandung to develop an open Base Transmission Receiver system 119. Indonesia is blessed not only with its rich natural resources, but also its talented and brilliant human resources. Thousands of young Indonesians have already dedicated their life to helping ICT grow around the globe. Many are behind high-quality animation films produced from Singapore to Hollywood120. They are competing with millions of young talented people from China, India, and Eastern Europe in techno parks and in Silicon Valley for “new world-class applications”121. To conclude, Zuckerberg’s visit, Jokowi’s Vision on ICT use, and the Indonesia Broadband Plan (IBP) should boost the local ICT industry and also the nation’s economy in the near future. Jokowi outward looking on “East Asia Cooperation” The international situation is undergoing profound and complex changes against the backdrop of in-depth development of world multi-polarization and economic globalization and the constant evolution of cultural diversity and social cohesiveness. Through world society having increasingly closer interconnections and ever growing interdependence, global cooperation is becoming ever more multifaceted and all-dimensional, which all strengthen the trends of peace, development, cooperation and potential win-win solution. Meanwhile, it is not a peaceful world yet. Regional unrests, border and territorial dispute, and cultural clash conflicts take place from time to time. Food security, energy and resource security, cyber security, climate change and other global non-traditional security issues are even more pressing. However, East Asia region still remains generally stable, with regional cooperation booming and its global status constantly is rising. The participating countries are attaching more importance to, and increasing constant involvement in, East Asian cooperation, proactively exploring its future direction and coming up with many initiatives. These efforts have not only reflected the will of the parties to advance East Asian cooperation, but also provided food for thought on what to make of it.
118
Ibid.
119
Ibid.
120
Ibid.
121
Ibid.
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President Joko “Jokowi” Widodo needs to have historical depth and a global vision to view East Asia mutual cooperation in a comprehensive ethical manner. Today’s development achievements of most East Asian countries stepped from the termination of colonial regimes and were accelerated upon casting off the shadows of the Cold War. Through arduous explorations, East Asian countries have found the development paths that suit their national conditions and wholeheartedly focused on development and improving livelihood of the people. They uphold the spirit of opening up, cooperation and win-win in jointly advancing regional cooperation and common prosperity. Thus, in comparison to its past, East Asia is at its best political economic development stage. Compared to other regions of the world, East Asia has an admirable development momentum and cooperation environment. Through sustainable cross-cultural dialogue and cooperation has become the main stream of closer interstate relations. Still, it is undeniable that East Asia is currently challenged by increasing pressure on economic growth and intertwining traditional and non-traditional security threats that have historical roots, like the colonial regime and the Cold War, as well as new problems arising from development. We should tackle these issues with no evasion or exaggeration, but rather, jointly face and address them through pragmatic negotiation and cooperation based on understanding the overall situation. As a major country in East Asia, China has large stakes in the welfare and safety of the region. It is an important participant and contributor in East Asia cooperation and always prioritizes development. It has established with the ASEAN member states the biggest free trade area among developing countries to promote regional trade and investment, actively engaged in regional cooperation on disaster prevention and mitigation with ASEAN, partnered ASEAN+3 countries in advancing the Multi-lateralization of the Chiang Mai Initiative and establishing emergency rice reserves to preserve regional financial and food security. China has also actively engaged in East Asia Summit (EAS) cooperation and proposed drafting the Plan of Action to implement the Phnom Penh Declaration on the EAS Development Initiative. China advocates a common, comprehensive, cooperative and sustainable Asian security concept. China has participated in the ASEAN Regional Forum, the ASEAN Defense Ministers’ Meeting-Plus and other regional security cooperation moves to protect peace and stability in the region. East Asian cooperation is facing historical opportunities. Although the negative impacts of the post-financial crisis are still lingering, East Asian economic development is generally steady and getting better. The structural adjustments of its major economies are advancing steadily and new growth points and industrial structures are gradually taking shape creating new opportunities for East Asian cooperation. 64 | P a g e
In 2015, the establishment of the ASEAN Economic Community (AEC) and conclusion of the Regional Comprehensive Economic Partnership will lead the East Asia integration into a brandnew development phase. The development space for East Asian cooperation will be further expanded, with even more vitality and stronger momentum. China is comprehensively deepening its reform, expanding opening up and working hard to realize the two centenary goals and the Chinese dream of the great rejuvenation of the Chinese nation. For that purpose, a peaceful and stable neighboring environment is indispensable. China not only needs to draw development vitality from in-depth engagement in regional cooperation but will be better able to benefit neighboring countries with its own development. Taking the path of peaceful development and adhering to the principle of amity, sincerity, sharing in prosperity and inclusiveness in neighborhood diplomacy, China will continue to deepen East Asian cooperation on the foundation of China-ASEAN cooperation and by utilizing ASEAN+3 cooperation as the main vehicle for its healthy and steady development. To implement the China-ASEAN “2+7 Cooperation Framework”, China will further engage in closer high-level exchanges with ASEAN, explore the signing of the treaty of goodneighborliness and friendly cooperation with ASEAN countries, advance negotiations on upgrading the China-ASEAN Free Trade Area, strengthen cooperation with the countries along the Mekong River, as well as build the 21st century maritime silk road. China will continue to push forward ASEAN+3 cooperation in areas of finance, food, maritime cooperation, connectivity, energy, social and cultural affairs, adhere to the position of EAS as a leader-led strategic forum and deepen its cooperation in the six priority areas. On the issue of the South China Sea, China has been a persistent protector of its national sovereignty and a strong defender of peace and stability in the South China Sea. China supports and advocates the “dual-track approach” proposed by ASEAN countries, i.e. relevant disputes being addressed by countries directly concerned through friendly consultations and negotiations in a peaceful way, and peace and stability in the South China Sea being jointly maintained by China and ASEAN countries. China will continue to work with ASEAN countries to comprehensively and effectively implement the Declaration on the Conduct of Parties in the South China Sea (DoC), and push for the early conclusion of a code of conduct of the parties in the South China Sea on the basis of consensus. On 30 October 2014, 8th Senior Officials’ Meeting on the implementation of the DoC was held in Bangkok and reached important consensus, which will give strong impetus to the dialogue and cooperation on the South China Sea. This year marks the 60 th anniversary of the initiation of the five principles of peaceful coexistence and next year Indonesia and other non-aligned movement countries will celebrate the 65 | P a g e
60th anniversary of the Bandung Asia Africa Conference. The spirit of sovereign equality, common security, common development, cooperation and win-win initiated 60 years ago is still shining the light of East Asian wisdom, bearing the East Asian ideal and guiding the development of East Asia. Therefore it is nation’s responsibility to uphold the spirit of maritime power history, stick to the theme of economic development, continue to deepen mutual bilateral cooperation and jointly build a brighter future for East Asia people social welfare. Indonesia’s Foreign Policy Challenges Since President Susilo Bambang Yudhoyono ruled the country in his first presidential term (2004-2009), and continued with his second term (2009-2014), Indonesia has pursued closer relations with the United States and a broadly active foreign policy, seeking to increase Indonesia's voice in both regional and global forum. It increasingly is a de facto leader of the Association of Southeast Asian Nations (ASEAN) and a key player in Southeast Asian nations' diplomacy with China over maritime disputes in the South China Sea. In 2014, Indonesia will undergo a significant transformation, as the country held national elections to choose new legislators at both the national and regional levels, as well as elect a new President to succeed Susilo Bambang Yudhoyono, who has been in power since 2004. As President, Dr Yudhoyono has been lauded for reviving activism in Indonesia’s foreign policy after years of difficulty following the 1997 Asian financial crisis and the fall of former President Suharto. However, will the new leadership transition result in a drastic change in Indonesia’s foreign policy ? Some analysts of Indonesia’s foreign policy have been worried that the new President might be inward-looking and more interested in pursuing a nationalistic agenda. This prediction is somewhat exaggerated. While the new President might be much more nationalistic leader, he would be unlikely to change radically the country’s foreign policy direction. There are three reasons for this. First of all, as in the case of domestic politics, foreign policy issues involve a broad range of domestic aspirations, from a more protectionist trade policy to human rights and democracy promotion; from a more active stance in the Association of Southeast Asian Nations (ASEAN) to one that is more globally oriented. The new President, like the incumbent, would probably choose the middle ground by continuing Indonesia’s current diplomacy. He or she would not conduct an extreme foreign policy makeover and would prefer to satisfy demands from diverse foreign policy interests inside the country. Secondly, Indonesia does not urgently need to pursue an aggressive foreign policy, which requires energy and resources. Jakarta has been criticized for not taking a proactive leadership 66 | P a g e
role in ASEAN during difficult times. For instance, Indonesia did not take a firm stand against China over the territorial disputes in the South China Sea, until after ASEAN Foreign Ministers were in disarray over the issue following their annual meeting in Cambodia in 2012. Nonetheless, this position is understandable because adopting an aggressive policy towards China would not only incur economic costs with Beijing but would also require a huge effort to rival China’s dominant economic influence with some ASEAN members such as Cambodia and Laos, something that Indonesia currently lacks. Thirdly, the new President would not become an inward-looking President because he would be driven by domestic aspiration to see Indonesia play a constructive role in world politics. Indonesians have become increasingly more mature and rational in responding to international affairs because more of them have had international exposure. More government officials from various agencies, including at the regional level, and House of Parliament members have had more experience in networking from their involvement in international fora. The private sector has also been intensifying its lobbying of the government for more participation in economic diplomacy. It is true that when there was political tension between Indonesia and its neighbours, such as with Malaysia over Indonesian migrant workers, some protests had occurred in front of the Malaysian embassy in Jakarta in 2013. Nonetheless, nationalist rhetoric of a few groups does not necessarily reflect real public interest and concern. The public, in general, prefers to see increasing mutual trade, cultural exchanges and people-topeople relations, despite some difficulty in bilateral relations. While there will probably be no substantial and ideological change in Indonesia’s foreign policy under the new leadership after this year’s elections, the next President will need to deal with both regional and global developments, which would influence the country’s strategic choices. In Southeast Asia region, despite progress towards ASEAN Community 2015, some countries in the region have been facing the threat of domestic instability. The political stalemate in Thailand, unresolved protests in Phnom Penh and other internal tensions could weaken enthusiasm for regional integration. In the broader region, there have been tendencies towards conservatism and self-serving nationalistic agendas, seen in the growing tension between China and Japan over contested islands and the controversial “stop the boats” policy in Australia. Amid an uncertain and unpredictable regional and global situation, Indonesia will try to refocus its foreign policy. It will probably reduce its diplomatic weight from traditional yet increasingly less effective organizations such as the Non-Aligned Movement and the Organization of Islamic Cooperation, which are two groups that Indonesia had participated actively in between the 1960s and 1990s. 67 | P a g e
ASEAN would still be important for Indonesia, but Jakarta might seek to diversify its foreign policy orientation as a consequence of its self-perceived status as an emerging middle power. For example, Indonesia, together with Mexico, Korea, Turkey and Australia, as formed in 2013 an informal consultative group dubbed MIKTA. It is too early to predict whether MIKTA could have significant influence in world politics, especially within the Group of Twenty, but its member countries have started to meet regularly at the working group level. As shown by its move on MIKTA, Indonesia might be in 2014 and beyond creatively initiate or join informal groupings, which is a new phenomenon in world politics. For any future Indonesian President, joining the club of middle and emerging powers across different regions would not be entirely aimed at influencing global governance. More importantly, it would have a domestic goal. If the new leader intensifies efforts to raise Indonesia’s image as an emerging power, he would be regarded by constituents at home as a competent leader of this big and complex nation. Also Indonesia is a member of the Group 20 developed countries (G-20) group of nations and the Organization of Islamic Cooperation (OIC). Thus, U.S.-Indonesia relations have deepened considerably since 2010, when the two nations formed a Comprehensive Partnership 122 and committed to annual meetings of a joint commission chaired by the U.S. Secretary of State and Indonesia's Foreign Minister. The most recent meeting was held in February 2014123, and it finalized several developments including MOUs on wildlife trafficking124 and an increase in bilateral cooperation on assistance to other developing nations under an arrangement known as South-South and Triangular Cooperation125. Foreign policy played only a small role in the presidential campaign, but Widodo and Vice President elect Jusuf Kalla issued a policy platform126 that called for strengthening Indonesia's security and economic interests in the maritime domain, defending the country's outer islands, protecting natural resources within its exclusive economic zone, and strengthening Asian regional architectures127. Thus, Jokowi and Jusuf Kalla “Vision Mission for Better Indonesia” 122
http://www.state.gov/p/eap/rls/ot/2010/147287.htm
123
http://www.state.gov/r/pa/prs/ps/2014/02/221714.htm
124
http://www.state.gov/r/pa/prs/ps/2014/02/221713.htm
125
http://www.state.gov/r/pa/prs/ps/2014/02/221712.htm
126
http://www.lowyinterpreter.org/post/2014/07/21/Indonesia-Defence-foreign-policy-implications-Jokowi.aspx?COLLCC=3663751441&
127
http://jkw4p.com/stagging/media/2014/05/JALAN_PERUBAHAN_INDONESIA.pdf
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included defense and foreign policy objectives. Advised by a cohort of talented Indonesian intellectuals128, the statement reflected the authors' views of the Indo-Pacific region as a single geopolitical and strategic entity. The statement was predicated strongly upon securing Indonesia's economic and security interests in the maritime domain and enhancing Indonesia's identity as an archipelagic state. The statement promised to increase defense spending from 0.8% to 1.5% of GDP and build the Indonesian Armed Forces into a regional maritime power. It further committed to enhancing regional defense diplomacy and maritime cooperation through multilateral entities. Although the statement did not refer to any specific countries, the sub-text was clearly China. Priorities included defending Indonesia's outer islands, protecting natural resources within its exclusive economic zone (EEZ) and strengthening the regional architecture in order to 'prevent the hegemony of major powers'.
Thus, 3rd presidential debate on 22 June 2014 concerned on 'International Politics and National Resilience' revealed further insights into Jokowi's thinking on foreign policy and strategic issues. While, on the Australia relationship 129, the candidates seem to agree there was a trust deficit between Jakarta and Canberra, but Jokowi offered more considered analysis. He indicated his willingness to work towards ameliorating this deficit through business, education and cultural diplomacy, but cautioned that a government he led would not abide perceived condescension or disrespect from its southern neighboring states. However, on the South China Sea, a critical security issue for the region, Jokowi generally kept to the foreign ministry line that Indonesia was not directly involved in the dispute but would continue to work towards a diplomatic solution. His equivocation during the debate about Indonesia's ongoing commitment to mediating in the dispute can be attributed more to inexperience on foreign policy matters than an indication of any forthcoming policy shift. China’s hardly in need of more territorial disputes with neighbors. Yet, it has started a new one with Indonesia. Map 4. Republic of Indonesia
128
http://thejakartaglobe.beritasatu.com/news/power-players-behind-indonesias-presidential-candidates
129
http://www.lowyinterpreter.org/post/2014/07/21/Indonesia-Defence-foreign-policy-implications-Jokowi.aspx?COLLCC=3663751441
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Source: http://www.nationsonline.org/maps/indonesia_admin_map.jpg
China is hardly in need of additional territorial disputes these days, but it seems to have a new one on its hands. China has claimed a new drawing of its nine-dash line includes waters that Jakarta claims as its own.
“China has claimed Natuna waters as their territorial waters. This arbitrary claim is related to the dispute over Spratly and Paracel Islands between China and the Philippines. This dispute will have a large impact on the security of Natuna waters”130, assistant deputy to the chief security minister for defense strategic doctrine Commodore Fahru Zaini said, according to Indonesia’s official news agency, Antara. The Natuna waters, named after the islands, are part of Riau Islands Province in Indonesia, located along the southern part of the strategic Strait of Malacca. They are part of the South China Sea, which is a new map on Chinese passports encompasses part of the Natuna waters. Indonesian government went to complain China’s nine-dash line position, which is not transparent owing to the fact that it doesn’t include precise coordinates. “The deployment of the TNI (Indonesian National Army) forces around the Natuna waters aims to anticipate possible infiltration as a result of instability in the South China Sea” 131, TNI chief General Moeldoko said according to an Antara report. While maintaining that Indonesia is ready to cooperate with countries like China and the U.S., Moeldoko added: “Since Natuna is strategically located, the increase of its forces at sea, on the ground, and in the air is necessary to anticipate any instability in the South China Sea and serve as an early warning system for 130
131
http://thediplomat.com/2014/03/chinas-newest-maritime-dispute Ibid
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Indonesia and the TNI”132. Earlier in the year 133, Indonesian media reported that Jakarta would soon announce the Natuna Islands as one of the four hotspots it would focus on militarily in the coming years. Therefore, what to make of the Indonesian government’s foreign policy regarding the South China Sea territorial dispute ? The basic reality is that a dispute does exist between China and Indonesia, but Jakarta refuses to officially recognize it. This dispute is by no means new, despite reports suggesting otherwise, and Indonesia’s longstanding policy of non-recognition remains essentially unchanged. But equally important shifts are underway, including changes to Indonesia’s military force posture. The issue of illegal fishing by foreign vessels is likely to prove a pivotal challenge for Jokowi’s administration, and will almost certainly create tension with another emerging maritime power, China. China is hardly the only country whose fishermen are operating illegally in Indonesian waters. But it’s the only one whose fishermen are directly supported if not encouraged by the coercive power of its state security services at sea. China’s expanded presence in disputed areas of the South China Sea is increasingly bringing its fishermen, and its maritime security organizations, into direct contact and often confrontation with those of Indonesia. While the Indonesian foreign ministry continues to maintain there’s no dispute between China and Indonesia, China’s actions suggest otherwise. A number of incidents have occurred in the area since 2010 134, resulting from what ultimately proved to be unsuccessful attempts by Indonesian security forces to prosecute Chinese fishermen operating illegally within Indonesia’s claimed the Exclusive Economic Zone (EEZ). Those efforts to assert Indonesian jurisdiction in its claimed EEZ are beginning to form a pattern of persistent failure, a pattern which, if left unaltered, may eventually compromise Indonesia’s military deterrent posture in those areas, as well as the legal basis for its claims. Thus, the maritime boundaries between Indonesia and Malaysia are located four bodies of water, namely the Straits of Malacca, Straits of Singapore, South China Sea and Celebes Sea. The territorial seas of both countries (both claim a 12-nautical-mile, and or 22 Km territorial sea) only meet in the Straits of Malacca and Straits of Singapore. Territorial sea boundaries also exist at the continuation of both ends of the land boundary between the two countries in Borneo. Only continental shelf boundaries have been agreed to in the South China Sea while the continental shelf boundary in the Celebes Sea has not been determined at all. 132
Ibid
133
Ibid
134
http://www.indopacificreview.com/indonesias-global-maritime-nexus-looming-challenges-sea-jokowis-administration/#sthash.65wdQIDu.dpuf
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The border claim tensions have been fed by a series of aggressive actions by regional maritime authorities, including harassing vessels, destroying equipment, and blockading islets and shoals. The increasing frequency of such events raises the possibility of miscalculations that could lead to overt conflict at sea. China’s decision to antagonize Indonesia could be a costly one given the amount of influence Jakarta wields in the Association of Southeast Asian Nations (ASEAN).
Conclusion To be concluded, given the urgency of improving logistics nationally from Sabang to Merauke, the Government is urged to prepare National Grand Design/Master Plan on National Logistic Blueprint (NLB) which automatically will link to specific on-going reform actions with a larger economic corridor strategy through west-to-east vis-à-vis sea-ports infrastructure and maritime connectivity management. These larger master plans aim to combine regional and sector approaches by developing a stronger national connectivity and be the basis for transforming and upgrading Indonesian economy by 2030. The Joko “Jokowi” Widodo idea to develop Indonesia as a maritime axis is a strategic decision of the country’s grand design to maximize its maritime assets potential and apply the blue economy concept into realization within five years short term presidential period (2014-2019). This new Grand Design/Master Plan on Blue Economy will play an important role as the main driver in revising and realigning the National Logistic Blueprint (NLB) with other blueprints and master plans, and tackling some of the main challenges that the National Logistic Blueprint (NLB) and other master plans faced alone. Thus, through this realignment process, it will help Joko “Jokowi” Widodo working cabinet or Kabinet Kerja” to prioritize actions by avoiding inter-ministerial coordination overlaps and 72 | P a g e
regrouping similar activities with common objectives, revise private sector incentives and rely on dedicated teams for implementation, monitoring, evaluation, and decision making progress. Implementing such a revised the National Logistic Blueprint (NLB) will be an important step forward in reducing logistics costs and improving timeliness of international and domestic trade at national and regional level. Indonesian government must emphasize some priority programs in the implementation of the blue economy concept are maritime infrastructure development, renewable energy and maritime mineral exploration, and marine tourism promotion. As the world's largest archipelago, Indonesia is keen to be on the frontlines of the maritime issue and to raise it as a global issue in multilateral forums such as the United Nations (UN), the Association of Southeast Asian Nations (ASEAN), the Indian Ocean Rim Association (IORA), and the Pacific Islands Forum. As prioritized programs are in accordance with President Joko "Jokowi" Widodo's vision to revive Indonesia's past maritime glory. One of the many challenges facing Indonesia’s current government is re-establishing the country’s unique geographical, cultural and ideological identities. Presently, there is a concerted governmental effort to augment Indonesia’s power by introducing its “maritime-axis” foreign policy to fully take advantage of its strategic geographical position. Recognizing the need to ensure the availability of strategic commodities at affordable prices, reduce logistics costs to facilitate the competitiveness of export products, and prepare the country for better national market integration within Association of South East Asian Nations (ASEAN), Presidential Instruction No. 5/2008 was issued requiring the release of a National Logistics Blueprint (NLB). The National Logistics Blueprint (NLB), completed by an inter-ministerial team in early 2010, describes current conditions and major problems in the flow of commodities for domestic use and key export destinations, and proposes an action plan in seven main areas: 1) To upgrade national infrastructure; 2) To set regulatory reform aimed at creating a business environment conducive to lowering logistics costs; 3) To upgrade the quality of human resources in logistics; 4) To strengthen competitiveness of domestic service providers; 5) To introduce Information and Communication Technology (ICT); 73 | P a g e
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