Indonesia Balances Maritime Sovereignty, Economic Ties to China

Source: VOA

Published: Saturday 26th November, 2016

In March, the two countries engaged in a standoff when Indonesian authorities detained a Chinese fishing vessel, but a Chinese coast guard vessel intervened. Also that month, Indonesia said China had officially included waters near the Natuna Islands on a territorial map, a move that Fahru Zaini, chief security minister for defense, told local media had made a “large impact on the security” of that tract of ocean.

In May, the Indonesian navy arrested a Chinese fishing vessel despite Beijing’s coast guard backup. A month later the navy fired on another Chinese boat, possibly injuring a sailor, before impounding it and jailing the seven-person crew.

China has not lashed out at Indonesia or threatened economic retaliation as it does when other countries, such as Japan and the Philippines, test its claims.

“At the moment, both countries seem to have been able to largely compartmentalize those incidents from affecting the economic relations although obviously it must have an effect on anxieties about increasing Chinese assertiveness,” McRae said.

Most of Indonesia’s efforts around the Natuna Islands are preventive rather than reactive, he said. Indonesian officials also avoid reminding Chinese officials in public about past incidents or issuing warnings as the Philippines did under its president from 2010 to mid-2016. China trimmed trade and tourism to the Philippines in 2012.


Two-way street

China needs Indonesia as much as the other way around, analysts say.

Last year Widodo and Chinese President Xi Jinping signed eight agreements partly aimed at letting China build infrastructure in Indonesia. This year in Jakarta, lower-level officials agreed to work together on energy, agriculture and industrial park construction.

“I think there’s definitely a balancing act for the Jokowi administration, but I think the Indonesia-China relationship is an important one to both countries and diverse enough that if the Jokowi administration treats these kinds of incidents and confrontations with enough diplomacy as possible, it will not disrupt investment flows into Indonesia from China,” said Natalie Sambhi, a research fellow at the Perth US-Asia Centre in Australia.

Chinese firms need new markets for construction as their own becomes saturated or too competitive. The Chinese government has sighted Indonesia as part of its “maritime silk road” initiative to foster investment in countries around Asia and in Europe.

“Indonesia is an important component of the way China sees the strategic landscape in the Asia Pacific, particularly as a key state in Southeast Asia, and it would be a boon for China to maintain its relationships with Indonesia on the basis of its wanting to implement things like its maritime silk road and its one belt, one road initiative,” Sambhi said.

But Indonesia, an exporter of commodities to world markets as well as a massive domestic market built on a population of 250 million, depends less on Chinese economic support than other parts of Asia.

China is Japan’s second most significant trading partner, a relationship worth $125 billion in 2014. Malaysia counts China as its top trading partner and source of direct foreign investment.

“Indonesia feels less concerned about Chinese response because it’s less dependent on Chinese invest and infrastructure development than some of the other more developed countries in Southeast Asia,” said Carl Baker, director of programs at the think tank Pacific Forum CSIS in Honolulu.


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