THURSDAY, March 28, 2024
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Jokowi caught between BRICS and a hard place 

Jokowi caught between BRICS and a hard place 

This year, China holds the presidency of BRICS, the cooperation forum of Brazil, Russia, India, China and South Africa. China is currently hosting the group’s annual summit in Xiamen – where the agenda is dominated by “BRICS-plus”, an expansion of the group.

Last month, Chinese news agency Xinhua hinted three times that Indonesia would be invited to join BRICS following the Xiamen summit.
It is nice to be wanted, but Indonesian President Joko “Jokowi” Widodo has reason to pause for thought.
BRICS needs new initiatives to live up to China’s view of the group’s purpose. Only China and India are achieving good economic growth, while growth in Russia, Brazil and South Africa is at best anaemic.
Trade and investment relations between the countries remain minimal, aside from imports from China and Chinese foreign direct investment (FDI). 
Add to this Russia’s lacklustre interest in the forum and India’s increasing hostility towards China, marked by Prime Minister Narendra Modi snubbing Chinese President Xi Jinping’s Belt and Road Forum in May, as well as simmering territorial disputes in the Himalayas.
Meanwhile BRICS cannot claim to lead the developing world without at least one predominantly Muslim member state. And there are other reasons for China to favour Indonesia. 
Firstly, Indonesia is a G20 member. Beijing could do with another ally in this forum to withstand pressures for China to float its currency and open up further to foreign trade and investment. Secondly, China may also see Indonesia as a possible ally in the China-Asean free trade agreement renegotiations and in the Regional Comprehensive Economic Partnership discussions.
In both forums, China has to placate forum partners antagonised by its claims in the East and South China seas.
But will Indonesia accept an invitation?
It will gain little in economic terms since BRICS is not a trade bloc. But if BRICS asks Indonesia directly, Jokowi would likely consent, because a refusal would embarrass all.
In addition, Jokowi needs China.
Since his 2014 election, he has styled himself as Indonesia’s infrastructure president, frequently donning hardhat and boots to break ground for projects in Indonesia’s five-year MP3EI infrastructure plan.
The Indonesian economy badly needs the stimulant of infrastructure improvement, but MP3EI was slowed by a lack of private investor interest in 2015.
That left the door open for a stampede of Chinese state-owned construction firms and their state-owned suppliers, in conjunction with finance from Chinese state-owned banks.
Around the same time President Xi’s Belt and Road (B&R) initiative started taking shape. Chinese firms have taken a greater share of infrastructure projects in Indonesia, joining B&R and MP3EI at the hip in the process.
As Indonesia’s domestic private sector remained reluctant, the government persuaded more state-owned firms to become local partners of Chinese firms in turnkey projects.
Chinese companies achieved a record US$4.8 billion turnover on their projects in Indonesia in 2015. And there is more to come.
The Heritage Foundation so far recorded the signing of $11.5 billion worth of large Chinese construction projects in Indonesia since 2015.
Indonesia’s total foreign debt to China increased to $15.5 billion in June. Projects based on concessional Chinese lending may not yet be included, as they tend to have a long grace period before repayments are due.
Jokowi’s penchant for Chinese construction activity may have peaked in 2015 with the awarding of the Jakarta-Bandung fast rail project, and promises of more loans and FDI from China.
Since then, the high-profile fast rail project he endorsed has been mired in delays. Chinese nationals were found to be working illegally at construction sites and companies in Indonesia. And Chinese companies proved reluctant to commit to the FDI projects that Indonesia’s investment board had approved.
An indication of the mixed feelings towards Beijing came in July with Indonesia defiantly naming part of the South China Sea as the North Natuna Sea.
Accepting BRICS membership could therefore be an opportunity for Jokowi to express a desire for ongoing good relations with China.
On the other hand, Jokowi will be working towards re-election in 2019.
For Jokowi, the immediate advantage of accepting the invitation is that few people in Indonesia know much about BRICS. The government also has no explicit policy stance on BRICS.
But if the implications sink in with Indonesia’s voters, membership of BRICS could add fuel to smouldering popular discontent about China’s growing role in the country.
It adds to the issues of illegal Chinese workers and the growing bilateral trade deficit with China. This would be something Jokowi does not need in the lead-up to the 2019 elections.
Elections in recent years have shown that opponents are not likely to leave any of Jokowi’s political stones unturned.
An invitation for Indonesia to join BRICS could put Jokowi between a brick and a hard place.

Pierre van der Eng is asst professor in international business at the Australian National University.

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