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Jakarta Post

Economic opportunities in Melanesian states

  • Sandy Darmosumarto

    The Jakarta Post

Jakarta   /   Wed, June 24, 2015   /  06:19 am

Among the highly contested issues in this year'€™s Melanesian Spearhead Group (MSG) Leaders'€™ Summit '€” to take place in Honiara on June 24 to 26'€” is the possible approval for membership of the United Liberation Movement for West Papua (ULMWP) in the MSG.

Complementary to this membership admission is the idea that Papuan separatist movement groups would gain more leverage for their cause. On the opposite pole, many view Indonesia'€™s application to become an associate member of the MSG as merely a counter effort.

In reality, both applications for membership stand a significant chance of being rejected through split approval by the five MSG members.

With respect to ULMWP'€™s application, the majority of MSG members do not consider it an organization that meets the prerequisite of being an inclusive umbrella group that represents the solid and collective voice of Melanesians in Indonesia '€” not only in Indonesia'€™s Papua and West Papua provinces but also those in Maluku, North Maluku and East Nusa Tenggara.

While Vanuatu and the Front de Libération Nationale Kanak et Socialiste (FLNKS)'€™s constant support for self-determination of Melanesian groups will stand in the way of a consensus on Indonesia'€™s membership application.

Regardless of the outcome to these applications, recognizing the separatist movement in Indonesia'€™s Papuan provinces is not MSG'€™s main agenda '€” more so when a strong majority of MSG members have clearly agreed to honor Indonesia'€™s sovereignty and territorial integrity in a joint statement from 2014.

That Indonesia has not been conducting intensive negotiations with Vanuatu and the FLNKS demonstrates the secondary nature of these membership issues to Jakarta.

Boosting economic development is MSG'€™s top priority, and Indonesia'€™s endeavor into Pacific Islands Countries (PICs) ought to aim at becoming an active part of this development effort. The six out of 15 MSG meetings dedicated to economic issues attest to this priority.

With PICs, especially Fiji, increasingly finding lobbying activities related to preferential access to Australia'€™s and New Zealand'€™s markets unsustainable, PICs have, in the past few years, been escalating significant trade activities with China, and '€” to a lesser extent '€” with Malaysia and Singapore. In return, China has been escalating direct investment into PICs.

For Indonesia, this leapfrog by China is a loss since it should have been Indonesia who escalated economic engagement with PICs and had been actively involved in economic transformation in PICs.

Indonesia, however, could benefit from China'€™s economic rise in PICs. Indonesian and Chinese maritime companies could share the burden of putting in place the necessary maritime infrastructure that would facilitate increased trade activities.

Projected Chinese involvement in developing maritime infrastructure within the Indonesian archipelago serves as a starting point for this joint endeavor. Amid plans to link the western and eastern Indonesian islands with sea routes and seaports, there exists an opportunity to link these maritime logistic facilities eastward into Papua New Guinea (PNG), Fiji and Solomon Islands.

These three MSG members are PICs that possess the largest population and sustained purchasing power to consume Indonesia'€™s export products and commodities. Thus, engaging in higher degrees of trade activities with them could potentially result in financial benefits.

Additionally, since 2011, export penetration from Indonesia to all PICs is significantly higher in PNG, Fiji and Solomon Islands '€” reaching a total value of US$201.7 million in 2014 alone. Apart from attempting to reduce the cost of logistics, Indonesia should also assist the three PICs in increasing the competitiveness of their economy.

Indonesia could replicate past experiences in developing sustainable small- to medium-sized enterprises to add more value to products derived from primary commodities, stimulate innovation of creative and tradable products and support PICs'€™ efforts to diversify away from unprocessed primary goods, which make up the majority of PICs exports.

Indonesian private sectors '€” especially those in plantations, mills, construction and food processing industries '€” should seek ways to expand their operations in the three PICs. Likewise, they should also invest in developing PICs'€™ tourist industries.

One common obstacle to increasing inbound tourists into PICs is the lack of a convenient network of scheduled flights. Hence, the Indonesian air transportation industry should escalate engagement with air carriers and governments from the three PICs to collaborate in enhancing air transportation linkages between Indonesia and the three PICs.

Additionally, Indonesian banks should start to look into opportunities in financing business development '€” including the maritime sector '€” in the three PICs. With increased connectivity as well as improvements in the production process, exports from PICs would eventually become competitive and seek additional foreign markets

Given the proximity and, by then, ease of access to Indonesia'€™s large market, including the 11 million Indonesians of Melanesian ethnicity (the largest in any one country in the world), Indonesia could serve as the engine for intra-Melanesian trade.

Additionally, over 15 soon-to-be-constructed passenger seaports within Indonesia'€™s Melanesian provinces could be reconfigured to also serve as short sea shipping points to cater to low-volume trade between Indonesia and the three PICs.

With improved maritime facilities, Indonesian ports could take over the role of transshipment destinations played by Australian and New Zealand ports for PICs exports going out to Southeast Asia and East Asia '€” and vice versa.

The writer is head of the Sub-Division for Political, Social and Security Affairs connected with the Regional Organization, the Bureau of the Foreign Minister and the Ministry of Foreign Affairs of the Republic of Indonesia. The views expressed are his own.

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