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After Africa, RI looks to replicate success elsewhere
As the Foreign Ministry doubles down on economic diplomacy, the government has been looking to replicate its successful push into Africa elsewhere
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span>As the Foreign Ministry doubles down on economic diplomacy, the government has been looking to replicate its successful push into Africa elsewhere. However, challenges such as the adverse economic climate in other countries have proven to be significant factors in determining the outlook for Indonesia's trade and investment strategies, several ambassadors have said.
Last week, more than 130 Indonesian heads of missions overseas convened in Jakarta for foreign policy briefings and coordination meetings to develop economic diplomacy strategies.
From Wednesday to Saturday, envoys were briefed on the foreign policy directive of President Joko "Jokowi" Widodo, who wants diplomats to be more economic-minded in their work abroad.
Indonesia had poured most of its resources into upgrading relations on the African continent over the past two years, which Deputy Foreign Minister Mahendra Siregar said has largely paid off.
He said the government has learned that so long as the directives were carried out well by the ministry and its overseas missions, it could glean extraordinary results from markets that had the most unrecognized potential.
According to the ministry, various Indonesian companies have established business cooperation agreements with contracts totaling US$2 billion from nine African countries and several enterprises since the government convened the first Indonesia-Africa Forum in 2018. The contracts mostly came in the infrastructure, construction services, financing and strategic industry sectors, among others.
“Based on that [our success in Africa], this year we will do the same thing for Latin America and the Caribbean, for the Middle East, and the whole Indo-Pacific in the context of the World Economic Forum on ASEAN and the Indo-Pacific,” Mahendra said during a reception for the national coordination meeting last week.
Foreign Minister Retno LP Marsudi recently announced that Indonesia would also be hosting the second Indonesia-Latin America and the Caribbean (INA-LAC) Business Forum later this year, as well as the Halal Industry Summit, the Indonesia-Middle East Energy Forum and the fifth World Cocoa Conference.
The success in Africa, after hosting the 2018 Indonesia-Africa Forum and the Indonesia-Africa Infrastructure Dialogue the following year, had buoyed otherwise modest expectations in a market Indonesia has labeled as nontraditional.
“For decades our exports have always been focused on mature or traditional markets. We’ve only been dealing with the big ones in the Americas and Europe but also China, whereas [we ignore] developing countries with growth well above 5 percent. Indeed [the market yield] is small but put together they can be quite substantial,” Jokowi told the envoys on Thursday.
He touched on the success of penetrating Africa, expressing his approval for increasing trade with countries that would more readily accept products from Indonesia’s small and medium enterprises (SMEs).
“Our small and medium enterprises can compete there because they don’t have strict standards. Please ensure we really look into the markets in Central Asia, South Asia and Eastern Europe and have your staff collect the required data,” the leader said in a coordination meeting at the State Palace.
Going forward, the President expected Indonesia’s overseas missions to funnel from 70 to 80 percent of their resources toward economic diplomacy in an effort to reverse the nation’s trade and current account deficits — a message he has repeated at other ministries and state agencies.
Jokowi’s directive has been warmly welcomed by the envoys, but not without a few reservations.
Indonesian Ambassador to Brazil Edi Yusup, for instance, bemoaned the high import tariffs that Brazil has imposed on Indonesian goods, despite being Indonesia’s largest trade partner in Latin America, posting an estimated $3 billion in trade last year.
As one work-around, Indonesia was eyeing a free trade agreement with Mercosur, the South American trade bloc consisting of Argentina, Brazil, Paraguay and Uruguay, the envoy said, which is expected to help consolidate tariffs in the faraway and politically volatile region.
Ambassador to Ecuador Diennaryati Tjokrosuprihatono also pointed to the high and relative stable economic growth in Africa as a significant factor of Indonesia’s successful trade there. Meanwhile, the Latin American economies still faced “many challenges”.
In the case of Brazil, Edi said it was just recovering from recession. In 2018, Brazil’s economy grew by only 1 percent despite calls for economic reforms.
“The problem in Brazil is that [President] Jair Bolsonaro's party is small, so getting support is very difficult. Also, there have been many protests in other Latin American countries [such as] in Chile and Bolivia, so he is a bit afraid of the domino effect if he makes any changes,” he said.
Besides macroeconomic challenges, diplomats in developing countries often have to overcome the challenge of reputation, particularly as it relates to poverty.
Bangladesh in South Asia, for instance, has some of the highest levels of economic growth in the world despite its status as a least developed country, resident Ambassador Rina Soemarno said.
“The real challenge is to convince Indonesian businesses to trade and invest in Bangladesh because of the mindset that it is a poor country, when in fact it has great potential because of the size of the market, its high economic growth and its stable macroeconomy,” the envoy said.
Under Rina’s ambassadorship, Indonesia recorded $238 million in trade in 2018 and $1 billion in 2019 from Bangladesh, the country with which Indonesia has its eighth largest bilateral trade surplus. (tjs)
