Indonesia-Middle East Relations in 2022: A Year in Review

The inauguration of the Masjid Sheikh Zayed Al-Nahyan in Solo, November 2022. Credit: Twitter @jokowi

Cooperation in Political and Judicial Areas

The year 2022 witnessed several developments in the relationship between Indonesia and Middle East and North Africa (MENA). On the political front, cooperation on parliamentary and judicial affairs seems to be of utmost importance. A plethora of examples demonstrate this.

For instance, the Speaker of Dewan Perwakilan Rakyat (DPR), Puan Maharani, visited Doha where she met with Qatar Shura Council and agreed to strengthen cooperation on parliamentary ties. In another example, a meeting between the supreme courts of Indonesia and Bahrain took place to discuss potential exchanges of judicial affairs.

In a call with Iranian President Ebrahim Raisi, President Joko “Jokowi” Widodo also underlined ties on parliamentary and judicial affairs between Jakarta and Tehran. This year has also seen engagements between Jakarta and Bahrain, Saudi Arabia, Morocco as well as Algeria, especially on establishing the World Consultative Assembly as a platform for cooperation between parliaments among Muslim-majority countries.

Another important highlight was the signing of a Letter of Intent on humanitarian and development assistance for the people of Afghanistan, which would include long-term aid, including scholarships and vocational training programs tailored to the needs of the Afghan people. As a follow up to the agreement, in December, Indonesia and Qatar announced a plan to co-host an international conference on Afghan women and education.

Moreover, diplomatic exchanges have also continued which help strengthen cooperation between Indonesia and MENA. For example, Indonesia’s Special Envoy for the Middle East sat down with Iraq’s Chargé d’Affaires in Jakarta to discuss further ties between the two countries.

Defense and Security Cooperation

Furthermore, cooperation in the security sector saw an intensification in 2022. Qatar recently decided to choose Indonesia as the buyer of its Mirage 2000-5 aircraft of the Qatar Emiri Air Force. With Tunisia, Indonesia has inked a Letter of Intent to explore further cooperation in defense and security as well as discussed potential collaboration in counter-terrorism

Earlier in the year, Indonesian Defense Minister Prabowo Subianto met with his Emirati counterpart Mohammed Ahmed Al Bowardi in Riyadh while attending the 2022 World Defense Show to discuss the possible strengthening of military ties. Prabowo followed up on this two weeks later when met with Abu Dhabi’s Crown Prince Mohammed Bin Zayed Al Nahyan to discuss the matter further. These discussions seem to be fruitful as an Indonesian firm, PT. Dirgantara Indonesia, signed a Memorandum of Understanding (MoU) with the United Arab Emirates (UAE)-based CALIDUS in June on joint market for CN235 and aircrafts N219, as well as joint development for N219 and drone.

Prabowo also met with his Saudi counterpart as well to discuss the potential of the defense industry.

Even Indonesia-Iran relations were notable this year. Indonesia witnessed two Iranian naval vessels docked at a port in Jakarta for a “peace-mission” while the two countries discussed the possibility of exchanges among cadets and the security of sea lanes for commercial shipping between Iran and Indonesia.

These developments signify Jakarta’s strategy to seek other partners in non-traditional security areas in the face of the United States’ renewed interest to seemingly “contain China” through such architectures as the Quadrilateral Security Dialogue (the Quad) and Australia, the United Kingdom and the United States (AUKUS) trilateral security pact.

Developments on the Palestinian-Israeli Issue

Interestingly, the Palestinian-Israeli issue continues to color Indonesia-MENA relations. In September, The Jerusalem Post published a report insisting that a “secret delegation” from Indonesia was scheduled to depart for Israel to engage in “secret visits.” Although Indonesia denied the report, in July it welcomed an Israeli delegation in Jakarta to explore the potential to heighten cooperation through investment, start-up ventures and social impact initiatives.

Israel has been interested in cooperating with Indonesia for some time.

In January, the then Israeli Foreign Minister Yair Lapid raised the issue publicly by asserting that Israel was looking to “expand the Abraham Accords to additional countries.” He said, “If you’re asking me what the important countries that we’re looking at are, Indonesia is one of them, Saudi Arabia of course, but these things take time.”

The United States tried to facilitate this. During a visit to Jakarta this year, Secretary of State Antony Blinken discussed with the Indonesian government the possibility of normalization, a proposal Indonesia said it had declined to take.

In fact, in October, President Jokowi received an official visit from Palestinian Prime Minister Mohammad I.M. Shtayyeh at the Bogor Presidential Palace. In his statement, President Jokowi emphasized Indonesia’s commitment to continuing to support the Palestinian independence. During the meeting, Kamar Dagang dan Industri Indonesia (Indonesian Chamber of Commerce and Industry – KADIN) also discussed various opportunities and prospects for the trade relations between the two countries.  KADIN especially targeted an improved communication with Federation of Palestinian Chambers of Commerce, Industry and Agriculture (PCCIA) with a focus on digital technology, small and medium enterprises (SMEs), agriculture, marble industry, spiritual tourism industry and human resource development.

Economic Ties

Indeed, economic ties also strengthened between Indonesia and MENA. Agreements in new sectors were achieved this year such as with Iran on halal industries, technology and medical sectors as well as with North African countries on food industry and fisheries. Indonesia’s state trading company PT Perusahaan Perdagangan Indonesia (PPI) has also begun shipping coffee to Egypt, following a total contract of 3,000 tons throughout 2022.

The most crucial development was that Indonesia signed CEPA with the UAE. The Indonesia-UAE Comprehensive Economic Partnership Agreement (CEPA) is expected to remove about 94% of existing tariffs and is expected to increase Indonesian exports to the Emirates rising by 54% over the next 10 years.

Few months later, Indonesia and the UAE also signed a business-to-business (B2B) MoU valued at US$ 3.6 million. Furthermore, PT Pupuk Indonesia (Persero), a state-owned enterprise (SOE), is expanding opportunities for cooperation in the trade of ammonia, urea, fertilizer and other products by opening a representative office in Dubai City.

Indonesia has discussed with the UAE on strengthening cooperation between Etihad Airways and PT. Garuda Indonesia, as well as was in talks with Abu Dhabi Investment Authority and ADQ. In August, the two countries also broached potential cooperation in pharmaceutical and medical devices fields with the hope of establishing joint ventures on the production of drugs, vaccines, and medical devices. Meanwhile, in November, Jakarta and Abu Dhabi signed an agreement on tuberculosis prevention.

Investments were also on the rise. The most highlighted development was the discovery of natural gas and condensate in the Anambas Block, offshore Indonesia, by the Indonesian subsidiary of Kuwait Foreign Petroleum Exploration Company.

Meanwhile, Saudi Arabia, through the Saudi Fund for Development (SFD), has funded 12 development projects and programs in Indonesia worth over US$401.6 million in the sectors of transport, communications, agriculture, infrastructure, shipping, health, and education. This was followed by Riyadh’s intention to offer funds for Indonesian startups and the signing of an MoU on traditional and renewable energy in November. Indonesia is also aiming to establish CEPA with Saudi Arabia soon.

G20 Summit in Bali in November also became another momentum for Indonesia and Saudi Arabia, whereby seven government-to-government (G2G) MoUs and 17 business-to-business (B2B) MoUs were concluded.

Other opportunities explored include the establishment of fertilizer factory in Jordan by PT. Pupuk Indonesia and PT. Petrokimia Gresik with the Jordan Phosphate Mines Company, the purchase of motor vehicle spare parts by the Jordanian Police from Indonesia, and; the discussion on the purchase of Jordanian Police uniforms from PT. Sritex.

Amidst positive developments, not-so-good news came from Libya. Indonesia’s Medco Energi has started international arbitration at the International Criminal Court (ICC) against the National Oil Company (NOC) of Libya to enforce its contractual rights under an exploration and production sharing contract, as well as to protect its right to benefit from its investment in Area 47 in Libya. The step made after the NOC tried to circumvent its obligations under the contract and prevented Medco from fully participating in the development and exploitation of Area 47 by, instead, seeking to develop Area 47 for the NOC’s sole benefit. Despite this issue, both countries’ representatives met in August to discuss ways to improve economic relations.

Various meetings and engagements on trade and investments were also held this year, including Indonesia-Qatar Business Forum, Indonesia-Kuwait Business Forum, Indonesia-Egypt Business Forum, Indonesia-Saudi Arabia Business Forum, business matching held by Indonesian Embassy in Muscat for Indonesian businesses and their Omani and Yemeni counterparts, Kuwaiti’s participation in Trade Expo Indonesia 2022, the 10th Indonesia-Iran Bilateral Consultation Committee, Indonesia’s participation in Foire Internationale D’Alger (FIA), and the signing of MoU between the Indonesia-Morocco Trade and Investment Cooperation Council (DK-PRIMA) and an export-import company from Morocco, IDA NEGOCE.

Interestingly, despite the ongoing Syrian conflict, the Indonesian Embassy in Damascus had the most active updates throughout 2022 compared to other Indonesian Embassies in the Levant region. These include diplomatic exchanges, economic promotions, Indonesian language courses and cultural events.

The 2022 cooperation between Indonesia and MENA also took place in the tourism sector. The most important one was Qatar, which agreed to invest over US$500 million in Indonesia’s “10 New Balis” tourism project for the constructions of hotels and resorts in eastern part of Indonesia. The project is part of Indonesia’s initiative to accelerate its tourism industry. This was followed with Saudi Arabia which declared its commitment to fund Indonesia’s tourism development, especially in the construction of cable cars in several tourism destinations.

After Covid-19-induced decline in two-way tourism between Indonesia and MENA, efforts have been taken to ameliorate the situation. Recently, the Wonderful Indonesia brand has popped up in billboards and advertisements on single and double decker buses across Qatar during the FIFA World Cup Qatar 2022. It is also important to note that, despite not qualified for the World Cup, Indonesia played a crucial role in the tournament. Al Rihla, the official souvenir match ball of this year’s World Cup, was manufactured by an Indonesian firm, PT. Global Way. Throughout the year, the Indonesian Minister of Tourism has also traveled to Bahrain and Qatar to further promote tourism cooperation. Efforts to boost tourism was also carried out with Tunisia in September.

The gesture does not solely come from Indonesia. The Saudi government recently lifted a ban on its citizens traveling to Indonesia in response to an improved COVID-19 situation here. This may increase the number of Saudi visitors to Indonesia. On that note, this year has also witnessed the agreement between Jakarta and Riyadh to resume the hiring of Indonesian domestic workers. This is significant given several deployment bans over the years due to some human rights abuses.

Socio-Cultural Cooperation

Moreover, religious cooperation also continued with the participation of Indonesian Muslim scholars at Bahrain Forum and the visit of Qatari Ambassador to the office of Nahdlatul Ulama, the largest Muslim organization in Indonesia.

The UAE has not missed a beat on this department. Masjid Sheikh Zayed Al-Nahyan was constructed in Solo and has been inaugurated by President Jokowi and President Mohamed bin Zayed Al Nahyan. The mosque is considered as a manifestation of the UAE’s soft power in Indonesia.

Saudi Arabia has also gone down this route. Prince Mohammed bin Salman, the Kingdom’s prime minister, announced that Saudi Arabia will finance the restoration of the Jakarta Islamic Center after it suffered fire damage during renovation work.

Indonesia-MENA cooperation has been further fostered with Indonesia’s efforts to promote its culture such as with the showcase of traditional dances and music in Bahrain Summer Festival, Batik fashion show and the celebration of Indonesian culture and independence day in countries such as Bahrain, IranKuwait and Iran.

Cooperation also continued in the academic realm, with possible cooperation being explored with Bahrain Institute of Banking and Finance. With Iran specifically, Indonesia has agreed to further cooperation in the fields of pharmaceutical nanotechnology and medical devices. Indonesia also discussed potential cooperation on education with its Iranian and Tunisian counterparts, and launched new scholarships to Egypt.

There are several stumble blocks such as the continued tensions in Iraq – whereby the Indonesian Embassy there called its citizens to be cautious – and the Syrian conflict, where some Indonesians allegedly have donated funds to Daesh.

Cooperation in climate change between Indonesia and the UAE also exists. The most significant development took place at the 27th Climate Change Conference (COP27) in Egypt, where both countries led the establishment of Mangrove Alliance for Climate (MAC) aimed to increase awareness about mangroves as a nature-based climate change solution, and to expand and speed up the conservation and restoration of mangrove ecosystems.

The Coming Years

Investment and trade ties can be expected to grow, with various letters of intent and agreements signed this year. The same can be said in security sector. Qatar, for instance, has expressed its intent to expand military cooperation with Indonesia.

This will be strengthened with institutional frameworks signed between Indonesia and MENA. This year, for instance, Indonesia and Iran concluded the 6th round of negotiations on Preferential Trade Agreement (PTA). The deal would see increased business links, a reduction in tariffs and an easing of financial transactions between the two countries. Discussions on PTA were also carried out with Jordan, Egypt and Tunisia.

Indonesia has additionally invited investors from MENA to explore its refinery sector and forge joint projects for different downstream products, such as jet fuel, diesel,and lube oil, among others.

The cultural ties will also strengthen with the appointment of Indonesia as a partner country for a key annual event organized by Qatar, namely the Qatar Year of Culture. With the “look east” policy, the MENA countries will continue to strengthen ties with Asia. While China has been the main focus, growing Southeast Asia has increasingly become a target. Indonesia, as the largest country in the region, seems to be a priority. Meanwhile, MENA represents a way for Indonesia to widen its sphere of cooperation. These conditions signify that Indonesia-MENA ties will strengthen in the future.

The views expressed are those of the authors and do not necessarily reflect those of STRAT.O.SPHERE CONSULTING PTE LTD.

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