Introduction
Indonesia’s Foreign Minister Sugiono declared Indonesia’s interest in becoming a member of the Brazil, Russia, India, China and South Africa (BRICS) grouping. According to him, this is an exercise of Indonesia’s bebas aktif (independent and active) foreign policy approach.
Many view this move as an opportunity for economic growth and diversification. However, a closer look raises a crucial question: Are the potential benefits worth the risks?
There are significant opportunities and risks. Beyond the promise of wider market access, Indonesia’s alignment with BRICS could strain its relationships with key Western partners and even limit economic opportunities with traditional allies.
To maximize national interest, the government must carefully weigh whether a BRICS membership genuinely advances Indonesia’s economic goals or risks isolating it from existing engagements with Western economies.
Economic Opportunities
President Prabowo sees BRICS as a path to expand Indonesia’s economic alliances, offering new markets, investment sources and more autonomy from traditional Western partners. BRICS countries make up around 30% of the global economy and represent 43% of the world’s population, driven mainly by China and India.
This substantial market size and consumer base underline the organization’s potential influence as a global economic force. In 2022, BRICS countries contributed US$9.25 billion in FDI to Indonesia, or 21.2% of its total. Given its existing economic relations with these countries, Indonesia’s participation may bolster its export-orientated economy by diminishing tariffs and other non-tariff barriers.
Prabowo is also advocating for Indonesia to embrace the BRICS bilateral currency exchange initiatives to strengthen trade amidst global financial volatility and lessen its reliance on the US dollar.
Moreover, reducing reliance on Western economies appears aligned with Prabowo’s nationalistic stance. Indonesia is seeking increased independence and resilience in the face of global economic instability. Given its strong connections to Western markets, diversifying Indonesia’s economic portfolio is a necessity, which can be done by engaging BRICS countries.
To illustrate this, the United States is Indonesia’s second largest export destination, with US$23.28 billion in commerce in 2023. Therefore, a BRICS membership has the potential of diverting Indonesia’s strong economic relationship with the West, provided strong economic activities between Indonesia and BRICS countries can be fostered.
Indonesia’s natural resource wealth can be an attractive point for other BRICS members. In 2023, Indonesia was the world’s largest palm oil exporter, producing 47 million metric tonnes of crude palm oil, thereby meeting 54% of the global demand and generating US$23.97 billion in revenue. In addition, Indonesia is the fifth largest coal producer and possesses substantial nickel as well as other mineral reserves that are essential for modern technologies. These make Indonesia an attractive potential member in the perspective of BRICS countries.
Joining BRICS would afford Indonesia greater opportunities to increase exports and maximize profit from investment projects in its natural resources. As per the government’s data, Indonesia’s export value stood at US$258.82 billion in 2023, a figure that might further expand if Indonesia could tap the potential of the BRICS markets.
While Indonesia can benefit from its resource industry, there is also a strategic imperative to reduce overdependence on it. A membership in BRICS could help Indonesia attract foreign investment into non-resource sectors, thus creating a more balanced and resilient economy.
Unlike historical exploitative practices by Western countries or even China itself, which have often involved one-sided agreements that benefit foreign powers at the expense of local economies, Indonesia must negotiate terms that protect its economic interests. The varied economic interests of BRICS members can create opportunities for Indonesia to negotiate deals that are mutually beneficial rather than exploitative.
Besides, BRICS consists of a diverse group of countries that have different economic systems, political ideologies and development strategies. Many BRICS nations, including Brazil and India, have demonstrated a commitment to sustainable development. Indonesia can advocate for agreements that prioritize sustainable practices, promoting its own environmental and economic goals while engaging with other BRICS countries.
Economy vs. Autonomy
While BRICS offers promising economic opportunities, Prabowo’s administration is tasked with managing the potential complexities of such an accession. China and Russia have enhanced their geopolitical influence through economic alliances. Given its non-alignment policy, Indonesia must remain vigilant to prevent the erosion of its sovereignty that might transpire from its closer engagement with BRICS countries.
In other words, Jakarta should carefully manage its economic relationships within BRICS to maintain policy independence and avoid overreliance on a single partner.
The decision to accede to BRICS suggests a willingness to participate in a “revisionist” group. BRICS countries, such as China and Russia, are known for their efforts to reorganize international norms and institutions to reflect a multipolar power structure. They also seek to challenge the Western-established global order.
Prabowo considers that Indonesia is capable of placing itself on the world map in a multipolar setting; however, the journey is accompanied by a lot of risks.
Indonesia has not taken any sides in international conflicts, but being part of the BRICS block can change this scenario. The aspirations of the BRICS countries to create a third or even a fourth currency system may lead to a head-on collision with Western countries. Such a position from the bloc, which openly seeks to revise the global order and financial system designed by the West, poses a danger to Indonesia’s ties with other Western countries.
The threat is not only limited to the Western links. For quite some time, Indonesia was able to make inroads in Southeast Asia owing to its policy neutrality. This has enabled Indonesia to take on the leadership roles of the Non-Aligned Movement (NAM) as well as ASEAN. By virtue of ASEAN’s non-alignment, Indonesia is able to exercise strategic independence and manage relations with the Western and BRICS countries in a balanced manner.
However, a BRICS membership may also raise questions among other ASEAN Member States (AMS). It may signal that Indonesia seeks to diversify its attention away from ASEAN, which ironically may weaken ASEAN’s unity, cohesion and capacity to assert its centrality vis-à-vis global affairs.
While BRICS promotes trade cooperation, Indonesia may face challenges from member countries, particularly China, as they would also seek to compete with Indonesia’s domestic market.
This is evidenced by recent events. The large volume of Chinese imports into Indonesia has had a negative impact on both the Indonesian manufacturing and textile industries. Many local companies have been put out of business because of the adverse effects of Chinese products, which are too cheap to compete against.
It is still possible for Indonesia to see more imports from BRICS, though this would entail creating more uncertainty within its domestic market. Therefore, it is essential for Indonesia to promote the establishment of equitable trade norms within BRICS to ensure fair competition and avert dumping practices, or the sale of commodities at excessively low prices.
Indonesia’s most recent experiences with Chinese investment are noteworthy. Under President Joko “Jokowi” Widodo, Indonesia’s economic initiatives were significantly influenced by Chinese investments, particularly in the downstream processing of nickel.
There has been criticism that 41% of Chinese investment goes to metal processing companies that are environmentally harmful. In addition, many Chinese-operated nickel smelters in Indonesia have free foreign exchange agreements to allow the transfer of revenues back to China. Such agreements limit Indonesia’s economic gain, considering it also plays a role in processing the nickel exports.
These examples demonstrate the urgency to implement stringent regulatory criteria when engaging BRICS countries to guarantee that foreign investments contribute rather than incurring losses to Indonesia’s economy and environment.
Prabowo’s administration must assess the symbolic and substantive value of BRICS. Indonesia’s accession to BRICS may turn out to be theatrics without sound strategies and policy measures. Besides, membership in one more international economic association does not, as practice shows, automatically accord economic benefit. Additionally, its membership in BRICS may be nominal, as it could be unproductive participation that only drains effort and resources when the domestic economies are weak.
Instead, the new administration needs to address the weak points of Indonesia’s economy and enact policies that could protect it from unfair trade as well as investment practices.
Balancing Ambitions
The government’s plan to join BRICS must incorporate a strategy that focuses on bolstering the Indonesian economy, the independence of its diplomacy and its regional power. Indonesia needs to be able to continue exercising its non-alignment policy but wrest the economic opportunity offered by BRICS. Furthermore, Indonesia must intensify its engagement with AMS, pursuing policies and projects that prioritize intra-ASEAN cooperation to stave off any potential undue influence emanating from BRICS countries.
Moreover, Indonesia must stay true to its strategy of putting its eggs in multiple baskets. Indonesia can seek to enhance its trade agreements not just with BRICS but also with key partners like Japan, South Korea and Australia. For instance, Indonesia could negotiate a multitiered trade agreement that allows for preferential tariffs with AMS and these partners while also facilitating trade with BRICS countries.
Conclusion
The strategic entry of Indonesia into BRICS is a complex decision that will put Prabowo’s ability to reconcile economic ambition and Indonesia’s professed non-alignment position to the test.
By joining BRICS, Indonesia can enhance its exports, attract international investment and reduce its reliance on the US dollar. This progress, however, is dependent on Jakarta’s ability to contain the potential vulnerabilities that might come from the engagement, especially the political and economic challenges arising from an enhanced partnership with China and Russia.
Acceding to BRICS may boost Indonesia’s economic potential and its standing in the multipolar world order. However, such a step comes with its own challenges. Indonesia’s priority is to ensure that its domestic economy and environment will not be undermined by economic engagement with BRICS countries. Active and measured diplomacy must also be exercised. Indonesia must retain its non-aligned posture and anticipate shifts in global politics.
The bottom line is, Indonesia’s accession to BRICS must not come at the cost of giving up parts of its sovereignty and national interest.
