Indonesia is a population powerhouse in Southeast Asia with abundant natural resources, a large consumer base and a vast domestic market with potential for growth. These existing economic strengths, which support the nation of approximately 279 million residents, have made Indonesia a ripe recruitment target for an association of nations beyond Western hegemony in its attempt to consolidate their strengths, namely BRICS.
BRICS was founded in 2001 by Russia and China and named for the initials of its first members: Brazil, Russia, India, China and South Africa. Its members hope to overcome the impact of economic sanctions by other nations and reduce the international use of the United States dollar, which they said is often used as an instrument of American political pressure. Members offer international financial opportunities for other members ranging from taxation to development banking.
This is exemplified by China, which hosted a BRICS virtual annual summit on 23 June 2022 and has increased trade with other BRICS members to further the group’s goals. In early 2022, BRICS trade was estimated at around CNY1.64 trillion (US$243.8 billion), up by 14.1 % year on year, surpassing the overall value of trade of Western countries.
Recently, discussion of Indonesia’s BRICS membership has been revived, with China extending an invitation to Indonesia. Indonesia was among the countries whose foreign ministers were invited to join the association’s virtual conference in May in this year. New BRICS slots were also offered to Argentina, Egypt, Kazakhstan, Nigeria, Saudi Arabia, Senegal, Thailand and the United Arab Emirates. Argentina and Iran sought membership in June 2021, which was agreed in principle by BRICS members. BRICS expansion could integrate members into a format akin to G-20 but dominated by economically developing countries.
BRICS Internal Issues Hindering Indonesia’s Joining
The offer for Indonesia to join BRICS has been available for years. Similarly, the debates over Indonesia’s possible accession to BRICS have been quite as intense and challenging as it is long.
In 2010, Indonesia seemed likely to become a BRICS member after successfully surviving the 2008 financial crisis. Ambassador Dino Patti Djalal, who was Indonesia’s top diplomat to the United States in 2010, highlighted that Indonesia’s desire to join BRICS could bolster its economy in the future, though there are significant reasons to not become a member as well. Later in 2012, it was argued that Indonesia’s strong economy could displace India from BRICS. The issue was again brought up in an October 2018 webinar entitled “BRICS: Challenges and Implementation for Indonesia”, held by Universitas Gadjah Mada. In this webinar, it was argued that Indonesia has the potential to join BRICS because the forum is not limited by history, culture and political elements.
However, joining BRICS may not be rosy for Indonesia. BRICS has been argued to be fraught with internal issues. These issues, which could hamper BRICS from becoming a successful organization, include member countries’ decreasing economic growth, differences in political systems and regional differences.
Although China’s economy is in bloom, its growth rate is decreasing. The National Bureau of Statistics of China revealed that its economic growth was only 4% from October to December this year. This was a drop from 4.9 in July to September 2021. Notably, the decrease in growth has been occurring since 2012.
Similarly, Russia’s economic growth would slow to 2.5% in 2022, likely as a result of President Vladimir Putin’s invasion of Ukraine. Decreased growth rate is also occurring in India and South Africa. The imbalance in the global order in recent years has caused the two countries to experience inconsistent economic growth.
India’s economic growth has decreased to 5.7% from 8.2% in 2021 and is envisaged to decline further to 4.7% in 2023. South Africa’s economy declined by 0.7% after a positive economic growth in the first quarter of 2022 (Q1). This economic downturn was due to South Africa’s largest industrial manufacturing area being hit by floods this year.
Meanwhile, Brazil is experiencing its own political and economic crises. Recent political contestation between outgoing President Jair Bolsonaro and incoming President Luiz Inácio Lula da Silva reveals the deep polarization in the country, threatening socio-political stability which is instrumental for Brazil’s economic growth. This is on top of high inflation rate, stringent unemployment and supply bottleneck that continue to haunt post-pandemic Brazil. Among others, these contributed to Brazil’s economic slowdown, which will decline to 0.6% in 2022 from 5% in 2021.
No Urgency to Join
Furthermore, there is no urgency for Indonesia to join BRICS considering Indonesia’s ability to develop its economy with its neighbors and trading partners. Such cooperation also provides a degree of economic safety in the context of today’s global flux.
Although Indonesia’s economy has been affected by the Covid-19 pandemic, its growth rate has been steady at around 5%. The trend of economic stability has continued into 2022. In the coming years, growth is expected to reach 4.5% to 5.3%.
Additionally, Indonesia already has a close relationship with China, especially in trade. Indonesia recorded a surplus of US$1.12 billion in trade with China from January through April 2022. From January to September 2021, the trade between the countries reached US$85.3 billion, the highest level in 20 years. Accession to BRICS, with China as its largest economy, may thus seem redundant.
Furthermore, via Association of Southeast Asian Nations (ASEAN), countries in this region are presented with multi-dimensional economic cooperation opportunities. Although intra-regional trade in goods remains low (at 21.3%, and trade in services is under 12 %, ASEAN GDP from 2017 to 2027 is expected to be positive. The GDP estimate reached US$3.08 trillion in 2020, a significant increase from previous years that could grow to more than US$5 billion. This should be an incentive for Indonesia and ASEAN countries to strengthen their intra-trade cooperation. Given the growing global economic instability, looking towards close neighbors may be an alternative.
ASEAN also maintains channels with other nations in the frameworks of ASEAN+3 (Japan, China and South Korea), ASEAN+6 (Australia, China, India, Japan, South Korea and New Zealand) and ASEAN+8 (Australia, China, Japan, India, New Zealand, Russia, South Korea and the United States). Notably, several members of these frameworks are members of BRICS, again demonstrating it to be redundant for Indonesia to join the association.
Collectively, Indonesia is capable of effectively handling regional economic issues, drawing from its domestic and regional strengths. All of which could be achieved without having to join BRICS.