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Opinion | Indonesia could be Beijing’s best belt and road friend
- Indonesia needs Chinese investment to close its gaping infrastructure gap so that development can be distributed equally across the archipelago
- But China also needs Indonesia to reach its economic goals overseas, say Muhammad Zulfikar Rakhmat and Dikanaya Tarahita
Reading Time:3 minutes
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China has been one of the biggest foreign investors in Indonesia, spending no less than US$2.37 billion last year to finance 1,562 projects. And with new investments expected from agreements signed at last month’s Belt and Road Forum, China could soon be the archipelago’s largest investor.
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This comes as no surprise, given the increasing convergence of interests between both economies.
Incumbent president Joko Widodo, popularly known as Jokowi, has shown his commitment to further develop the country’s infrastructure and attain growth of 7.3 per cent.
Jokowi has prioritised the development of eastern Indonesia, which currently has poor infrastructure. But the country’s US$353 billion budget for the 2019-2020 financial year is far from enough to bridge the infrastructure gap so that development is distributed equally across the archipelago of 17,000 islands.
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This is where China can play a role. One of China’s approaches to foreign policy has been to offer loans and investments to developing countries seeking to improve their crumbling infrastructure. This is a way for China to solve its overaccumulation of manufacturing capital in areas such as steel and asphalt, which need profitable outlets. The Belt and Road Initiative is expected to help channel this excess abroad.
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