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International relations

Indonesia can play key role in mediating US-China tensions: experts

Rising Southeast Asian nation keen to boost free trade and regional security

Shujiro Urata of Japan's Waseda University, right, and Mari Elka Pangestu from Indonesia's CSIS Foundation, center, participate in a panel session in a symposium in Tokyo on April 20. (Photo by Wataru Ito)

TOKYO -- Indonesia can play the role of a mediator to ease U.S.-China trade friction and other political and economic conflicts around the world, experts said at a seminar on Friday in Tokyo.

"All great powers need friends," Jusuf Wanandi, vice chairman of the board of trustees at the CSIS Foundation, a Jakarta-based think tank. "That is why we, as middle powers, also have a role to play," he added. He was speaking at a symposium commemorating the 60th anniversary of Japan-Indonesia diplomatic relations, organized by Nikkei Inc. and others. 

Indonesia is expected to become the world's fourth-largest economy by purchasing power parity in 2050, according to consultancy PwC. Its role in shifting the power balance between global superpowers such as the U.S. and China will only grow.

Wanandi warned about the fading influence of the U.S. in Asia under the administration of U.S. President Donald Trump. He said he is "worried President Trump is hurting global trade" and expressed skepticism about the upcoming U.S.-North Korea summit, scheduled to be held in May or early June. "Preparation is minimum ... let's pray that something positive will happen," he said.

As an example of Indonesia's intermediary role, Wanandi pointed to the agreement that Southeast Asian countries and China struck in November 2017 on creating a code of conduct in the South China Sea. While admitting that it is "not an easy step," he said, "Indonesia is expected to influence the Association of South East Asian Nations and bring ASEAN to the world."

Indonesia's Minister of National Development Planning Bambang Brodjonegoro speaks at a symposium in Tokyo on April 20. (Photo by Wataru Ito)

Mari Elka Pangestu, a member of the board of trustees at CSIS and a former trade minister, said Indonesia can counter growing trade protectionism by pursuing trade negotiations. However, opinions differed on how to promote free trade.

Pangestu stressed that Indonesia should focus on completing the negotiations for the Regional Comprehensive Economic Partnership, a 16-member trade pact including China and India, by the end of the year.

Meanwhile, Shujiro Urata, dean and professor of economics at the Graduate School of Asia-Pacific Studies at Waseda University, pointed out that the members of RCEP will not have a major impact on Indonesia due to the string of free trade deals between ASEAN and other countries. Instead, he suggested that Indonesia should participate in the Trans-Pacific Partnership, which became an 11-member trade agreement after Trump pulled the U.S. out of the deal last year.

The debate also touched on how deeply Indonesia should commit to China's ambitious Belt and Road Initiative.

Wanandi said the initiative should not only be a Chinese project, but "should be a joint venture with all of us, as the need for infrastructure is very high in developing nations." He said, "Training, education or transfer of technology" should also be included in the initiative.

Akihiko Tanaka, president of the National Graduate Institute for Policy Studies of Japan, said China should be more clear about its intentions in the regions where it is building infrastructure. "It is preferable to consider carefully the transparency and debt of a project, thus developing infrastructure cooperatively between countries concerned," he said.

The panel discussion was mainly among Indonesian ministers and Japanese businessmen, concerning innovation of investment and infrastructure. Bambang Brodjonegoro, minister of national development planning, emphasized the country's national growth strategy, dubbed Indonesia 2045, which is intended to place the country among the ranks of developed countries by 2045, the 100th year since its independence. "Cooperation with Japan in human development and infrastructure is essential," he said.

Shigeru Hayakawa, vice chairman of Toyota Motor, said his company is aiming to procure not only automobile components but also more raw materials to strengthen its supply chain in Indonesia. Hiroyuki Ishige, chairman and CEO of the Japan External Trade Organization, highlighted the importance of business exchanges of IT startups between Indonesia and Japan.

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