Once I was invited [to visit] by China, America also invited me. Wow, an invitation from both superpowers? I couldn’t possibly refuse that, right? For the sake of the [Indonesian] people, I must attend!
– President Prabowo Subianto
Indonesia’s new President, Prabowo Subianto, made back-to-back stops in Beijing and Washington, D.C., between Nov. 8-12 on his way to his first Asia-Pacific Economic Cooperation (APEC) Summit as Indonesia’s leader. Guiding Indonesia’s foreign policy is the principle of non-alignment, or sometimes phrased as “a thousand friends, zero enemies.” There is considerable discussion regarding how Prabowo will uphold Indonesia’s neutrality amid U.S.-China tensions.
However, there is enormous merit in close cooperation with both the United States and China that goes beyond any consideration of geopolitical competition—Indonesia needs the United States and China. Prabowo’s central economic goal is to boost GDP growth to 8% per year, a rate considered necessary to escape the “middle income trap.” To do this, Indonesia will need investments, technology and market access from both China and the United States. Thus, Prabowo’s visits to Beijing and Washington are first and foremost about strengthening the economic ties that will be critical to his presidency.
Key Takeaway
Alongside President Prabowo’s meetings with Chinese President Xi Jinping and U.S. President Joe Biden, and a highly publicized courtesy phone call with President-elect Donald Trump, was a flurry of activities across a wide range of topics, including renewable energy, critical minerals and the digital economy.
In Beijing, there were substantial economic and infrastructure deals, including energy, joint-industrial parks and tech. China signed agreements on nickel and support for Indonesia’s down streaming ambitions. Health care and human resource development were also highlighted.
While in Washington, there was an emphasized strategic cooperation on global challenges like the climate crisis and supply chains and support for Organization for Economic Co-operation and Development (OECD) membership. There were also tangible investments in energy and health care. Partnership on critical minerals, an Indonesia and United States priority, were pointed to but no clear agreement emerged.
Comparison
Strategic Cooperation & Global Role
Beijing
- Development and the Belt and Road Initiative (BRI): Presidents Prabowo and Xi emphasized cooperation under the BRI. The partnership will focus on high-quality operation of the Jakarta-Bandung High-Speed Railway, a key symbol of collaboration. Both sides are committed to aligning their development stages and policies to create new cooperation highlights in this area.
- Disaster Management Cooperation: Indonesia and China agreed to enhance collaboration in disaster risk reduction, including early warning systems and disaster logistics hubs to improve resilience and management infrastructure.
Washington
- Regional Responsibility: The United States lauded and emphasized Indonesia’s leading role in maintaining a balance in the Indo-Pacific, especially regarding its leadership in ASEAN.
- Global Stability: In their Joint Statement, Presidents Biden and Prabowo urged a ceasefire and end to the conflict in Gaza, expressing deep concern over the humanitarian situation and condemning all attacks on civilians. Biden and Prabowo also stated their support for a two-state solution.
Economic Cooperation & Investments
Beijing
- Business Forum: Prabowo’s visit saw the signing of agreements worth $10 billion at the Indonesia-China Business Forum. Agreements covered sectors including renewable energy, health care and downstream processing.
- Nickel Processing & Green Projects: Standout deals signed during the visit include an agreement between Indonesian and Chinese businesses to construct two 200MW floating solar and wind plants. Another Indonesian business signed a $1.4 billion nickel processing deal with a Chinese battery metal producer.
- Industrial Cooperation: The two countries stated they will aim for greater integration of their industrial, supply, value and talent chains. They also called for expanded bilateral trade and investment, increased use of local currencies and the creation of a favorable business environment. China’s support for Indonesia’s North Kalimantan Industrial Park was highlighted as an example for regional economic corridors and bilateral industrial parks.
Washington
- OECD Membership: Biden stated that the United States strongly supports Indonesia’s bid for OECD membership, offering assistance with the implementation of any necessary governance, trade and labor reforms.
- Investment Talks: Prabowo recently met with representatives from 12 U.S. companies under the United States–Indonesia Society (USINDO), to discuss investment opportunities in Indonesia. Key topics included boosting oil and gas capacity, renewable energy and carbon capture and storage, which U.S. businesses see as critical for Indonesia’s net-zero emissions goals. Prabowo emphasized geothermal energy development and reducing bureaucratic hurdles to attract more investments.
Energy & Infrastructure
Beijing
- Green Development: A memorandum of understanding (MOU) was signed focused on critical mineral partnerships with the stated aim of ensuring supply chain security and enhancing energy transition partnerships. Indonesia’s state electricity company signed an MOU with Chinese companies to collaborate on energy projects.
Washington
- Energy Transition: The United States pledged $21.6 billion to support Indonesia’s energy transition under the Just Energy Transition Partnership (JETP), focusing on geothermal and hydroelectric projects. This support will be divided into public sector financing of $11.6 billion and private financing of $10 billion. The United States will help finance the construction of a geothermal power plant and two hydroelectric power plants in Indonesia with an investment of $239.5 million through the United States Trade and Development Agency (USTDA) and the U.S. Development Finance Corporation.
- Critical Minerals: Prabowo raised concerns over the stalled Critical Mineral Agreement (CMA) to include Indonesia’s minerals under the U.S. Inflation Reduction Act (IRA). The agreement remains uncertain as Biden signaled a “wait and see” approach due to uncertain environmental, social and governance (ESG) issues.
Health Care & Human Development
Beijing
- Health Care Collaboration: China and Indonesia signed a partnership on collaboration in health care infrastructure, communicable disease prevention and medical technology. This includes expanding hospital networks and cooperation in medical equipment and pharmaceutical production.
- Free Nutritious Meal Program: Xi expressed support for Prabowo’s free meal program for schoolchildren and pregnant women. This includes an MOU for funds for the program.
Washington
- Health Care Investment: The United States pledged to continue its investment in Indonesia’s health care system through U.S. Agency for International Development (USAID), which has contributed $1.1 billion worth of health care investment historically. Moving forward, Biden stated that USAID will focus on investing to reduce outbreaks of communicable diseases such as zoonosis and reduce tuberculosis prevalence by developing health care infrastructure and medical devices.
- Free Nutritious Meal Program: Biden expressed his support for Prabowo’s free nutritious meal program for schoolchildren and pregnant women. This commitment aligns with broader U.S.-Indonesia cooperation in health research, public health and addressing emerging and chronic health conditions, including tuberculosis.
Technology
Beijing
- Cloud & Data Centers: Chinese companies committed to expanding Indonesia’s digital infrastructure, investing in new data centers and local HR training. The Indonesia Investment Authority signed a joint venture agreement to scale Indonesia’s data center industry.
- Digital Economy: China aimed to accelerate Indonesia’s digital economy through partnerships with Indonesian firms, aligning with Indonesia’s “Golden Indonesia 2045” vision.
- HR: Indonesia and China agreed to boost student exchanges and scholarship programs, focusing on science, technology, engineering and math (STEM) education, language training and digital talent development. Chinese companies are encouraged to incorporate training as part of their localization strategies.
Washington
- Artificial Intelligence (AI) & Food Security: The United States committed to supporting AI research and digital technologies for Indonesia’s food security efforts.
These agreements spanning a wide range of sectors are still in their preliminary phases. However, there are clear signs that the cornerstone of Prabowo’s economic and foreign policy is the strengthening of the political framework that welcomes private sector participation from both countries.
The piece was co-authored by APCO intern Pier Ballo.
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