Why Indonesia wants a bigger say in AIIB

April 27, 2015 14:53
President Joko Widodo wants to turn Indonesia into a maritime power and project its influence beyond its borders.  Photo: Bloomberg

Indonesia is a rising economy in the Asia-Pacific region and may become a main investment target for the China-led Asian Infrastructure Investment Bank (AIIB).

Apart from contributing 3 percent of the AIIB’s capital, Indonesia also wants to play a leading role in the bank.

Indonesia asked that its headquarters be set up in Jakarta, home to the Association of Southeast Asian Nations (ASEAN), but the request was rejected by China.

Jakarta then expressed interest in filling the position of vice president.

There are two executive presidents, three senior vice presidents and 24 vice presidents in the World Bank.

If the AIIB follows that example, it's possible Beijing will reserve a vice president seat for Indonesia.

Indonesia’s ambitions are backed by its economic potential.

Indonesia is one of the “Next 11”, a group of countries described by investment bank Goldman Sachs as having the potential to be among the world's biggest economies in the 21st century.

The country has a lot of natural resources and a population of more than 250 million, the fourth largest in the world.

A big population provides a sizable domestic market and workforce for its future development.

In the United States' pivot to Asia, Indonesia is a key ally. Also, Jakarta knows its unique value in the power game between China and the US.

Globally and regionally, Indonesia is important for several reasons.

To start with, it is a key player in ASEAN, reflected by the fact that its headquarters is based in Jakarta.

Having the world's largest Islamic population, Indonesia wants to be the leader among “moderate Muslims” and an anti-terrorist ally of the West.

In fact, Indonesia has recently signed an agreement with Iran to jointly fight Islamic extremism.

Through a network of Indonesian Chinese, Indonesia can take advantage of the rise of China.

If Indonesia can have its say in the AIIB, it can be an important ally of the United States under its new Asia policy.

Indonesian President Joko Widodo is a charming leader. Dubbed as the “Indonesian Obama”, Widodo is more proactive than his predecessors.

Soon after becoming president, Widodo proposed building Indonesia into a maritime power.

Also, he often talks about establishing an Indian Ocean rim association, reflecting his ambition to take Indonesia’s influence beyond the country’s borders.

He hopes to end the export of domestic helpers within five years in order to restore Indonesia’s national dignity.

There are more than six million Indonesian domestic helpers overseas, sending US$6 billion home each year. Ending this labor export will surely hit the country's income.

Given Widodo’s welfare reform plan --  he is promising to provide 12-year compulsory education and national health insurance which require a huge amount of money -- it's small wonder Indonesia wants to play a bigger part in the AIIB.

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Associate professor and director of Global Studies Programme, Faculty of Social Science, at the Chinese University of Hong Kong; Lead Writer (Global) at the Hong Kong Economic Journal