Indonesia at ‘Connectivity Crossroads’ as regional powers jostle for influence

Indonesia finds itself having to balance the benefits of foreign investment in major infrastructure projects and protecting its own strategic interests, writes Postgraduate Research Grant recipient Jackson Calder.
Jackson Calder

Jackson Calder: "There is a real sense in the streets of Jakarta that significant structural shift is underway."

In this era of unprecedented strategic competition, particularly in the Asia/Indo-Pacific, foreign direct investment and infrastructure construction and management contracts are an emerging realm of immense importance.

China’s Belt and Road Initiative (BRI) and Japan’s Free and Open Indo-Pacific (FOIP) are the two primary competing connectivity networks that are seeking to shape the emerging security and economic architecture of the region to suit their preferences. As Indonesia embarks on its strategic trajectory towards becoming a leading system influencer with a strong focus on the maritime domain, through the development of the Global Maritime Fulcrum (GMF) grand strategy, it must carefully manage the expansion of these networks. Thus, Jakarta has reached ‘The Connectivity Crossroads’ where its investment and infrastructural decisions moving forward will carry immense strategic weight and will either help or hinder its pursuit of the GMF vision.

In the last decade we have seen powerful states increasingly utilising foreign infrastructure projects to fulfil key strategic objectives, not just economic objectives.

China’s ambition to become a resident power in the Indian Ocean is a major driving motivation behind its funding of a plethora of ports, railways, airports and roads that form an infrastructural network stretching from Southeast Asia to Mozambique, sometimes referred to as the “String of Pearls”.

These projects not only contribute to the Chinese economy and create jobs for Chinese nationals overseas, but they function as a support network for expanding PLA Navy operations and, in some cases, are used to justify the presence of security forces on foreign soil.

These projects are also utilised for area and access denial – competing for an infrastructure contract for the strategic advantage of your state controlling it instead of another, even if no economic benefit is expected.

A fantastic example of this is India’s pursuit of a management contract for Mattala Airport in Sri Lanka. Even though the airport receives no commercial flights and is often completely empty, representing no economic benefit to India, it is close to the Chinese-built and operated Hambantota Port, thus New Delhi recognises the strategic advantage of disallowing Beijing control over both the port and airport.

A shot looking down a freeway with tall buildings on either side

Countries such as China and Japan are hoping to exert influence in Jakarta through the funding of massive infrastructure projects.

This infrastructural competition is particularly salient in Jakarta, where critical infrastructure projects mere kilometres apart are financed and operated by competing great powers. For example, the Jakarta-Surabaya railway double-tracking project, completed in 2014, was funded by the Japan International Cooperation Agency and is currently managed by Japan Transportation Consultants Incorporated, while the Jakarta-Bandung high-speed rail, which is currently under construction, is supported by funding from the China Development Bank and consulting from the China Railway Construction Corporation. Furthermore, Mitsui & Co, a multinational based in Tokyo, is providing funding and logistical support to the construction of the New Priok Port in Northeast Jakarta alongside numerous other projects, while the Mitsubishi Corporation contributed significantly to the development of the Jawa-2 Combined Cycle Power Plant in North Jakarta in 2018.

The Peoples Republic of China has offered close to USD$100 billion in project funding under a collaborative BRI-GMF framework to try and bring Jakarta further into its economic orbit, but thus far Jokowi has managed these investment pressures expertly as he is well aware of the strategic risk associated with over-relying on Chinese deals.

There are currently 17 port projects and over 50 energy projects that are either recently completed or ongoing throughout Indonesia, with Jokowi’s domestic development focus facilitating further infrastructural expansion over the coming decade.

There is a real sense in the streets of Jakarta that significant structural shift is underway. The people there appear energised by the winds of change that are sweeping through Southeast Asia and the wider Indo-Pacific, and optimistic about their future within an Indonesia that can exert greater influence on the political, economic and security dynamics of the rapidly evolving region.

Spending time in Jakarta gives you an immense appreciation for its people and their attitude towards the development of their state; everyone knows there are jobs to be done and things to be built and are eager to do their part.

 It is clear that Indonesia is on the right strategic pathway, and that it has the will and capability to emerge as a leading power in the future through the Global Maritime Fulcrum grand strategy, contingent upon Jakarta making the right turn at the Connectivity Crossroads.

About the author 

Jackson Calder recently completed his dissertation for a Master of Strategic Studies from Victoria University of Wellington. His project analysed how countries of Southeast Asia are managing competition for natural resources.

 Late last year, Jackson traveled to Indonesia to research the country’s approach to regional strategic connectivity initiatives such as the Belt and Road Initiative and the Free and Open Indo-Pacific Vision.

Jackson received a Foundation Postgraduate Research Grant to help him with his research in Indonesia.