Sketching out Jokowi’s Caribbean economic strategy

This is a rejected commentary piece, which I thought would be better posted here than being forgotten on my hard drive.

Recent achievements of the Ministry of Foreign Affairs (MOFA) in the Caribbean include the recent establishment of diplomatic relations with Barbados and the first full-fledged diplomatic visit to Suriname after 26 years in 2019. Looking from the MOFA’s performance report in 2018, the Caribbean seems to have gained renewed attention having been absent from foreign policy discourse since the Yudhoyono administration. 

In Jokowi’s first term, setting up better economic ties with the Caribbean Community (CARICOM) was one of the main priorities, alongside establishing diplomatic inroads with the Pacific Islands.

Indonesia’s sudden interest in the Caribbean is largely rooted in political interests. Members of CARICOM supported Indonesia’s candidature as non-permanent UN Security Council member. Now, Jokowi seeks to return the favor by revitalizing Indonesian economic relations with CARICOM.

Another way to view Indonesia’s enhanced engagement is through an economic lens, which mostly has its roots in the US-China trade war and the European Union’s clampdown on palm oil. Anticipating long-term effects of these trade impediments, Jokowi has prioritized seeking so-called “non-traditional markets” (markets where interstate economic activity is not prominent) for Indonesian exports. So far, the Pacific Islands and CARICOM have been identified as these new non-traditional markets.

At home, Jokowi has signaled deliberate steps to advance Indonesian economic interests. He has hinted that several ministries will be agglomerated, such as with the Foreign Ministry being combined with a proposed Exports Ministry. Though details remain unclear, what can be discerned now is that Jokowi’s foreign policy in the second term will be heavily geared towards enhancing international trade relations.

So, what would a strategy of economic diplomacy look like in the Caribbean? 

It would first begin with the establishment of formal relations between Indonesia and CARICOM as a regional organization.In 2017, Indonesia became the third accredited member of CARICOM, marked by the accreditation of HE Julang Supratikno as the Indonesian representative to CARICOM. 

Then, two key challenges need to be addressed, namely knowledge and logistics. Unlike more traditional markets, such as Europe and Asia, key actors of economic diplomacy have little knowledge of the Caribbean business landscape. Distance is also an issue. Trade to the Caribbean often goes through a third country as a “hub”, which racks up operational costs. Except for automotive spare parts, textiles, and beauty products, there is little reason for Indonesian businesses to do business with the Caribbean. 

In Jokowi’s second term, both challenges are expected to be addressed, though bridging the knowledge gap will likely be a main priority.

With the Pacific Islands, Indonesian Ambassador to New Zealand Tantowi Yahya, hosted the first Pacific Exposition 2019 (11-14 July 2019). The event was aimed at introducing and linking business groups in Southeast Asia and the Pacific Islands. A similar expo, this time focusing on Caribbean trade and business opportunities, is being planned by the MOFA to be held in this year, though details remain unclear. 

In solving the cost of logistics, Jokowi’s administration would need to be able to seek partnerships with private logistics companies or negotiate with “hub” countries for preferential treatment.

The third phase of the strategy would involve the negotiation of a sort of preferential trade agreement with CARICOM. The institutionalization of economic relations would serve to attract more trade between Indonesia and CARICOM countries. However, it is still too early to speculate.

What is clear, however, is that Jokowi’s second term will mostly involve his administration expanding Indonesia’s share in international trade. These diplomatic moves are reflective of his technocratic and pragmatic style of foreign policy, and his penchant for prioritizing economic development through accumulation of state revenue. The success of his Caribbean policy, however, hinges on the success of current efforts at enticing Indonesian businesses to expand to the Caribbean. Here, the role of the administration would be to provide economic incentives for local businesses, while simultaneously negotiating preferential trade deals with CARICOM.

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