Modi’s Indonesia Visit: China in the Mix

Indian Prime Minister Narendra Modi’s visit to Indonesia at the end of May 2018 followed that of Chinese Premier Li Keqiang to the Southeast Asian nation earlier the same month.[1] The Modi visit is a significant step not just for the bilateral relationship but in clarifying what India’s strategy is in the region. It is, therefore, important to both understand China’s impact on the India-Indonesia bilateral relationship and what it is that India is up against in converting the rhetoric into action.

As important as practical immediate-term outcomes are – as on counter-terrorism, for example – a long-term vision should also animate the relationship between India and Indonesia that has for long been consigned to a secondary or tertiary status in both capitals. One Indian official on the eve of the visit said that he expected the visit to be ‘forward-looking’. But he also set its foundation very low by noting the obvious that ‘India and Indonesia do not share any territorial disputes, which is significant to add momentum to the relationship’.[2]

While it is true that an Indonesian President has been chief guest at the Republic Day in quick succession in recent years – Susilo Bambang Yudhoyono in 2011 and Joko Widodo (Jokowi) this year as part of the group of 10 ASEAN leaders invited collectively – there is much that needs to be done to retrieve the India-Indonesia relationship from the ignorance and listlessness it has sunk to at the elite levels in both countries. Note for instance, the chief guest at India’s first Republic Day in 1950 was then President of Indonesia, Sukarno.[3] And yet, since 1962 when the Indonesians refused to support India in the conflict against China, relations have generally been on a gradual downward slope. For India, as an aspiring Asian and global power such a situation is particularly untenable.


The Maritime Connect

The maritime domain was important enough for both India and Indonesia to warrant a separate ‘Statement on Maritime Cooperation’ during Jokowi’s December 2016 state visit to India. The Statement covered such issues as maritime security, maritime industry, maritime safety and navigation and commitment to international law.[4] The conclusion of the Modi visit too, saw a separate statement, this time longer and more detailed, and titled, ‘Shared Vision of India-Indonesia Maritime Cooperation in the Indo-Pacific’.[5]

Plans for Modi to apparently imitate Prime Minister Jawaharlal Nehru and make his first official visit to Indonesia by ship[6] fell through. Nevertheless, the present visit and the regional context it comes in should hopefully cure most Indians of their sea-blindness that seldom acknowledges Indonesia and Thailand as India’s neighbours.

When Jokowi came to office he came with his own grand idea of a ‘global maritime fulcrum’ (GMF) that combined his nation’s identity as an archipelagic nation, the need for massive infrastructure development to connect its own islands and ambitions to play a significant role in the maritime and political affairs of the region and, by extension, of the world.[7]

However, shortage of domestic economic resources and capacity in Indonesia meant that the Chinese were soon able to undermine the Indonesian concept in the global imagination and bring back to the forefront their idea of the 21st Century Maritime Silk Road, part of their BRI. This leg of the BRI, it must be remembered had been announced by the Chinese President Xi Jinping at the Indonesian Parliament in October 2013.[8]

Meanwhile, India has in recent years announced a series of maritime-oriented measures – Project Mausam[9], SAGAR (Security And Growth for All in the Region)[10], and the Spice Route, a provincial government initiative from Kerala.[11] These measures also represented the need for understanding and reviving historical connections, promoting regional security and economic development, including a blue economy, and tourism and people-to-people links, but New Delhi has not yet quite found the creativity or the diplomatic acumen to help combine these with the Indonesian initiative.

For instance, while Indonesia is one of the 39 countries identified under Project Mausam, the total spend sanctioned for a two year period over 2015-16 and 2016-17 was Rs.150,244,502 of which only Rs.2,394,600 had been utilized up to March 2017 as of information available at the end of December 2017.[12] Elsewhere, it was also mentioned that

‘Indian mission in identified countries have been requested to identify appropriate authorities/resource person/experts to initiate a dialogue but only a few have responded with necessary information’.[13]

This does not suggest that anything substantial has been undertaken under the Project either with Indonesia specifically or more generally. It is evident that after the initial flurry of activity – conferences, exhibitions, etc. – in 2014, and a burst of activity in the first half of 2016, very little happened in 2015 and 2017.[14]

The Indian Prime Minister did say in a statement during his visit that ‘India’s ‘Act East Policy’ along with our vision of “SAGAR” … coincides with President Widodo’s Maritime Fulcrum Policy’, that a roadmap was laid out during Jokowi’s visit to India in December 2016 and that discussions ‘assessed the progress made on its implementation’.[15] However, as one analysis from the region noted in March 2015 while specifically discussing Project Mausam, ‘[T]here has always been a gap between India’s strategic promise and its performance’.[16]


Political and Security Relations: The China Factor

What is the security cooperation that brings India and Indonesia together vis-à-vis China? Counter-terrorism has been identified as one area[17] but the fact is that India also holds counter-terrorism exercises with China without pinning the latter down on reaching a common understanding of what terrorism is. This allows China to simultaneously keep blocking Indian requests to sanction Pakistan-based terrorists at the UN. And given that what little defence exchanges take place between Indonesia and China also have counter-terrorism as a major component[18] India’s outcomes are likely to be minimal also in the Indonesian case.

Certainly, New Delhi would like Jakarta to be more muscular in its approach to China on the latter’s 9-dash line in the South China Sea, which runs adjacent to Indonesia’s own northern EEZ. And indeed, maritime security has specifically been highlighted as a subject of discussions in multiple official statements, including the latest ones. The two sides also reaffirmed their commitment to both the idea of the ‘Indo-Pacific’ as well as the rules and norms that should govern it, which were sharply in contrast to the Chinese positions.

A related question is of where Indonesia fits in from New Delhi’s point of view, in the Quadrilateral Security Dialogue (QSD) involving also the United States, Japan and Australia. New Delhi’s recent ‘reset’ with China and the ‘informal summit’ between Modi and Xi are practices of diplomacy that the Southeast Asians can well relate to given how their own limited national security and economic capacities and weight in global politics force them regularly into accommodation with Beijing despite the latter’s constant provocations. While the US continues its freedom of navigation operations in the South China Sea, these do not inspire the confidence necessary for Southeast Asian nations to band together against Chinese hegemony. Even a disputant like the Philippines has returned to doing business with China despite having won its case against the latter at the Permanent Court of Arbitration in July 2016.

Jakarta is somewhat less susceptible to Beijing’s blandishments than Manila is but not by much. Given its huge physical infrastructure deficit and Jokowi’s GMF, China’s BRI is particularly attractive[19] and the latter has frequently talked up the possibilities of combining or cooperation between the BRI and GMF.[20]

That said, India has certainly upped its own responses to the security challenge posed by China in its neighourhood in the Modi term even if it has taken him four years in office to make his first full-fledged state visit to Indonesia. The 1st India-Indonesia Security Dialogue was held in New Delhi in January 2018, over a year after the two countries agreed to it during Jokowi’s December 2016 visit.[21] Later in January, the two sides also convened their Biennial Defence Ministers Dialogue, again in New Delhi[22] with the Indonesian Defence Minister also addressing the Indian Ministry of External Affairs-supported 3rd Raisina Dialogue. The two countries already have various military-to-military engagements including ship visits and joint exercises, the latest of which, the 6th Annual Garuda Shakti exercises between the Special Forces of the Indian and Indonesian armies was held at Bandung in February.[23] A sixth iteration of the Joint Defence Cooperation Committee is expected in August 2018 and talks are underway to finalise a MoU on Maritime Security Cooperation between Coast Guards of the two countries.[24]

It is also the case that despite being maritime neighbours, the India’s premier maritime affairs think-tank, the National Maritime Foundation has no regular exchange with an Indonesian counterpart. At the very least, there is need for regular India-Indonesia exchanges along the lines of the India-France-Australia trilateral on the Indian Ocean and the India-Australia policy forum and at multiple levels of government and the strategic community. One could also argue for a QSD+1 arrangement with Indonesia or minilateral arrangements involving Indonesia, India and one or the other QSD member. The 1st Trilateral Senior Officials Strategic Dialogue involving India, Indonesia and Australia has now been scheduled for November 2018 in Bogor, Indonesia[25] and will hopefully meet regularly with a substantive agenda.

Such exchanges would also help clarify definitional and operational issues related to the concept of the ‘Indo-Pacific’ as well as help build greater understanding between the nations on how to deal with the Chinese undermining of international norms and regulations on maritime affairs. Indonesian minister, Luhut B. Pandjaitan in an op-ed in Singapore’s The Straits Times in February 2018, declared his country was ready to take on a greater role in the Indo-Pacific and did not shy away from expressing rather blunt views on China’s activities in the South China Sea.[26]

One operational issue that India might soon have to tackle with the Indonesians is their use of Chinese-built Beidou navigation system, which ‘has been applied to almost everything: transport monitoring, survey and mapping in Indonesia’.[27] This has implications down the line for interoperability between India and Indonesia in the civilian, and possibly, military domains. ASEAN nations are, in fact, a particular target of the Chinese for coverage under the Beidou system, which too, is promoted as part of the BRI.[28]

At the same time, there is also work to be done allaying Indonesia’s security concerns vis-à-vis India itself. For instance, one reason for difficult India-Indonesia ties in the 1980s was Jakarta’s concerns over the substantive accretion in the capabilities of the Indian Navy and particularly, the build-up the Andaman and Nicobar Islands.[29] Indonesia once had a lead in submarines in the region and now once again acquiring submarines in numbers. While the maritime challenge from China is considered as a significant motivator, as also submarine acquisitions by neighbours such as Singapore and Malaysia,[30] the implications for India, too cannot be ruled out. India might preempt drift in a negative direction in the Indonesian political and military hierarchy by offering to cooperate with its neighbour in this department including in training and supply of submarine platforms or parts and/or their repair especially since potential Indonesian suppliers include Russia and France.[31]

Negotiations are also still ongoing between India and Indonesia on maritime delimitation with the Indonesians seeking a separate delimitation of the Exclusive Economic Zone different from the delimitation of the continental shelf the two countries had agreed to in 1974. It was only last year that technical teams from the two sides met for the first time and where they agreed on the need for a new agreement for the exclusive economic zone.[32] The 2018 Joint Statement called for ‘mutually acceptable solutions… based on the principles of international law including the 1982 United Nations Convention on the Law of the Sea’.

Finally, there have never been any Indian arms sales to Indonesia according to the database of the Stockholm International Peace Research Institute. The Chinese though, began their sales in 2005 with anti-ship missiles and most sales are in the naval sphere.[33] India and Indonesia have begun talking about ‘joint production of defence equipment and systems’[34] and the latest Joint Statement has gone to some length to underline cooperation in this regard, saying the two sides had,

‘identified cooperation in defence industry and technology as areas of great potential. They further directed officials of both sides to expand mutually beneficial collaboration between their defence industries for joint production of equipment, technology transfer, technical assistance and capacity building as well as sourcing of defence equipment.’[35]

Given the state of India’s own defence production, it remains to be seen how much of this will fructify and be sustained.

Thus, it is evident that there have been several missed opportunities in the India-Indonesia relationship until now but Modi’s visit could provide fresh impetus to combining the two national visions in an equal and mutually- as well as regionally-beneficial manner without the implied hierarchy and lack of transparency associated with Chinese projects.


Economic Relations

The weakest leg of the India-Indonesia relationship is the economic dimension and this also the domain where the Chinese score significantly in their bilateral relationship with both India and Indonesia such that China is more important to each than the other.

As Chinese Premier Li pointed out on the eve of his visit, his country has been Indonesia’s largest trading partner for seven years in a row with two-way trade in 2017 reaching US$63.3 billion, an 18% year-on-year increase with a focus on infrastructure projects including industrial parks and the Jakarta-Bandung high-speed railway a major showcase project[36] – China is providing some US$4.5 billion in loans for the railway project.[37]

China is also the third-largest foreign investor in Indonesia behind Singapore and Japan with US$3.36 billion in 2017 following US$2.66 billion in 2016. Since 2013, its FDI in Indonesia excluding the oil and gas and financial sectors has grown by over 11 times while in the same period from 2013-17, Indian investments have grown from a very low US$64.96 million to just US$285.37 million or by just over four times and still totaling less than US$500 million.[38] The India-Indonesia Vision Statement 2025, meanwhile calls for an increase of bilateral investment to US$50 billion and of bilateral trade to a similar amount[39] from US$17 billion in 2016-17.[40]

By comparison, Chinese trade with Indonesia, already stood at US$63.3 billion in 2017 with the latter in deficit to the tune of over US$6 billion[41] and the target for bilateral trade in 2020 being US$150 billion.[42] And if Li’s promises are to be believed, China will soon be the largest destination for Indonesia’s crude palm oil while the latter already has significant exports to China of other agricultural products including tropical fruits, coffee and cocoa.[43] India and Indonesia meanwhile, had to openly acknowledge in their latest Joint Statement that there were ‘obstacles to trade and investment in palm oil products and industries’.[44]

The 1st India Indonesia Infrastructure Forum was inaugurated in March 2018 in Jakarta with over 30 Indian CEOs from infrastructure sector present and a focus on port, power, airport, water resource management, hospital management systems and health services, and IT. It might be worth noting however, that while there were two Indonesian ministers present at this meeting, there was no Indian minister available for what was the first such forum devoted exclusively to India in Indonesia.[45]

There is much in common between Modi government’s maritime infrastructure plans under the Sagarmala project and Jokowi’s own ‘sea toll road’ initiative that focuses on building sea ports, and increasing shipping and scheduled transport between Indonesia’s islands. In both countries, land acquisition, bureaucracy and rent-seeking have created bottlenecks. Nevertheless, Jokowi appears to have had some significant success owing to his personal attention to Indonesia’s infrastructure development.[46] The sea toll road has reportedly already reduced prices by 20% to 40% in various regions of the country.[47] It is to be noted that during his visit, the Chinese Premier specifically committed his government’s support to Chinese companies engaged in Indonesia’s ‘regional comprehensive economic corridors… infrastructure improvement… cooperation in ports, maritime economy, industrial processing and overseas warehouses’.[48] The India Indonesia Infrastructure Forum must be backed by such government commitment from New Delhi.

On the Spice Route, there is a basis for common interests between India and Indonesia given the latter’s specific focus on attracting Indian tourists who primarily visit Malaysia and Singapore.[49] In this regard, it is worth noting that the first direct flight between India and Indonesia (Mumbai and Jakarta) started only in the wake of Jokowi’s visit to India and a second one between Mumbai and Bali in April 2018 but despite the encouragement to Indian carriers in the joint statement,[50] none have started direct flights so far. This reality hampers not just tourism but also economic relations. By contrast, China is also Indonesia’s largest source of foreign tourists[51] and during the Li’s visit, the two sides agreed to start more direct flights and aim at three million mutual visits annually.[52]

While both New Delhi and Jakarta have ‘agreed to work intensively for the early conclusion of the Regional Comprehensive Economic Partnership (RCEP)’, they also ‘reiterated that it needs to be comprehensive, fair and balanced with benefit to all member states’[53] suggesting concerns with China’s overwhelming presence and drive to have the RCEP concluded.



Indian and Indonesian elites appear sometimes to suffer from an exaggerated sense of their country’s importance to China. But perhaps the problem is not so much the belief as the foundations of the belief. China certainly cannot ignore Indian and Indonesian interests if these are presented to Beijing in a compelling and forceful manner – the problem is when there is a lack of consistency of policy in New Delhi or Jakarta which the Chinese then perceive as weakness and which then allows them to exercise patience and wait out periods of ‘tough’ policies towards Beijing or of anti-China rhetoric.

Anti-China rhetoric that apes Chinese hyper-nationalism or chauvinism will do neither India nor Indonesia any good but ‘tough’ policies if based on both pragmatism and principles, including the democratic values that New Delhi and Jakarta espouse at home are considerably more threatening in political terms to Beijing. How Indian and Indonesian leaders promote and support true federalism, equality in inter-ethnic relations, religious freedoms and civil and political rights as well as manage class differences and conflict at home will have consequences for China which is home to another billion plus of the world’s population with considerable regional and economic inequalities as well as ethnic problems.

There is a wide gap in capabilities between China on the one hand and India and Indonesia in the other. But material capabilities in the economic and military sphere are never the entire picture and Beijing knows this well – even if New Delhi and Jakarta might not realize it – the political challenge to the narratives and legitimacy of the Communist Party of China that is posed if the two smaller countries prove to be well-functioning and successful democracies.

This article was originally published as Jabin T. Jacob, ‘India-Indonesia Ties: Chinese Elephant in the Room’, Indian Defence Review, Issue Vol. 33.3, Jul-Sep 2018.





















[20] For a comparison of the GMF and China’s BRI, see Premesha Saha, ‘Convergence and Divergence: Indonesia’s Global Maritime Fulcrum and China’s One Belt One Road’, The Indonesian Quarterly, Fourth Quarter 2016, Vol.44, No.4, 317-335.


































Published by Jabin T. Jacob

China analysis from an Indian perspective

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