August 23, 2023
JAKARTA – Indonesia has expressed interest in joining the BRICS group of major emerging economies, consisting of Brazil, Russia, India, China and South Africa, a move experts believe could have benefits, but repercussions too.
Deputy Trade Minister Jerry Sambuaga told reporters on Friday that joining the group could result in new trade opportunities given the group’s diverse geographical locations and massive population.
“The interest is there, the potential is clear, and the opportunity is up for grabs,” said Jerry on the sidelines of the 55th ASEAN Economic Ministers’ (AEM) Meeting in Semarang, Central Java.
He added that joining BRICS might open doors for Indonesia to “nontraditional markets” of South America and Africa, given that these regions were relatively “unexplored”.
Data from Statistics Indonesia (BPS) show that in 2022, Indonesian exports to BRICS member states totaled US$93.16 billion, while imports were $84.27 billion. China was responsible for a big chunk of both – 70.9 percent of exports and 79 percent of imports.
Consistent with Jerry’s statements, the same data showed that 2022 trade between Indonesia and Brazil totaled only $5.26 billion, while exports and imports with South Africa were $3.2 billion.
“When it comes to trade, benefits are what matters. […] When it’s scalable, deliverable, measurable and can be translated into numbers, and if the numbers meet [expectations], then why not?” said Jerry.
Rajesh Agrawal, an official at India’s Ministry of Commerce, declined to comment on the possibility of Indonesia joining the group, but he pointed out on Monday that Indonesia was India’s largest trading partner in the ASEAN region in 2022 and 2023.
Indonesia’s major exports to India are coal, vegetable oils, iron and steel.
“There’s a need to diversify the trade basket,” Agrawal told The Jakarta Post.
United States Trade Representative Katherine Tai had no official comment on the matter, but she said learning more about the motivation behind Jakarta’s interest in joining BRICS “would be interesting”.
“Indonesia has its own mind, and I think a part of strong partnership is respecting each other’s sovereignty,” Tai told the Post at the AEM venue on Monday.
President Joko “Jokowi” Widodo is among several heads of state of non-BRICS members set to attend the 15th BRICS Summit in Johannesburg, South Africa, from Tuesday to Thursday.
On the way there, the presidential plane first touched down in Kenya, where Jokowi held bilateral talks with his counterpart William Ruto on Monday for a state visit ahead of the BRICS event.
BRICS emerged from what was initially just BRIC, a term formed by an economist in 2006 from the initials of four major emerging markets. It has since grown from a conceptual acronym into a political and economic forum, and its name was changed to BRICS to include South Africa when the country joined in 2010.
It is commonly seen as a counterweight to the Group of Seven countries, which have long enjoyed a dominant position in world politics through their economic clout.
BRICS set up its own lending institution in 2015 called the New Development Bank, which claims to have approved a little more than $30 billion worth of projects in the BRICS countries.
Centre for Strategic and International Studies (CSIS) executive director Yose Rizal Damuri said BRICS’ development of the multilateral bank had been executed poorly.
“For [the bank] to be influential, it’s still far away from what was expected,” Yose told the Post on Sunday.
Given that BRICS is seen as a geopolitical rival to the G7, Indonesia’s enrollment could result in Jakarta being viewed either as the group’s “neutralizer” or as creating a new “G7 rival”, Yose said, adding that he leaned toward the latter interpretation.
Regardless, should Indonesia decide to join, it would not bring about immediate sanctions but might have geopolitical consequences, Yose opined.
“The economic constellation is heavily dependent on geopolitical conditions, and that will infect investment, trade, etc.,” said Yose.
Institute for Development of Economics and Finance (Indef) economist Nailul Huda said that joining BRICS could increase Indonesia’s economic potential, and the group would welcome the archipelago with open arms, given its status as one of the world’s biggest economies.
“Joining BRICS or any other [multilateral] coalition will open broad export opportunities, bigger access to financing and strengthen economic cooperation with the members,” Nailul told the Post on Sunday.
However, it would not be a free ticket to greater international trade volumes for Indonesia, given that exports to Western countries may diminish, Nailul pointed out. Shipping in $28 billion worth of Indonesian goods throughout 2022, the US is one of the archipelago’s largest trade partners.
Analyzing how a BRICS membership would affect regional relations and stability was important to understanding the long-term consequences, Nailul noted.
Yose opined that the group was directionless, its objectives remained unclear and it was riddled with a “cohesion problem” precipitated by tensions between China and India, as well as Russia’s geopolitics.
“BRICS was formed because those countries were deemed to offer good prospects. […] But the prophecy was wrong. None of the BRICS countries are performing well except for China and India,” Yose stated.