Meet Indonesia: The engine that powers Southeast Asia

With huge land masses and a large, young, politically and digitally engaged population, Indonesia is a country to watch. Canada’s former Deputy Minister of Foreign Affairs, Len Edwards, gives four big ideas for more ambitious Canadian-Indonesian relations. 

By: /
July 11, 2016
Construction cranes are seen along the city skyline during sunset in Jakarta, Indonesia March 24, 2016. REUTERS/Darren Whiteside

Canada’s inconsistency of approach to the Asia-Pacific over the past two decades since the 1997 Asian financial crisis has been much discussed within foreign policy circles in recent years.

Canada has at times displayed vision and energetic engagement with regards to its Asia relationships and in regional issues and institutions.  At other times it has shown uncertainty about whether Canada is a Pacific nation and ready to make the required multi-faceted effort to be part of the Asian community.

This ambivalence and coming and going — much noticed by Asia-Pacific partners who value long-term relationships over occasional transactions — has reduced Canada’s potential effectiveness in terms of economic performance against tough competition in Asian markets and hindered its ability to garner support for its foreign policy objectives.

It can also be argued that the lack of a deeper, multi-faceted, two-way relationship, where both sides have a positive long-term stake, limits the Canadian government’s leverage with Indonesian authorities, despite the most determined efforts, in helping Canadian citizens in distress, such as in the serious case of Neil Bantleman, the school teacher who has been convicted of sexually abusing children despite the absence of any credible evidence.  

A nation full of potential

One of the farthest countries from our shores, Indonesia seems to sit at the margins of Canadian consciousness. Despite Indonesia’s huge size and population, its strong economic performance and growing global power as a G20 member, Canadians have been at best ambivalent about the country. 

To the extent that Canadians think of Indonesia, many probably still see it in slightly exotic terms as the historical Spice Islands with a largely rural multi-ethnic society, or as a tourist destination (Bali). Some retain memories of the country’s 50-year domination by ex-military presidents Sukarno and Suharto, or the hard suppression of East Timorese desires for independence. 

This “history” ended 20 years ago. Indonesia has become one of the most vital, if still imperfect, newer democracies in the world. It is a model of harmony and tolerance — but with challenges. It has a young population (40 percent are under 25) that is engaged politically, increasingly mobile with economic aspirations, and among the world’s most digitally connected. Indonesia is the world’s third largest user of Twitter.

The raw numbers, and the challenges of geography for governance and connectivity, are staggering. A look at the map tells you almost everything: several large land masses and a huge maritime space containing over 17,500 islands. The distance between the tip of westernmost Sumatra to Indonesia’s eastern border with Papua New Guinea is greater than that between Vancouver and Saint John’s.   

Indonesia has the world’s fourth largest population and is the largest Muslim nation. Fifty-three percent of Indonesians live in cities, a figure expected to grow to over 70 percent by 2030.

The sixteenth largest economy in GDP terms, Indonesia is predicted by McKinsey to rise to seventh place by 2030. While growth rates have recently softened along with China’s demand for its commodities, it still enjoys dynamic annual growth rates in the five percent range, just behind India and a slowing China.

Indonesia is the engine that powers Southeast Asia, representing 40 percent of the ASEAN economic output. Strategically, it sits astride critical shipping channels that connect China, Japan, Korea and the rest of East Asia to Europe and beyond. 

With these facts staring Canada in the face, why has it been such a recent laggard with Indonesia? Corrective action is needed, and quickly.

Canadians once did better.  In the 1980s and ’90s, they had higher profile, access and influence than they have today. Indonesians remember and would welcome them back. Some Canadian companies, institutions and individuals are deeply engaged in Indonesia, just not enough of them, and without the consistent high-level engagement and support from Ottawa that is needed in this politically demanding and complex country.

Canada’s outstanding development assistance program has been an ongoing strength garnering much good will, involving institutions such as the International Development Research Centre (IDRC), the Parliamentary Centre and the Conference Board.

This is a solid foundation for moving forward. But, what next?

Four big ideas for a big country

Indonesia is a big country, with huge potential.  It calls for big ideas.  Here are four such ideas built around major “drivers” — natural conjunction points of interest. They match Canadian assets and experience with Indonesia’s contemporary needs.

First, Canada and Indonesia are “maritime nations,” which can be used as a compelling theme to energize inter-governmental cooperation and deeper long-term commercial and institutional ties:

  • both countries face the challenges of securing long coastlines, asserting sovereignty, managing the economic zone, and providing search and rescue and other services in the maritime space;
  • both have extensive fisheries: Canada’s experience could be very useful in Indonesia’s current efforts to manage stocks more effectively and control foreign fishing;
  • both face the challenges of communications, transportation and resource development over long distances with the resulting demands for modern infrastructure; and
  • both have the challenges of remote communities and the attendant social and economic issues that challenge the practice of democracy, the availability of opportunity.

Second, Canada should continue to build on the political and economic values and aspirational linkages that have been such a major strength in our development assistance cooperation with Indonesia, focusing now on two themes:

  • sharing of best practices on democratic governance, elections, federalism, an effective public service;
  • assisting Indonesia with economic reform, the current president’s anti-corruption drive, regulatory improvement, resource management, and sustainable development.

Third, the Canadian government should aggressively exploit three specific economic complementarities:

  • Indonesia’s infrastructure needs are immense; Canada offers leading transportation, energy, communications, engineering, project management and other solutions;
  • working innovatively through a ‘food security’ approach, Canada can provide the agricultural products to feed this nation of 255 million, while helping Indonesia develop its agricultural sector through the provision of fertilizers, sustainable technologies, nutritional advice, animal genetics and health, and so on; we can also show Indonesians how to find markets for their products in Canada, something which Global Affairs Canada and the Conference Board are now working on;  and
  • a more affluent population and sophisticated economy has opened doors for two major Canadian insurance providers, but much more is possible in the financial and other service sectors.

Fourth, Canada should target youth, with an emphasis on education, meeting Indonesian needs while building strategic personal and other linkages that will underpin relationships well into the future: 

  • The World Bank estimates that Indonesia may face a shortfall of nine million skilled workers at secondary and tertiary levels by 2030. Canada has huge room to increase recruitment of Indonesian students to Canada (only .5 percent of foreign students in Canada are of Indonesian origin). Canadians should also take our technical schools and expertise to Indonesia for local partnerships.
  • As the second ranked country in the OECD for entrepreneurship, Canada has much to offer Indonesia in developing its young entrepreneurs and innovators.

Essential next steps

These four “big” ideas provide plenty of opportunity for building a long-term dynamic, modern relationship with Indonesia, built on shared interest and mutual benefit.  

Canada should set one major objective: to recognize Indonesia’s power and potential by positioning Indonesia as one of its “top tier” relationships by the end of this decade, through what is commonly called a “Strategic Partnership.” 

This will require, as a starting point, a major investment in political relations, best accomplished by at least one exchange of visits over the coming four years between President Jokowi and Prime Minister Trudeau. Another bold step would be to create a multi-ministerial Steering Group of foreign, defence, development and trade ministers, with regular meetings conducted by teleconference. This is an innovation Canada has not used before. Why not try it here? 

Saskatchewan, B.C. and Alberta governments have stepped up their game in Indonesia. The federal government can still do more and other provincial governments need to follow.

Despite the challenges, businesses need to be more aggressive and present, and mindful that setting up offices in Jakarta (rather than covering Indonesia from Singapore, as some do) is a smart business decision. A structured regular senior Indonesia-Canada business dialogue would be useful. Indonesians should be encouraged to invest more in Canada.

In the nexus of security and economic interest, Canada should sound out Indonesian interest in partnering on a ‘maritime initiative’ — for example establishing a government/non-government regional workshop to discuss fisheries management in the South China Sea. This would help deal with one aspect of the increasingly worrisome security situation in this vital waterway. Strengthened naval ties are also important.

Taking advantage of the Indonesian president’s recent decision to seek admission to the TPP (and mindful that this could take considerable time to achieve), Canada and Indonesia could establish a Joint Economic and Trade Council of officials and businesspersons to consider trade facilitation, regulatory and other practical steps to improve economic ties. This “soft” approach could eventually provide the basis for negotiating a bilateral comprehensive economic agreement.

Finally, the Canadian government should designate Indonesia as a country of priority under Canada’s International Education Strategy, and dispatch a multi-institutional “EduCanada” mission to Indonesia in the near future. The ideal would be to combine it with a visit by Canada’s Governor General.

With Indonesia, Canadians must be ambitious, determined and ready to take some risks. They can ill afford to waste their time with small and incremental actions. It is time for “big ideas.”