Jokowi readies G-20 deals to showcase Indonesia’s growing clout
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JAKARTA – Indonesia is using the Group of 20 (G-20) summit next week to power through deals ranging from infrastructure to carbon trading that spotlight its ambitions as a South-east Asian economic powerhouse.
Much is at stake for Indonesian President Joko Widodo, who is targeting US$89 billion (S$125 billion) in investments in 2023, while pushing ahead with a US$34 billion new capital in Borneo. All these plans need funding and support from wealthier, developed nations.
“This message is mostly for the domestic audience to show that the G-20 forum running this whole time did result in some concrete projects,” said Dr Yose Rizal Damuri, executive director at the Centre for Strategic and International Studies.
It is also a way for Mr Widodo, popularly known as Jokowi, to leave behind a legacy of growth and investment, he added. The President is currently in his second and final term in office.
Indonesia has long been criticised by analysts for not punching above its weight for economic and diplomatic influence, given its domestic pressures and political elites. Clinching the G-20 presidency has been a way for Mr Widodo’s administration to showcase the country’s potential, and his officials are not going to let that opportunity pass.
Here is a list of deals that Indonesia is looking to announce:
Coal phase-out
Indonesia aims to clinch a deal during the summit with rich countries to fund programmes to phase out coal
However, his Cabinet has been divided on how to phase out coal, which contributes over half the country’s total power capacity.
The Asian Development Bank is studying similar plans for Vietnam and the Philippines, hoping to announce a concrete result during the summit.
Digital money
Indonesia’s central bank and those from Malaysia, Thailand, Singapore and the Philippines aim to sign a deal in November to link their payment systems, which will allow some 384 million people to pay for goods and services through QR code scanning.
The system will allow for local currency settlements, bypassing the need for the United States dollar as an intermediary.
Just 51.8 per cent of Indonesians have access to a financial account, one of the lowest among South-east Asia’s major economies, according to World Bank data. This made financial inclusion a main focus for Indonesia during its G-20 presidency.
Bank Indonesia also plans to release the conceptual design of digital rupiah by the end of 2022, said governor Perry Warjiyo. The central bank has been studying the digital rupiah since 2021 to get ahead of the global adoption of cryptocurrency as a payment method.
Trains
Mr Widodo has invited Chinese President Xi Jinping to witness the trial run of a US$8 billion China-backed high-speed railway
The train, which connects Jakarta to nearby cities, is backed by the Chinese Development Bank and China Railway International.
Indonesia also plans to sign deals with foreign investors for the 188 trillion rupiah (S$16.8 billion) expansion of the Jakarta MRT train system, a project that Mr Widodo has claimed as his legacy when he was governor. Funding would come from Japan, South Korea and Britain, according to Transport Minister Budi Karya Sumadi.
Carbon trading
Finance Ministry special adviser Masyita Crystallin said the government will release a road map for the carbon market, carbon tax and energy transition before the G-20 summit. This would be a prerequisite to issuing long-awaited regulation on carbon tax and trading that is meant to help South-east Asia’s largest economy attain net-zero emissions by 2060.
Dr Crystallin said the road map will outline the potential demand for such a market. The Indonesia Stock Exchange has already been assigned to set up a carbon exchange, which is expected to commence operations in 2025.
BLOOMBERG
