Strengthening India’s ties with Indonesia, Southeast Asia’s largest economy, holds considerable potential.
Recognizing that befriending the 11 Southeast Asian nations can be rewarding is the first step in correcting India’s strategic outreach policy. The need to secure greater and more meaningful international strategic and economic support has heightened, particularly with China using all levers at its disposal to enhance its global pre-eminence. This especially includes Southeast Asian nations, where a sizable, if not a majority, of the citizens of some countries are of Chinese origin. This, along with offering significant economic incentives, has enabled the People’s Republic of China to wield influence and develop close proximity.
CHANGE IN TACK BY INDIA
To counter the strengthening of such tendencies, India’s embellished strategy must convey the warmth of genuine friendliness among equals while maintaining greater substance. The message must be clear: India, a nation growing in both stature and economic strength, has consciously decided to prioritize building ties with Southeast Asian nations and others in the region over treating all nations equally.
India’s carefully crafted attitudinal shift should be reflected in every overture, big or small, toward each ASEAN member state. The long historical connections and the spread of Hinduism and Buddhism over several centuries can aid the revival process. The fact that the region’s countries share a high degree of behavioral commonality, despite differences in history, ethnicity, faiths, geography, demographics, prosperity, and potential for progress, will be helpful in such Indian endeavours.
The myriad characteristics of ASEAN nations are evident in Indonesia, Malaysia, and Singapore. Indonesia and Malaysia are well-populated, have considerable land, and long coastlines, though their historical and cultural backgrounds vary. Singapore, a single-city country, became independent in 1965 after a brief alliance with Malaysia, which retained the name Malaysia despite Singapore’s exit.
Forgetting its bumpy start, the successive leaders of the island nation, through evoking incredible determination, diligence, and discipline among the citizens, have managed to turn Singapore into a developed, tech-savvy nation. Indonesia and Malaysia, on the other hand, have maintained consistent economic growth of around 5% by managing their large and varied mineral deposits, utilizing rich agrarian resources, and keeping spending frugal, despite external trade being a smaller component of their GDP. Their progress has been gradual, without a sudden transformation of traditional social and religious traits.
Indonesia, often termed a vibrant democracy with a population of 285 million, is the world’s fourth-largest country. 242 million, or 85%, of the population are Muslims, with 30 million Christians and 5 million Hindus. With the largest economy in Southeast Asia, Indonesia is classified a newly industrialized nation and ranks 16th globally. However, more work remains to ensure strong and productive human capital development and to ensure that the growth process is both sustainable and inclusive.
COMMONALITY IN APPROACH TO EXTERNAL ISSUES
None of these three nations have aligned themselves with any superpower, though they maintain varying degrees of association with the US and China. Unambiguously, they place their own interests ahead of ideology and commitments to any military or security groupings. All 10 ASEAN nations remain open to cultivating ties with those they deem potentially useful, while believing in a multipolar world order. Indonesia and Malaysia, in particular, have grown increasingly concerned about China’s assertiveness in the South China Sea and, along with Vietnam, the Philippines, and Brunei, have begun to challenge China’s tenuous territorial claims.
These five countries have historical rights over the South China Sea, which allows them to exert control and influence over significant portions of global trade. They recognize the immense geopolitical importance of the Sea and advocate maintaining free and unhindered navigation through the South China Sea and the Indo-Pacific. However, instead of vocally criticizing China, with which many maintain economic ties, most remain ambiguous in condemning China and rely on ASEAN to navigate the increasingly complex web of relationships between major powers, including the USA, China, and regional players.
INDIA’S BILATERAL TIES WITH INDONESIA
Indonesia, a country of 17,000 islands, has long enjoyed cordial relations with India. Hinduism and related cultural elements have been “exported” to Indonesia since the first millennium, particularly flourishing on the important island of Java. India’s role in Indonesia’s nationalist movement is also recognized. Post the War, the Dutch had returned to Indonesia with no genuine desire to relinquish control. When the small-scale clashes between them and the Indonesian forces had escalated to another “police action” in December 1948, the Indian PM Nehru had promptly convened an Asian meet in New Delhi to express solidarity and support.
At the urging of this Conference, the UN Security Council ordered an immediate cease-fire, the release of political prisoners, and the restoration of the republican government in Jogjakarta. With additional pressure from the US on the Dutch government to withdraw, Indonesia secured full sovereignty on 27 December 1949. The daring rescue flight by Biju Patnaik, a prominent figure from the Indian state of Odisha, to save besieged Indonesian leaders during the Dutch military actions is still fondly remembered.
PM Nehru’s initiative, along with Sukarno, Col. Nasser of Egypt, and Marshal Tito of Yugoslavia in the 1950s, evolved the third path or the grouping of Non-Aligned Nations. It proved itself relevant during the Cold War years and while the Warsaw Pact existed. It brought considerable convergence on issues of their foreign policy despite differences in managing their internal affairs. Sukarno believed in creating a cult around himself and chose to develop the archipelago according to his own conception of Guided Democracy.
China was cultivated by both Indonesia and India, and both had urged its inclusion as a permanent member of the Security Council. The relationship cooled off after the Chinese invasion of India in 1962 and Sukarno’s exit from power in 1967. Instead, they began to look to the communist Soviet Union for military and economic support. Sukarno’s high-handedness in the oil-rich Brunei and his “Crush Malaysia” campaign (due to fears of Singapore’s pro-Beijing Chinese dominating the Federation of Malaysia) did not go down well with the West. Nor did India’s virtual abandonment of neutrality in favour of the Eastern bloc. The following 32 years of the “New Order” under General Suharto were unremarkable vis-à-vis India. His authoritarian rule was marked by severe suppression of human rights in different parts of the country, particularly East Timor, which later became the new nation of Timor-Leste.
From 1997 to 2024, Indonesia was ruled by President Jokowi, who undoubtedly moderated his predecessor’s authoritarianism. His “reformasi” measures brought about several elements of real democracy and noticeable economic progress. But, like the others before him, he manipulated the system to ensure his political legacy was sustained. The promotion of political dynasties has become a pillar of Indonesian politics. Such attempts rightly evoke adverse public reactions and signal continued challenges to democratic norms and institutions. Eschewing commentary on such internal policies of Indonesia has worked well for India.
Their bilateral trade has grown steadily to about $39 billion in 2023, and Indonesia has become India’s largest trading partner in Asia excluding China. India’s imports of Indonesian thermal coal for power generation, palm oil, strontium (tin), and copper have been sizable. Nickel has now been added to the list. Indian imports are about three times its exports, which largely consist of engineering goods, refined petroleum, and both organic and inorganic chemicals. India has not been exporting services to Indonesia, which is also labour-surplus. The export potential of ITES and digitalization software remains significant, as does the scope for collaboration in artificial intelligence for advanced manufacturing.
Bilateral tourism has taken root, and in 2024-25, the Indonesian authorities hope to host about a million Indians, up from 0.6 million last year. Such people-to-people contacts can be further strengthened through bilateral educational, healthcare, and cultural links. Indonesia has been striving for decades to promote its culture and traditions in India, which can augment its similar efforts in Bali, the popular holiday resort with a strong Hindu connection. Indonesia, with its rich deposits of nickel, seeks greater cooperation around green technologies for electric vehicles and batteries. It would also welcome collaboration in domestic pharmaceutical manufacturing and joint production of aviation and military equipment.
Indonesia, as a large crude oil producer, has long been a member of OPEC, the international cartel of hydrocarbon nations. Owing to its mineral and oil exports and rich timber produce, foreign exchange scarcity is not a serious concern. Of late, however, in enhancing revenue from the extraction of nickel, tin, coal, and forestry produce and setting up new refineries, numerous conflicts with local communities have come to the fore. The extractive and other primary activities have undoubtedly added to air and water pollution and led to severe health impacts, especially in its cities.
Such issues are also relevant in India given their similar stages of economic and social development. Both are classified as “low middle-income nations” by the World Bank (though at about $4,300, Indonesia’s per capita income is twice India’s). Collaborating to secure relevant technologies and financial assistance from developed nations for mitigating and adapting to climate change adversities is crucial. The diverse and meaningful efforts of the World Bank and ADB to support a wide range of development in Indonesia and India warrant additional supplementation from industrialized nations. While both economies are currently on the right track, several challenges and risks remain.
Another strategic change worth exploring by both nations is closer ties with Australia. Among their commonalities are reliance on abundant mineral wealth, vast agricultural diversity, and large geographical size with significant biodiversity. Despite their substantial bilateral trade and investment relationship, all three have apprehensions about China and its expansionist tendencies in the Indo-Pacific region.
Australia has teamed up with India and the USA in the Quad, and with the UK and the USA in the more military-oriented AUKUS. India and Australia have a trade agreement to capitalize on immediate opportunities, with a more comprehensive agreement expected soon. Like India, Indonesia is also seen by Australia as a market for a variety of daily-use and advanced products. Australia can be a source of key minerals and processed foods, as well as modern technology and funding, while skilled manpower exports from both nations are a distinct possibility. More importantly, leveraging the naval strength of Australia through collaboration among the three large nations would serve a significant strategic purpose in the Indo-Pacific.
RELATIONS WITH TIMOR-LESTE
The newest nation in Asia born in 2002 after a struggle with Indonesia and Portugal, is only 1.4 mn strong, almost all Christians, despite its geographical size being 20 times Singapore’s. In his three-nation tour, Pope Francis had visited it last month. Fishing remains the main stay and continuing with other traditional vocational modes has kept the country way behind its neighbours. The drawls from the Petroleum Fund which constitute three -fourth of its national revenue, are fast depleting. NGOs like OXFAM have been working with the local communities but with rather limited impact on their well-being.
The reef building corals, 2,000 types of reef fish and six of the seven known species of turtles along with stunning beaches, rugged mountainous interiors and rich culture, hold potential for making tourism and adventure -sports, significant revenue earners. Funds for improved air connectivity and physical transportation – infrastructure initially, would have to come from ADB etc though later, the travel cum hospitality facilities could come from private entrepreneurs of nearby affluent Australia and New Zealand.
ASEAN as well as others in the Pacific need to guard against the replication in Timor-Leste of the recent Chinese foray into the Solomon Islands. Through offering economic and other allurements, it must not get a foothold there. A distant India may not be in a position to significantly partake in its development or defence.
Dr Ajay Dua, a development economist and former Union Secretary Commerce and Industry, will explore the potential of ties with Myanmar, Thailand, Cambodia, Lao PDR and Brunei-Darussalam in Part 3.