Current Indonesia’s presidency of G20 has opened new window of opportunities to all the member countries and the world alike. On its part, Indonesia encourages and facilitates all countries to work together to achieve a stronger and more sustainable world recovery.
In this connection, Indonesian president Widodo signaled his government priority to advocate equitable economic growth and enhanced trade cooperation among the member countries of the G20. Youth engagement, employment, inclusive digital economy, women’s empowerment and low carbon solutions that unlock climate finance should be prominent themes of its presidency of G20.
It seems that Indonesia will focus on three main pillars for its G20 2022 Presidency namely: Global Health Architecture (GHA), Sustainable Energy Transition (SET), and Digital Transformation (DT). Through these pillars, Indonesia will continue to take the lead on ensuring equitable access to COVID-19 vaccines, promoting sustainable and inclusive economic development through participation and digital economy.
It hopes that G-20 Presidency will bring numerous befitting propositions to Indonesia starting from showcasing its strong economic resilience during COVID-19, projecting Indonesia’s position as one of the largest world economies, with the ability to represent other developing economies, providing value addition to Indonesia’s recovery in terms of economic activity as well as domestic and international public trust.
It will support and boost economic recovery activity in Indonesia, affirming Indonesia’s leadership in terms of international and economic diplomacy in the region, considering Indonesia is the only G20 member among ASEAN countries, positioning Indonesia at the forefront of international focus and attention, particularly in terms of the economy and finance.
Moreover, it will highlight Indonesia’s impressive achievements to the world and represent a starting point for restoring post-pandemic economic confidence at home and internationally, presenting an opportunity to introduce Indonesia’s tourism sector and local products to the world, thus reviving the national economy and last but not least, recognizing of the importance of collective action and inclusive collaboration among major developed countries and emerging economies around the world has always been the core purpose of the G20.
It seems that during its presidency of G20 Indonesia will have to develop a “flight plan” that ensures new initiatives on economic recovery, international tax and climate finance. In this regard, Indonesia has rich experience chairing Investment and Infrastructure Working Group which should be responsible for overall guidance on global macroeconomic policies, global financial imbalances, and global economic growth. Thus Indonesia’s G20 presidency will be positive, productive and participatory.
Fortunately, the G20 comprises of developed and developing countries, which together account for 85 percent of the world’s gross domestic product, 80 percent of global investment, 75 percent of world trade and 66 percent of the world’s population. Moreover, Indonesia the only Southeast Asian member of the G20 was first invited to attend the G20 summit in 2008 in the United States. Thus Indonesian current presidency of G-20 has numerous socio-economic, geopolitical and geostrategic orientations.
Furthermore, Indonesia’s 2022 presidency will provide the G20 with the opportunity to focus on promoting inclusive growth, while demonstrating the country’s growing political influence and offering a chance to shift global attention to the region’s needs.
Indonesia demonstrates its huge capacity to provide wise and visionary leadership in Southeast Asia and the world alike. G20 summit will be held in Bali in November 2022.
Rapidly changing socio-economic, geopolitical and geostrategic conflicting realities have further deteriorated concepts of inclusive economic development, multilateralism, multiculturalism, dialogue, and diplomacy and conflict resolution. Unending obsession of power politics have redesigned chessboard of power politics in Indo Asia Pacific, Central Asia, South Caucuses, Middle East and Africa. Hide and see sugarcoated political alliances overlapping, non-state proxies and last but not least, limited economic access and conditional partnership doctrines have become serious hurdles in the easy and smooth sailing of the Indonesia, G20 Presidency.
In this context, geopolitical clashes and disputes originating from the Ukraine-Russia war, low levels of Indonesian economic engagement with other G20 countries, and renewable energy challenges are and will be main areas of concern for Indonesian G20 Presidency during 2022.
It seems that the unending Ukraine-Russia war has placed Indonesia’s presidency in a difficult position. There is widening dichotomy between its government and its people about the issue of Russia-Ukraine conflict. That is why Russian president Putin talked to its Indonesian counterpart and sought important diplomatic support. Even Ukrainian President Zelenskyy approached to Indonesia for seeking support. Moreover, Chinese president Xi called Indonesian president and discussed G20 presidency and issue of Russia-Ukraine conflict. Thus somehow, the government of Indonesia has been in difficult situation since the start of Russia-Ukraine conflict.
On the other hand, since last year the Indonesian government has prepared an agenda focusing on fair and equitable recovery from the COVID-19 pandemic. However, this year’s G20 proceedings will most likely be convened amid boiling geopolitical tensions that involve many G20 member states.
It seems that Russia-Ukraine war theater has now entered into the galleries of politics due to which there have seen growing concerns over Russia’s participation at the summit which demands that the forum should isolate or expel President Vladimir Putin and other Russian representatives from the group’s meetings.
So far, U.S. President Joe Biden, Australian Prime Minister Scott Morrison, and Canadian Prime Minister Justin Trudeau have stated that they will not sit down with Putin in the G20 meeting to be held in the month of November this year.
Unfortunately, from nowhere it has now become the most tenacious task facing Indonesia’s G20 presidency, as it will intensify the political divisions within the member countries.
Furthermore, ongoing Russia-Ukraine war has badly affected the global economy, energy security and prices, food security and supply, and financial markets. It has even disturbed main agenda of G20 during 2022. It fears that if there is no peace deal between Ukraine and Russia the impact of the multidimensional sanctions on Russia could well undermine the G20’s economic goals too. However, Indonesia is currently holding its wait-and-see approach, pushing for an immediate resolution to the conflict.
Undoubtedly, Indonesia’s macro-economy is growing however, its economic partnership with member countries of G20 remain relatively limited and low. Its bilateral and trilateral trade with G20 member countries remains low. It may be another challenge for Indonesia to overcome weak economic cooperation, socio-economic integration and low trade cooperation in its current role as the leader of the G20.
It suggests that the Indonesian government should take all possible measures to further enhance its economic cooperation with G20 member countries by leveraging small-medium enterprises (SMEs) and entrepreneurs. Moreover, there is an urgent need to develop numerous national strategic and infrastructure projects and further modernize various facets of Indonesia’s economy as soon as possible. Thus ensuring domestic growth to help drive momentum with international G20 partners must continue to be a priority for Indonesia.
In this context, Indonesia’s government should take all possible measures to overcome its relatively isolated geographical position and other practical capacities to foster cross-border trade flows, through modern transportation systems and connecting trade hubs.
Suitable transaction settlements in currencies like the U.S. dollar, lengthy custom clearance times and friendly and productive business/investment policies should be mantra of Indonesian government. It suggests that Indonesia should use its G20 presidency to promote the use of local currency settlement (LCS) at the global level, with the aim of lowering transaction costs through direct currency settlements. A holistic and comprehensive economic road map is the need of hour to further enhance trade flows and economic cooperation with G20 member countries which could help increase Indonesian economic flows to and from other G20 partners.
Frankly speaking, Indonesian current G20 presidency offers Indonesia the opportunity to lead the G20 in sustainable energy transitions. Members of the G20 are currently divided on this transition and transformation. Many international studies indicate that the G20 is not yet united with a 1.5 Celsius pathway, leaving a significant emissions gap between advanced economies and the developing ones within the group itself. Thus Indonesia must address the challenge lying in the fact that not all G20 economies possess the same economies, knowledge, and societal demands regarding the issue of energy transition.
On its part, Indonesia has initiated a variety of projects aimed specifically at establishing renewable energy resources, including solar, wind, and hydropower. However, Indonesia’s economic dependence on coal puts it in a risky position in balancing its renewable energy priorities with the imperative of economic growth. The amount of renewable energy generated by Indonesia, the world’s eighth-largest carbon emitter, remains very low compared to other G20 nations, potentially affecting its credibility to lead the G20 on this issue.
It seems that successful transition towards renewables and energy transformation Indonesia may need over $50 billion. It presents significant challenges for Indonesia’s capability to scale economic growth while decreasing reliance on coal, thus affecting one of Indonesia’s three primary G20 initiatives. The efforts of coal-free development must be pushed further.
Indonesia passed a carbon tax in October 2021, aiming to target its coal industry. A number of green-financing schemes have been designed to spur the country’s energy transition. Thus vividly reflects Indonesia’s commitment to achieve the goal of green energies. However, balancing economic growth and increased investment in renewable energy, while still reliant on coal as an economic backbone, will present Indonesia with significant challenges moving forward.
Integrated but complicated problems stemming from the Russia- Ukraine conflict, low trade flows with G20 member countries and the limitations on the nation’s energy transition will pose significant challenges for Indonesia during its leadership of the G20. Having said all this Indonesia’s G20 presidency does offer a chance for further growth, particularly if it mitigates these challenges through internal and external initiatives.
To conclude Indonesia should ensure that the historic agreement on global tax brokered by the G20 in July 2021 on profit reallocation and global minimum tax is legislated and implemented. Moreover, the finance track, sustainable finance, regulations on climate finance should also be priority. Indonesia should secure finance for green investments.
Hopefully Indonesia G20 presidency will be a game changer in the history of bilateral or multilateralism. It will further consolidate its international soft image campaign. It will further strengthen its cultural diplomacy and give a new outlook to its comprehensive and holistic commercial diplomacy.
Indonesian tourism, SMEs, micro-financing, women empowerment, social development, banking & financial sector, service sector, national trade and last but not least, middle class income trap may also have socio-economic and geopolitical stimulation from its G20 presidency.
(The author is Director Centre for South Asia & International Studies
( CSAIS) Islamabad. Regional Expert Indonesia & ASEAN).
Current Indonesia’s presidency of G20 has opened new window of opportunities to all the member countries and the world alike. On its part, Indonesia encourages and facilitates all countries to work together to achieve a stronger and more sustainable world recovery.
In this connection, Indonesian president Widodo signaled his government priority to advocate equitable economic growth and enhanced trade cooperation among the member countries of the G20. Youth engagement, employment, inclusive digital economy, women’s empowerment and low carbon solutions that unlock climate finance should be prominent themes of its presidency of G20.
It seems that Indonesia will focus on three main pillars for its G20 2022 Presidency namely: Global Health Architecture (GHA), Sustainable Energy Transition (SET), and Digital Transformation (DT). Through these pillars, Indonesia will continue to take the lead on ensuring equitable access to COVID-19 vaccines, promoting sustainable and inclusive economic development through participation and digital economy.
It hopes that G-20 Presidency will bring numerous befitting propositions to Indonesia starting from showcasing its strong economic resilience during COVID-19, projecting Indonesia’s position as one of the largest world economies, with the ability to represent other developing economies, providing value addition to Indonesia’s recovery in terms of economic activity as well as domestic and international public trust.
It will support and boost economic recovery activity in Indonesia, affirming Indonesia’s leadership in terms of international and economic diplomacy in the region, considering Indonesia is the only G20 member among ASEAN countries, positioning Indonesia at the forefront of international focus and attention, particularly in terms of the economy and finance.
Moreover, it will highlight Indonesia’s impressive achievements to the world and represent a starting point for restoring post-pandemic economic confidence at home and internationally, presenting an opportunity to introduce Indonesia’s tourism sector and local products to the world, thus reviving the national economy and last but not least, recognizing of the importance of collective action and inclusive collaboration among major developed countries and emerging economies around the world has always been the core purpose of the G20.
It seems that during its presidency of G20 Indonesia will have to develop a “flight plan” that ensures new initiatives on economic recovery, international tax and climate finance. In this regard, Indonesia has rich experience chairing Investment and Infrastructure Working Group which should be responsible for overall guidance on global macroeconomic policies, global financial imbalances, and global economic growth. Thus Indonesia’s G20 presidency will be positive, productive and participatory.
Fortunately, the G20 comprises of developed and developing countries, which together account for 85 percent of the world’s gross domestic product, 80 percent of global investment, 75 percent of world trade and 66 percent of the world’s population. Moreover, Indonesia the only Southeast Asian member of the G20 was first invited to attend the G20 summit in 2008 in the United States. Thus Indonesian current presidency of G-20 has numerous socio-economic, geopolitical and geostrategic orientations.
Furthermore, Indonesia’s 2022 presidency will provide the G20 with the opportunity to focus on promoting inclusive growth, while demonstrating the country’s growing political influence and offering a chance to shift global attention to the region’s needs.
Indonesia demonstrates its huge capacity to provide wise and visionary leadership in Southeast Asia and the world alike. G20 summit will be held in Bali in November 2022.
Rapidly changing socio-economic, geopolitical and geostrategic conflicting realities have further deteriorated concepts of inclusive economic development, multilateralism, multiculturalism, dialogue, and diplomacy and conflict resolution. Unending obsession of power politics have redesigned chessboard of power politics in Indo Asia Pacific, Central Asia, South Caucuses, Middle East and Africa. Hide and see sugarcoated political alliances overlapping, non-state proxies and last but not least, limited economic access and conditional partnership doctrines have become serious hurdles in the easy and smooth sailing of the Indonesia, G20 Presidency.
In this context, geopolitical clashes and disputes originating from the Ukraine-Russia war, low levels of Indonesian economic engagement with other G20 countries, and renewable energy challenges are and will be main areas of concern for Indonesian G20 Presidency during 2022.
It seems that the unending Ukraine-Russia war has placed Indonesia’s presidency in a difficult position. There is widening dichotomy between its government and its people about the issue of Russia-Ukraine conflict. That is why Russian president Putin talked to its Indonesian counterpart and sought important diplomatic support. Even Ukrainian President Zelenskyy approached to Indonesia for seeking support. Moreover, Chinese president Xi called Indonesian president and discussed G20 presidency and issue of Russia-Ukraine conflict. Thus somehow, the government of Indonesia has been in difficult situation since the start of Russia-Ukraine conflict.
On the other hand, since last year the Indonesian government has prepared an agenda focusing on fair and equitable recovery from the COVID-19 pandemic. However, this year’s G20 proceedings will most likely be convened amid boiling geopolitical tensions that involve many G20 member states.
It seems that Russia-Ukraine war theater has now entered into the galleries of politics due to which there have seen growing concerns over Russia’s participation at the summit which demands that the forum should isolate or expel President Vladimir Putin and other Russian representatives from the group’s meetings.
So far, U.S. President Joe Biden, Australian Prime Minister Scott Morrison, and Canadian Prime Minister Justin Trudeau have stated that they will not sit down with Putin in the G20 meeting to be held in the month of November this year.
Unfortunately, from nowhere it has now become the most tenacious task facing Indonesia’s G20 presidency, as it will intensify the political divisions within the member countries.
Furthermore, ongoing Russia-Ukraine war has badly affected the global economy, energy security and prices, food security and supply, and financial markets. It has even disturbed main agenda of G20 during 2022. It fears that if there is no peace deal between Ukraine and Russia the impact of the multidimensional sanctions on Russia could well undermine the G20’s economic goals too. However, Indonesia is currently holding its wait-and-see approach, pushing for an immediate resolution to the conflict.
Undoubtedly, Indonesia’s macro-economy is growing however, its economic partnership with member countries of G20 remain relatively limited and low. Its bilateral and trilateral trade with G20 member countries remains low. It may be another challenge for Indonesia to overcome weak economic cooperation, socio-economic integration and low trade cooperation in its current role as the leader of the G20.
It suggests that the Indonesian government should take all possible measures to further enhance its economic cooperation with G20 member countries by leveraging small-medium enterprises (SMEs) and entrepreneurs. Moreover, there is an urgent need to develop numerous national strategic and infrastructure projects and further modernize various facets of Indonesia’s economy as soon as possible. Thus ensuring domestic growth to help drive momentum with international G20 partners must continue to be a priority for Indonesia.
In this context, Indonesia’s government should take all possible measures to overcome its relatively isolated geographical position and other practical capacities to foster cross-border trade flows, through modern transportation systems and connecting trade hubs.
Suitable transaction settlements in currencies like the U.S. dollar, lengthy custom clearance times and friendly and productive business/investment policies should be mantra of Indonesian government. It suggests that Indonesia should use its G20 presidency to promote the use of local currency settlement (LCS) at the global level, with the aim of lowering transaction costs through direct currency settlements. A holistic and comprehensive economic road map is the need of hour to further enhance trade flows and economic cooperation with G20 member countries which could help increase Indonesian economic flows to and from other G20 partners.
Frankly speaking, Indonesian current G20 presidency offers Indonesia the opportunity to lead the G20 in sustainable energy transitions. Members of the G20 are currently divided on this transition and transformation. Many international studies indicate that the G20 is not yet united with a 1.5 Celsius pathway, leaving a significant emissions gap between advanced economies and the developing ones within the group itself. Thus Indonesia must address the challenge lying in the fact that not all G20 economies possess the same economies, knowledge, and societal demands regarding the issue of energy transition.
On its part, Indonesia has initiated a variety of projects aimed specifically at establishing renewable energy resources, including solar, wind, and hydropower. However, Indonesia’s economic dependence on coal puts it in a risky position in balancing its renewable energy priorities with the imperative of economic growth. The amount of renewable energy generated by Indonesia, the world’s eighth-largest carbon emitter, remains very low compared to other G20 nations, potentially affecting its credibility to lead the G20 on this issue.
It seems that successful transition towards renewables and energy transformation Indonesia may need over $50 billion. It presents significant challenges for Indonesia’s capability to scale economic growth while decreasing reliance on coal, thus affecting one of Indonesia’s three primary G20 initiatives. The efforts of coal-free development must be pushed further.
Indonesia passed a carbon tax in October 2021, aiming to target its coal industry. A number of green-financing schemes have been designed to spur the country’s energy transition. Thus vividly reflects Indonesia’s commitment to achieve the goal of green energies. However, balancing economic growth and increased investment in renewable energy, while still reliant on coal as an economic backbone, will present Indonesia with significant challenges moving forward.
Integrated but complicated problems stemming from the Russia- Ukraine conflict, low trade flows with G20 member countries and the limitations on the nation’s energy transition will pose significant challenges for Indonesia during its leadership of the G20. Having said all this Indonesia’s G20 presidency does offer a chance for further growth, particularly if it mitigates these challenges through internal and external initiatives.
To conclude Indonesia should ensure that the historic agreement on global tax brokered by the G20 in July 2021 on profit reallocation and global minimum tax is legislated and implemented. Moreover, the finance track, sustainable finance, regulations on climate finance should also be priority. Indonesia should secure finance for green investments.
Hopefully Indonesia G20 presidency will be a game changer in the history of bilateral or multilateralism. It will further consolidate its international soft image campaign. It will further strengthen its cultural diplomacy and give a new outlook to its comprehensive and holistic commercial diplomacy.
Indonesian tourism, SMEs, micro-financing, women empowerment, social development, banking & financial sector, service sector, national trade and last but not least, middle class income trap may also have socio-economic and geopolitical stimulation from its G20 presidency.
(The author is Director Centre for South Asia & International Studies
( CSAIS) Islamabad. Regional Expert Indonesia & ASEAN).
