Indonesia’s elections are important for relations with China and the environment | News | EcoBusiness

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Indonesians are scheduled to vote for a new president on February 14, 2024. The incumbent, Joko “Jokowi” Widodo, has worked closely with China since taking office in 2014. He has consistently sought to attract investment, particularly in mining, metal smelting, transportation, and transport. and the construction of a new capital, Nusantara.

So far, three people have announced their candidacy for president, all of them prominent public figures with extensive government experience.

If Ganjar Pronowo, Prabowo Subianto and Anies Baswedan come to power, how will they navigate Indonesia-China relations, and what will be the environmental impact?

Relations between Indonesia and China under the Jokowi administration

Since President Jokowi took office, China has become Indonesia’s largest trading partner and investor. Imports from China increased from less than US$40 billion in 2014 to US$71.32 billion in 2022, according to the UN Comtrade database.

China’s state-owned banks and construction companies have financed and implemented major infrastructure projects, including the construction of a US$8 billion high-speed railway between Jakarta and Bandung, which opened to the public in October this year. The line was 75% funded by a loan from the China Development Bank and was built by a consortium of China Railway Group and Indonesian companies. Indonesia has also increased its debt to China to more than $21 billion and increased its use of the Chinese yuan in foreign transactions.

These investments not only present opportunities, but also raise community concerns, including environmental degradation, cost overruns, and labor issues.

The construction of the Jakarta-Bandung Railway has raised concerns about the increased risk of landslides and impacts on water supplies. Several projects to mine and process nickel for the EV battery industry are facing opposition. For example, fishermen in Weda Bay, North Maluku province, report that their catch has decreased due to projects involving Chinese companies such as Tsingshan.

Drinking water has been found to be contaminated at the Ob Island nickel joint venture between China’s Ningbo Raigendo Mining Company and Indonesia’s Harita Group. Additionally, efforts at the Batang Tolu hydropower project in Sumatra, being built by North Sumatra Hydro Energy in collaboration with Chinese engineering and construction company Sinohydro, are encroaching on the natural habitat of the endangered Tapanuli orangutan. ing.

How does the candidate approach the environment?

Indonesia’s three presidential candidates have each approached environmental issues in different ways.

Ganjar Pronowo is a member of Jokowi’s political party, the Indonesian Democratic Party of Struggle. He was the governor of Central Java during the Kenden incident, which involved local resistance to mining and cement production. Ganjal issued a new permit in 2016, a month after the Supreme Court ordered cancellation of the cement factory’s environmental permit.

He also served as governor during the Wada mine scandal, when there was resistance to extracting materials to build a dam to supply water to the airport. Ganjar encouraged the community to accept compensation despite some concerns about flooding from mining activities. Both incidents involved repressive police approaches against communities that refused to be relocated, leading to protracted conflicts.

Ganjar has never commented directly on environmental issues related to Chinese investments or critical minerals. Instead, he emphasized its economic importance. In a conversation with academics in October 2023, he said Chinese workers are still very much needed and will not be replaced by local workers in the near future. Jokowi has sought to develop a significant mineral processing industry in Indonesia to retain more value in Indonesia rather than simply exporting raw materials. Mr. Gunjar stands firmly behind this narrative, largely avoiding the environmental and labor rights issues that plague him.

Perhaps to compensate for his poor environmental record as governor, Ganjar has focused a significant portion of his presidential campaign on energy transition. In his manifesto, he supports off-grid renewable energy projects that benefit village communities. However, his target for renewable energy in the energy mix is ​​not particularly ambitious, at just 25-30 percent by 2029, lower than Jokowi’s current goal of 34 percent by 2020.

Meanwhile, Prabowo Subianto is currently the defense minister and was Jokowi’s rival in the past two elections (2014 and 2019). His environmental record is also flawed. Establish large-scale agricultural plantations across Indonesia using the “Food Estate” program. Mr. Prabowo was responsible for establishing one of these farms in central Kalimantan with cassava as the main crop. The forest area was cleared in 2022-2023, but cassava has reportedly not yet been harvested.

Additionally, a company connected to Prabowo’s brother has a very large timber plantation in East Kalimantan. Some parties have linked capital relocation agreements to permits for industrial-scale plantations within Kalimantan’s forests, taking into account the subsequent demand for both cleared land and construction timber. Conflicts of interest and the resulting environmental damage ultimately led Prabowo to prefer to avoid talking about environmental and climate issues. In his manifesto, policies on energy transition and preventing deforestation are largely similar to Jokowi’s.

Former Jakarta governor Anies Baswedan has a clearer record on the environment. His manifesto calls for accelerating the closure of coal-fired power plants and providing incentives for the renewable energy sector. To date, no presidential candidate has so clearly stated in their manifesto that they want to close coal-fired power plants.

This commitment could conflict with China’s interests, as coal-fired power plants financed by Chinese companies have been built in industrial parks in recent years. In the short term, the early retirement of coal-fired power plants will make the nickel smelting process more costly for Chinese companies in Indonesia due to the lack of battery storage and smart grids to facilitate solar power generation.

Áñez’s main challenge may be securing sufficient funding, given the high costs of running a presidential campaign.

For all three candidates, the impact of the fossil energy and extractive sectors is a concern. Indonesia’s political funding regulations remain very weak. Candidates must submit personal financial statements and identify the source of campaign funds, but these disclosures do not have to be audited by an independent third party. As a result, fossil fuel companies can pay candidates to make environmental promises to get them elected, and then deliberately fail to keep them, in order to serve their interests.

Candidate’s track record with China

Examining the three candidates’ past interactions with Chinese officials provides insight into how they would approach China if elected in February. The authors of the current article all work for his CELIOS (Center for Economic Law Research), an Indonesian think tank that recently published a report mapping these interactions.

Of the three, Prabowo had the most contact with China. From 2018 to 2022, he met several times with Xiao Chen, then the Chinese ambassador to Indonesia. If elected, he is expected to continue engaging with China, saying he would attract Chinese investment in areas such as infrastructure and food security.

Prabowo’s running mate, Gibran Rakabumin Raka, is the mayor of Solo in Central Java province and President Jokowi’s eldest son. Although his interactions are limited, many commentators emphasize his father’s closeness with China. If elected, his focus in China is likely to be technology and sister city cooperation.

The pair of candidates, Ganjar and Coordinating Minister for Political, Legal and Security Affairs Mahfud Mahmouddin, have frequent contacts with China. In his capacity as Governor of Central Java, Ganjar met with Chinese officials several times during his visits to Indonesia or China (2015, 2018, 2019, 2023). Most of them were discussions on investment cooperation, especially in Central Java. Ganjal’s party has good relations with the Chinese Communist Party.

Mahfud met with Xiaochen in 2019 and 2020 to discuss sensitive geopolitical issues. In 2022, China also received a visit from Lu Kang, and they exchanged views on political and security issues. Mahfud’s interactions with China are based on diplomatic missions related to law and human rights. During his tenure, he was considered quite critical of China.

Anis had more contacts with Western countries than with China. His only public appearance was in 2019 when he met with Xiaochen to discuss the possibility of sister city cooperation.

Áñez’s running mate, Muhaimin Iskandar (often referred to as Çak Imin), has increased his contacts in recent years, meeting with several Chinese officials. If elected, Chak Imin could fill in Agnès’ lack of experience with China.

Indonesia’s bargaining power

Whoever is elected must recognize Indonesia’s negotiating power with China. Indonesia is Southeast Asia’s largest economy, and its inclusion as a member of the G20 group of major economies shows the international community’s confidence in Indonesia’s economic strength. Furthermore, due to its strategic location, Indonesia occupies an important position in the maritime component of China’s Belt and Road Initiative (BRI).

At the same time, Indonesia’s next president must also understand China’s interests and needs. Belt and Road began in part as a way for China to leverage its industrial capabilities to improve economic performance after the 2008 global financial crisis. Currently, the Belt and Road continues to help China alleviate domestic problems such as oversupply of construction raw materials and materials. Foreign currency exchange that allows you to send money to the other country.

It is not just the countries that signed the Belt and Road Agreement that need China and its investments.We also need China they.

Whoever becomes president in February, it is essential that he understands this way of thinking. Indonesia should not position itself as a market for or investment destination for Chinese products or funds. Flexibility and expertise will be essential in negotiating future agreements with China, which should aim to secure mutual benefits for both countries.

The Indonesian government should selectively decide which Belt and Road projects will bring the greatest benefits possible, rather than projects that risk generating losses and environmental damage. Governments need to ensure that such risks are mitigated before projects are agreed.

No matter who wins the election, there is a need to maintain a political balance between China and the West in various areas of global cooperation. This includes an energy transition financing race in which Western countries are playing a role through the Just Energy Transition Partnership (JETP) with Indonesia, while China is ramping up its Belt and Road green efforts. Both will help accelerate the early retirement of coal-fired power plants and the introduction of renewable energy.

Addressing the impact of Chinese investment

The operations of various Chinese companies in Indonesia, especially the mineral extraction industry, are causing social and environmental damage. The next president must encourage related organizations to improve their corporate governance and prevent such problems from happening again. It is critical that governments involve all stakeholders, from central and local governments to civil society organizations and the private sector, in consultations on new projects and in addressing issues in existing projects.

The new president will need to seek a strong agreement to ensure that Chinese companies adhere to the highest environmental and governance standards. The government must also commit to thoroughly investigating instances of environmental and social harm, including cases of abuse of power by unscrupulous Indonesian officials, both at the central and local levels.

This article was originally published on China Dialogue under a Creative Commons license.

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