Officials, including South Africa's President Cyril Ramaphosa, Russia's President Vladimir Putin and China's President Xi Jinping, attend a plenary session in the outreach/BRICS Plus format at the BRICS summit in Kazan on October 24, 2024. — AFP/VNA Photo

JAKARTA – The administration of President Prabowo Subianto says joining BRICS will bring a number of benefits, but others are not so certain, noting that Jakarta has already inked a number of pacts with the bloc’s member states.

Indonesia recently became a full member of the BRICS economic and geopolitical grouping. The name is an acronym for the bloc’s first five member states: Brazil, Russia, India, China and South Africa.

Luhut Pandjaitan, who chairs the National Economic Council (DEN), a presidential advisory body, said in a press conference on Thursday that the chief benefit of membership would be “bigger markets”.

He also said Indonesia was “too big of a country to take sides” and that joining BRICS should not be seen as being in geopolitical opposition to Western countries.

“We have to be free, we have to be independent. It’s okay to be a little bit naughty to demonstrate that we have a say,” said Luhut.

On Wednesday, Coordinating Economic Minister Airlangga Hartarto said that through its membership, Indonesia would enjoy more access to trade and investment from the bloc’s member states.

The Energy and Mineral Resources Ministry said on the same day that it expected more opportunities to export the country’s mining products.

Prior to joining the bloc, Indonesia had inked bilateral and multilateral agreements with each BRICS member state.

In November 2020, for instance, Jakarta joined the Regional Comprehensive Economic Partnership, which includes China, as well as some other regional pacts that also involve Beijing.

China is BRICS’ heaviest hitter in terms of trade. It accounted for some 72 per cent of the total exports of the bloc’s five original members in 2023, according to the International Trade Center.

India, the bloc’s second-biggest trade presence, has also had a free trade agreement with Indonesia since 2010.

China and India are, respectively, Indonesia’s largest and third-largest export markets, buying some 27 per cent and 7 per cent of the country’s exports from January to November 2024. China is also Indonesia’s largest source of foreign direct investment (FDI).

Indonesia already has bilateral trade agreements with Iran and the UAE, which joined BRICS last year.

Jakarta is pursuing additional trade pacts, including a comprehensive economic partnership agreement (CEPA) with Eurasian countries that would include Russia.

Trade Ministry international trade negotiations director general Djatmiko Bris Witjaksono told The Jakarta Post on Wednesday that bumping up trade with BRICS members “needs more specific initiatives” and would not come automatically.

Indonesian Employers Association (Apindo) chair Shinta Kamdani told the Post on the same day that businesses saw the bloc “as more oriented toward geopolitical issues than the harmonization of concrete economic policies”.

She said BRICS did not demand that Indonesia adopt binding international agreements on the economy and said the country’s membership would likely “not give direct benefits to business through new market access”.

Muhammad Habib, a researcher from the Jakarta-based Centre for Strategic and International Studies (CSIS), told the Post on Thursday that joining BRICS might instead bring additional expenses, such as attending international meetings or supporting geopolitical causes without clear economic benefits.

“So far, I have not seen any special benefit that BRICS could give its members aside from a geopolitical spotlight. Indonesia still has to endeavor through bilateral routes with BRICS member states to earn concrete benefits,” said Habib.

Despite Donald Trump’s threats against BRICS, the US president-elect said his ultimate decision on the tariffs would wait until after his inauguration on January 20.

Center of Economic and Law Studies (CELIOS) researcher Muhammad Zulfikar Rakhmat said on Wednesday that Trump’s possible moves against the group had to be anticipated “since he is one of the leaders who walks the talk”, especially as the US was Indonesia’s second-largest export destination after China, purchasing 10 percent of its exports in the January-to-November period last year.

By joining BRICS, Rakhmat said, Indonesia was at risk of becoming subject to Trump tariffs of up to 100 percent.

Dedollarization and national interest

Indonesia may diverge from parts of the BRICS economic agenda that do not serve its interests, DEN executive secretary Septian Hario Seto said on Thursday, adding that this could include the bloc’s dedollarization agenda.

“Dedollarization, if it goes against our national interests, what’s the point of following suit?” Seto said.

Seto did not specify which parts of the BRICS dedollarization agenda Indonesia might opt out of.

The bloc’s members have been considering measures to reduce their dependence on the US dollar, including by boosting trade in national currencies among member countries. And in 2023, Brazil floated the idea of a BRICS common currency.

US president-elect Donald Trump has threatened a 100 per cent tariff on goods from member states if the bloc makes a new currency or supports other currencies in an effort to end the US dollar’s dominance.

Seto went on to say that Indonesia had been advocating for the increased adoption of local currency transaction (LCT) agreements, bilateral deals where two countries agree to allow the use of their respective currencies for the exchange of goods and services.

So far, Indonesia has LCT agreements with Malaysia, Thailand, Japan, China, Singapore, South Korea, India and the United Arab Emirates. And in Indonesia’s BRICS application, it spoke of reducing member countries’ reliance on the dollar. — The Jakarta Post/ANN