A New Era of One Belt One Road Policy

Jakarta - (6/9/2019) One Belt One Road (OBOR), is an innovative policy of the Chinese government to build a new economic and trade route connecting Asia to Europe.  One Belt refers to the revitalization of the Silk Economic Road Economic Belt or trade routes through the silk route.  The line includes land from China, Central Asia, East Asia, South Asia, the Middle East to Europe which will also be supported by rail lines, highways, and new pipelines.  Meanwhile, One Road refers to the 21st Century Maritime Silk Road or a sea-based silk route that connects China with Southeast Asia, South Asia, Africa, the Middle East and Europe.

Since it was popularized by Chinese President Xi Jinping and Chinese Prime Minister Li Keqiang in 2019, OBOR has embraced 65 countries, involved 4.4 billion people, and is worth around 40 percent of total global GDP with a bilateral scheme.  OBOR then grew and became increasingly popular as the Belt and Road Initiative (BRI).  China's global ideas helped strengthen relations and increase trade between Europe and China, which has grown 168 percent over the past ten years.  Other objectives are to strengthen policy communication, increase economic and monetary cooperation, remove trade barriers, and improve transportation from the Pacific to the Baltic Sea, from Central Asia to the Indian Ocean, and finally to West and South Asia.

The new stage of BRI began on July 12, 2019, with the signing of cooperation between China and 18 Arab countries.  According to the Chinese Ministry of Commerce, companies from the "Bamboo Curtain Country" will work on projects worth US $ 35.6 billion or around Rp 498.4 billion in Arab countries.  The field of cooperation covers various sectors, including energy, infrastructure, and manufacturing.  As reported by the Xinhua news agency, Deputy Minister of Commerce of China, Qian Keming said, the value of direct investment from Chinese companies in these projects reached US $ 1.2 billion or Rp 16.8 trillion.  The Chinese government also encouraged financial companies from the country to increase cooperation with Arab countries in the port, railroad, electricity and telecommunications sectors.    

China has approached the Arab countries since the China-Arab States Cooperation Forum was held in Beijing in July 2018. At the meeting, Chinese President Xi Jinping promised a loan of US $ 20 billion or Rp 280 trillion to support projects in the Arab. The China offering was welcomed by Arab countries. This is because some Arab countries face political instability problems due to slowing economic growth, lack of jobs, and low income of the people.  Therefore, the inclusion of China with the BRI project is considered to be able to overcome the problem.

The China’s presence as a global power needs to be responded proportionally and rationally.  BRI is considered as a form of grand strategy that will reduce the economic gap between the East and West regions.  At the same time to rebalancing the US economic and political power in Asia.  Economically, BRI gift more benefit to the Government of Indonesia.  Quoting the statement of the Executive Director of the Institute for Development of Economics and Finance (Indef), Enny Sri Hartati that, Indonesia was not wrong in supporting the construction of the Belt and Road Initiative.  The project will accelerate economic growth if the State responds appropriately.  If BRI's cooperation is not followed by increased productivity and investment, Indonesia will only become a tap for raw materials for global producers.  This was also supported by the Minister of Industry, Airlangga Hartarto, said that the OBOR initiative was part of attracting investment into the country.  The impact of the initiative on the Indonesian economy is very dependent on future projects.

OBOR is in line with national interests in the vision of the World Maritime Axis. This relates to three of the five pillars contained in the vision of the World Maritime Axis, namely maritime connectivity, maritime economics, and maritime culture. The development of maritime infrastructure is expected to improve the connectivity of maritime routes throughout the archipelago, which in turn will affect Indonesia's maritime economic activities.  This path is later used to further accelerate the development process, while at the same time leveling the results of development.  So, this can boost Indonesia's economic growth.  The National Economic and Industrial Committee (KEIN), assesses that the Belt and Road Initiative or OBOR project can be used as widely as possible for the benefit of Indonesia's economic growth.  Deputy Chairman of KEIN, Arif Budimanta, said that OBOR must be a momentum for Indonesia to improve Indonesia's trade balance with China.

In connection with the BRI project, Indonesia has signed 23 collaborative projects at the BRI conference in Beijing on April 26, 2019, which will be built in North Sumatra, North Kalimantan, North Sulawesi, Maluku and Bali.  These projects include, the development of industrial estates and supporting infrastructure (Taman Kuning, Kaltara), power plant projects processed from waste (North Sulawesi) and the Technology Park on Turtle Island (Bali).  Vice President Jusuf Kalla in the second Belt and Road Forum emphasized that projects under the Belt and Road Initiative (BRI) must be in line with the national development strategy, which is driven by the private sector and does not increase government debt.

Related to the national interests of Indonesia, the government has prepared special requirements.  The Coordinating Minister for Maritime Affairs, Luhut Binsar Pandjaitan, said that the Government actually tightened the requirements for all Chinese business people who would invest in Indonesia, Chinese investors must use workers from Indonesia, companies that invest must produce goods with added value.  Chinese companies are required to transfer technology to local workers, the Government of Indonesia prioritizes the concept of investment through business to business (B to B) instead of government to government (G to G), and the types of businesses that are built must be environmentally friendly.  Thus the presence of the Government of Indonesia in BRI can optimize the meeting of each business entity between the two countries.  Considering that the cooperation carried out in BRI involves private business entities, State-Owned Enterprises (SOEs), and universities. (*)