Insightsfrom Davos: Global economic initiatives will benefit Indonesia
Zheng Lie Lie
In his recent speech at the World Economic Forum (WEF) in Davos, Xi Jinping invoked Charles Dickens’s famous beginning to A Tale of Two Cities. “It was the best of times, it was the worst of times”, the Chinese president quoted, signalling that now is a time of “contradictions”, where advances in wealth and technology are offset by terrorism, mass migration and rising inequality.
At a WEF seminar on January 18th, organised by Tsinghua University and co-hostedby the International Cooperation Center of China’s National Development & Reform Commission, experts explored this climate of simultaneous adversity andopportunity in a discussion of One Belt, One Road (OBOR), a Chinese-sponsored infrastructure initiative. This project has implications across a vast areaspanning from West Papua to the Netherlands. The most dramatic impact is being felt in developing countries, and participants in the seminar focused on OBOR’s benefits for economic growth in Indonesia, South-East Asia’s largest economy.
As a global programme linking Asia with Europe and Africa, OBOR will benefit countries likeIndonesia by allowing them to tap China’s development experience over the past 30years. OBOR is a key element of China’s strategy for economic expansion, and overlaps with Indonesian initiatives like the Global Maritime Fulcrum (GMF) and its domestic counterpart, NawaCita (Nine Priorities), which aim to promote development. EnggartiastoLukita, the Indonesian minister for trade, said that “GMF is one of the most important centrepieces of Indonesian government strategy. It is an economically driven project, and there is a close interface between OBOR and GMF. China’s efforts ininfrastructure development are an attractive proposition for Indonesia.”
EnggartiastoLukita, Indonesia’s Minister of Trade
Despite being a global initiative, OBOR has common ground with President Widodo’s domestic NawaCita agenda, which covers many of Indonesia’s basic development issues. Within the NawaCita framework, infrastructure and development serve as aplatform for development more broadly. By linking OBOR with NawaCita, and with the maritime GMF initiative, Indonesia benefits from an alignment of its development objectives with China’s strategic ones.
OBOR’s backing by multilateral financial institutions, such as the Asian Infrastructure Investment Bank, has potential upsides for Indonesia. Economic growth needs to be sustained by steady investment in infrastructure. To confront the crises presented by its geographyand high population density, and to take advantage of the opportunities, Indonesia will need to invest infrastructure as China has done. The OBOR initiative presents a promising vehicle through which Indonesia can pursue its development goals because it encourages Chinese companies to invest in OBOR countries, bringing expertise and financial backing with them. Mr. Qi Bin, executive vicepresident of the sovereign wealth fund China Investment Corporation said that investment in OBOR projects has reached more than 50 billion USD since the announcement ofthe initiative by president Xi in 2013.
No other infrastructure project is as important for Indonesia’s economic growth as the development and management of an adequatewater supply, and this is a prime example of how Indonesia can benefit fromChina’s input. Wang Hao, a professor associated with the Chinese Academy of Engineering and the China Institute of Water Resources and Hydropower Research, said that “water resource allocation is directly linked to projected economic growth, and must, therefore, be anintegral part of infrastructure development and investment for these initiatives to be successful.” Such a holistic perspective is one of the things China can be expected to contribute to the development of Indonesian water infrastructure as part of the OBOR initiative.
China Institute of Water Resource and Hydropower Research, Prof. Wang Hao
Other aspects of OBOR, including financing, communications, capability building and engineering, will be supported by Chinese academic institutions and think tanks. Qiu Yong, president of Tsinghua University, believes that co-operationwith Indonesia’s leading universities will bebuilt upon through OBOR, and that Tsinghuawill continue to be a bridge between China and Indonesia. Ultimately, OBOR willbe a major part of the continued progress of globalisation and of sustainable and inclusive economic development.
President of Tsinghua University Qiu Yong with Prof. Wang Hao and Zheng LieLie
Institute of Global Development (IGD) was founded by Tsinghua University adopting cooperation mode of government, university and enterprise. Yang Bin, vice president and provost of Tsinghua University is the executive director of the institute and Chen Xu, chair person of the University Council, Tsinghua University is the director ofthe administrative committee. IGD is an unprofitable research organization donated by many well-known enterprises like Charoen Pokphand and CITIC Group,with the initial capital of 75 million yuan, aiming at integrating domestic and international resources of government, academia, business and soforth to promote global development research by means of proposing programs, contributing wisdom and providing public productions in China.
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Global Report of Tsinghua, Tsinghua Initiative, Tsinghua Perspective and other publications are edited by the institute. Up to now, IGD has successfully launched many programs such as joint-degree programs with George Town University, Global Entrepreneurship Program with Harvard University and Alibaba, and China Studies Center Program with Cambridge University. IGD has been devoting to being a top-class think tank.