Indonesia and Taiwan Relations in 2022

It was another important year for Indonesia-Taiwan relations. Of course, the most crucial story was the China-Taiwan tension following the visit of US House Speaker, Nancy Pelosi, to Taiwan. The tension reportedly had a noticeable impact on Indonesian trade with both China and Taiwan and on many Indonesian workers, many of whom are not registered. Despite this, Indonesia appeared to adhere to its One China policy, given that it is increasingly dependent on China as its largest trading partner and one of the country’s biggest investors.

In the midst of its commitment to avoid upsetting China, Indonesia’s cooperation with Taiwan continued in various sectors this year. Economic ties between Jakarta and Taipei witnessed several developments in 2022. Indonesia’s export share to Taiwan until June 2022 reached USD 0.69 billion or 2.82% of Indonesia’s total exports in June 2022. Taiwan is the eighth-largest export destination country for Indonesia.

Investments also continue to rise. For example, Taiwan International Ports Corp (TIPC) and South Korea’s Busan Port Authority (BPA) are to jointly invest in container handling infrastructure in Indonesia to tap into its emerging market and younger workforce. The two port authorities, through their Indonesian subsidiaries, PT Formosa Sejati Logistics (TIPC) and PT Probolinggo Logistic Centre (BPA) signed an agreement in October to develop container terminals, container yards and warehouses. Under the agreement, companies from Taiwan will also receive improved logistics services in Indonesia.

In September, PT Indika Energy, one of Indonesia’s foremost energy services companies, and Taiwan-based Foxconn launched a USD 2 billion joint venture to make EVs, batteries, and energy storage in Indonesia. The venture will focus on manufacturing electric buses in its initial production and may move on to making electric trucks.

In December, Indonesia and Taiwan also signed an MoU on agriculture to expand their partnership in the sector. Earlier in August, several MoUs were also inked during the 5th Indonesia-Taiwan Industrial Collaboration Forum, consisting of two MoUs on IoT, one on shipping, one on metal processing, as well as one MoU and one Technical Arrangement in the field of industrial product design development. It is believed that these MoUs will accelerate the development of industrial capacity in both countries.

Both Indonesia and Taiwan also continuously made attempts to expand their economic partnership. This was apparent from the Indonesia Investment Business Opportunities Seminar held in Taipei in August, Taiwan’s participation in Trade Expo Indonesia, Indonesia’s coffee promotion in the Taipei International Coffee Show 2022, and the promotion of tourism at Tainan Tourism Table Top Business Meeting in June. Indonesia also promoted its halal industry and participated in the Taiwan Culinary Exhibition in August. Moreover, the 5th Indonesia-Taiwan Steel Dialogue which aimed to examine the progress of cooperation between both nations in the steel sector was also held in November. Over the past five years, the basic metals, metal products, and non-machinery industrial equipment sectors contributed 31% of Taiwan’s total investment in Indonesia. The total trade value between Indonesia and Taiwan in the steel sector until October was USD 2.53 billion or an increase of 6.41% compared to the same period last year.

Despite limited political cooperation previously, this year saw Indonesia’s House of Representatives and Taiwanese president Tsai Ing-wen meet in October. The Indonesian delegation included Mardani Ali Sera of the Prosperous Justice Party (PKS) and Asep Maoshul Affandy of the United Development Party (PPP). The visit was significant because it was the first from Indonesia’s legislature since the start of the COVID-19 pandemic and given that it took place in the midst of China-Taiwan tension. Both sides expressed a commitment to strengthen cooperation, especially focusing on working together to increase exchanges among students, fishermen and farmworkers.

On the soft-power side, education remained an important aspect of Indonesia-Taiwan ties. It is important to note that over the years, despite not having official diplomatic relations, academic ties have been the backbone of the cooperation between the two countries. This year, Taiwan, via the Taiwan Economic and Trade Office (TETO), continued to offer scholarships to Indonesians by way of Taiwan’s Ministry of Education, as well as Huayu Enrichment Scholarships for non-degree Mandarin courses. Several scholarship events were also held across Indonesia this year to attract Indonesian students. Research collaboration also transpired between the Indonesian Trade and Economic Office in Taipei and R&D Centre for Smart Manufacturing at Chung Yuan Christian University.

Amongst all of this positive activity, cultural ties also continued to flourish. The most crucial illustration was the exhibition entitled the “Indonesia Tempo Doeloe III,” which was held at the Nanmen Branch of the National Taiwan Museum in August. During the event, ethnic cultures from all over Indonesia were showcased through performances and clothing, while food, clothes and literature from Indonesia were sold at stalls.

Despite these positive developments, some negative news impacted Indonesia-Taiwan relations this year, including 12 Indonesian sailors who went missing after their vessel sank off the coast of Taiwan, the ban on Indonesian instant noodles, after they were found to exceed the maximum pesticide residue limit and the reports on Indonesian workers in Taiwan receiving inhumane treatment.

In fact, the question of domestic workers remains a significant issue between Indonesia and Taiwan. There are approximately 350,000 Indonesian workers in Taiwan. Although this year, reports of abuses continued to emerge and these workers were deeply concerned about their fate due to the tension between China and Taiwan, some good news also appeared, including Taiwan’s decision to increase its basic salary and to remove agency fees. Beginning next year, Taiwan is also committed to providing these workers which much needed training.

Looking into the future, ties between Indonesia and Taiwan are expected to strengthen. With many agreements signed this year, we will witness the implementation of these agreements in the coming years. Moreover, the Indonesian finance minister, Sri Mulyani, also said in December that with ongoing uncertainty in China caused by the zero-covid policy, Indonesia welcomes investments from Taiwan. Simultaneously, the Indonesian government has expressed its intent to invite Taiwan to invest in the new capital city project.

Nevertheless, Indonesia’s close ties with China and its support of the “One China Policy” will possibly make Indonesia more wary and tread with caution in its continuing cooperation with Taiwan.

[Image by Gunkarta, via Wikimedia Commons]

Dr. Muhammad Zulfikar Rakhmat is a research professor at Busan University of Foreign Studies. The views and opinions expressed in this article are those of the author.

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