On October 19, 2020, the name Joko Widodo, the President of Indonesia, was placed as the name of a street in Abu Dhabi, United Arab Emirates. The move appears to have been done to commemorate the recent growing ties between Indonesia and the UAE.
While Jakarta’s ties with the UAE have been widely reported, Indonesia’s overall relations with the Middle Eastern countries have been limited despite many available opportunities.
Indeed, the relationship between Indonesia and the Middle East are relatively developed, but limited. In the beginning, the ties were made possible by shared political stances.
Middle Eastern governments were some of the earliest countries to recognize Indonesia’s independence and staunch supporters of Non-Aligned Movement who participated in the 1955 Bandung Summit. In addition, they also have often met in several multilateral organizations, such as the Organization of Islamic Countries (OIC).
Indonesia also sees Middle East countries as a religious partner. Due to a shared Islamic identity, Indonesia’s ties with the region, especially with Saudi Arabia, are dominated by people-to-people exchanges as many Indonesian citizens carry out the Haj and Umrah pilgrimage every year. Additionally, many Indonesian students are studying in the Middle East, and vice-versa.
In its development, the relationship between Indonesia and the Middle East has developed from political and religious to economic sectors.
Limited Economic Ties
Historically, the relationship between Indonesia and the Middle East even existed in pre-Islamic times. The route used to transport commodities passed through the spice route, which starts from Maluku across the Indian Ocean and the Red Sea through Sinai to get to the Mediterranean and the Southern European Coast. Goods that were traded were mainly spices that were believed to cure diseases and make food delicious.
This trade cooperation increased when the Islamic kingdoms appeared, which was called the age of commerce or international free trade. However, this trading system did not last long when the arrival of the European nations (Portuguese, Spanish, Dutch and British) applied a trade monopoly.
As the time passed, Indonesia began to not have a significant economic cooperation with the Middle East. During the Suharto government, it did not really see the Middle East as a partner. As a result, only a few Middle Eastern investors made their way to Indonesia. At the same time, Indonesian investors were reluctant to enter the Middle East due to regional instability.
Other countries like China, Japan and Singapore became major investors in Indonesia.
In more recent years, Indonesia has tried to attract more investors from the Middle East. However, many of these investments were cancelled, such as Qatar’s planned investments in tourism development in Lombok. Other countries such as Saudi Arabia and the UAE have also made investment promises, but failed to follow up.
Indonesia’s attempt to attract investors from the Middle East is increasingly difficult for several reasons such as changing economic policies and global dynamics.
Various conflicts in the Middle East have also been hindrances, which are made more complicated by the global recession due to the COVID-19 pandemic, the US-China trade war, and various conflicts that continue in the Middle East. Such dynamics could result in the falling of oil prices and an economic recession.
Nonetheless, in the midst of these hindrances, Indonesia and the Middle East actually have many potentials to strengthen their cooperation further.
Indonesia’s geographical position as Southeast Asia’s biggest economy and a G-20 member can become an alluring place for investments for Middle East countries.
Meanwhile, with a population of over 250 million, Indonesia is a very crucial market for Middle Eastern exports. As prospects appear to be generally positive, both should take efforts to strengthen economic ties, including the creation of free trade agreements.
Moreover, Indonesia could also be viewed by the Middle Eastern countries as a large potential market for their petroleum exports. With petroleum demand tumbling following the COVID-19 pandemic and the prospects remaining grim for the majority of the developed world, the oil-producing Middle Eastern states have turned their attention toward a growing Asia, which is now of the world’s fastest growing energy market. Once a major oil exporter, Indonesia now consumes as much as energy as it produces. As the region holds the world’s largest oil and gas reserves, the Middle East could be the major suppliers of Indonesia’s increasing demand of energy.
Besides economic cooperation, Indonesia’s strategic location also offers the Middle Eastern governments an opening to strengthen their presence in the region. Indonesia can serve as a hub to expand themselves politically and economically in Asia and the Pacific. With no sign to an end to the instability in the Middle East, it should be no surprise that some regional countries see Southeast Asia as a prudent alternative.
At the same time, for Indonesia, the Middle East could be a large market and investments.
The ties could also be facilitated by a shared stance on several issues, such as the ongoing Syrian conflict and the Palestinian cause.
Indonesia could also be considered as a potential partner for mediating some of the ongoing conflicts in the Middle East. As there have never been direct conflicts or issues between Indonesia and the regional countries, Indonesia could thus be well placed for involvement in conflict mediation in the region.
As such, the UAE’s growing ties with Indonesia could be an opening for Indonesia and the Middle East to realize each others’ importance and strengthen ties between the two regions.
*Muhammad Zulfikar Rakhmat is a senior lecturer at Universitas Islam Indonesia, and M. Habib Pashya, a student at Universitas Islam Indonesia.