China Is Benchmark For Indonesia’s Economy, But There Are Concerns – OpEd
In December 2020, Indonesia’s bank, Bank Rakyat Indonesia (BRI) became the first bank to collaborate with China’s mobile and online payment, Alipay to increase the use of payment methods through the Indonesian Standard Quick Response Code (QRIS). BRI announced that it received approval from Financial Cervices Authority (OJK) and Bank Indonesia (BI) to aim and to universalize cashless payments. Thus, the BI-launched QRIS code system enables users from one payment service to transfer funds to any rival service within BI’s ecosystem.
BRI continues to strive to increase the expansion of the cashless transaction system in the community through the QRIS payment method. BRI director of consumer, Handayani asserted, “One of BRI’s efforts is to collaborate with Alipay as a provider of applications or payment instruments from abroad so that people can transact in Indonesia through QRIS BRI.”
This collaboration allows Alipay users visiting Indonesia to make payment transactions using QRIS at BRI merchants and enjoy a comfortable and smooth digital payment experience from their smartphones. Under this collaboration, BRI also partners with PT. QFPay Technology Indonesia as a support provider (system integrator) to integrate BRI into Alipay systems.
According to data from Statistics Indonesia (BPS), Chinese tourists to Indonesia from 2009 to 2019 grew significantly by around 450%, which is seen as having huge market potential related to the cooperation with Alipay even in the midst of COVID-19 has got restricted. The increasing number of tourists to Indonesia annually is expected to increase BRI’s fee-based income.
As an initial step of the collaboration, BRI will focus on penetrating Alipay’s acceptance in BRI’s work areas throughout Indonesia that is visited by many Chinese tourists, such as Bali, Batam, and Manado. Outside these areas, BRI will roll out Alipay acceptance in all BRI’s merchant networks using QRIS.
Before the effectiveness of Alipay in Indonesia, PT Bank CIMB Niaga Tbk already had cooperated with China’s online payment, Wechat Pay. The Director of CIMB Niaga Consumer, Lani Darmawan explained that to prepare machines of electronic data capture or EDC for continuing the process of payment. The same purpose with Alipay, Lani as the director, imagined EDC machines of CIMB would provide the Chinese tourists in Indonesia.
This online payment system will continue Indonesia and China’s economic cooperation. At the macro level, in August, it was reported that Indonesia’s total bilateral trade with China reached $53.5 billion in the first half of 2021, an increase of 50.3 percent compared to the same period last year. Indonesia’s exports to China were recorded at $26.2 billion, growing 51.4 percent, while the value of Indonesia’s imports from China also increased 49.3 percent to $27.3 billion.
According to the Indonesian Investment Coordinating Board that Chinese foreign direct investment (including flows from Hong Kong) rosed 11% to $8.4 billion last year. China also is the second-biggest investor in Indonesia after Singapura. Even though in the midst of COVID-19, Chinese investment can grew 9% to US$2,4 million from US$2,2 million in the first semester of 2019. As reported by the Indonesian Ambassador to China and Mongolia, Djauhari Oratmangun, on April 2021 that China already confirmed to invest US$1.38 billion in Indonesia, especially West Kalimantan (the planning of the capital of Indonesia in 2024).
On September 24, 2021, Indonesia also accepted the arrival of the vaccine Sinovac. The arrival of 78 levels of vaccines within 1 million doses and the 79 levels also the same number. Thus, with the arrival of 2 million vaccines this time, the total already present in Indonesia in the form of raw materials (bulk) and finished is 273,639,790 doses.
Those economies’ cooperation does not match with political relations between Jakarta and Beijing. In early 2020 last year, dozens of people, mostly from fisher’s associations, gathered in front of the Chinese Embassy in Jakarta. With a huge white loud-speaker truck, they screamed and protested China’s moves in the North Natuna Sea and demanded China back off the Indonesian exclusive economic zone.
These kinds of protests are not the first, for example, repression of Chinese Uyghur populations and the migration of Chinese workers to Indonesia. In 2020 the Lingkaran Survey Indonesia showed that 34 percent of Indonesians hold negative perceptions of China. This is a quite significant increase from the 2016 survey, in which the level of negative attitudes toward China was only 19 percent.
Even Indonesia has strong economic relations with China that does not mean Indonesia might lower the standard for political bargaining power. Therefore, the Indonesian government should have negotiated continuously with Beijing particularly detaining its sovereignty. The elected Indonesian President, Joko Widodo has responded to public demand with several symbolic and rhetorical acts, to show if Indonesia has an economic and political power with China.
*M Habib Pashya, a research assistant at Universitas Islam Indonesia