This can result in a trade deficit, where a country’s imports exceed its exports with further implications on currency exchange rate, foreign exchange reserve and the competitiveness of domestically produced goods in international markets. Therefore, concrete efforts to balance growth in imports from China with an increase in exports of Indonesia’s key export commodities must be continuously maintained. (FIGURE-4)
So far, Indonesia’s export performance to BRICS, especially China, has been positive. China has become one of Indonesia’s top trade partners, accounting for 22.58 percent of the country’s total exports in 2022. This reflects the ongoing economic dynamics and evolving global supply and demand. Exports of Indonesian-made products to China have seen rapid growth, showing a positive trend in bilateral trade relations.
China has become a major destination for Indonesia’s agricultural commodities, minerals, timber and value-added manufactured goods. This illustrates the extent to which economic cooperation between Indonesia and China has been mutually beneficial while accommodating market needs and demands that are constantly changing.
BRICS or G7?
Indonesia, with all its potential, is able to contribute positively to global coalitions. Both BRICS and G7 have interests in Indonesia, considered as one of the major global economic powers. The two blocs have much to gain by inviting Indonesia to become one of their members. Given the opportunities and performance between BRICS and G7, the former has better performance and is able to increase Indonesia’s economic potential. However, the latter also have significant influence on Indonesia as the US is one of Indonesia’s important trade partners. Indonesia even enjoys Goods and Services Tax (GST) exemption from the US. This policy enables Indonesian products to compete with other foreign-made ones in the US.
If Indonesia seriously considers joining BRICS or other coalitions, there are some important aspects that need to be considered beforehand, as the decision can potentially have a significant impact on the economy, politics and national strategy. First and foremost, the economic aspect. Joining the BRICS or other coalitions of countries can open up broad opportunities for export, greater access to funding and stronger economic cooperation with other members. However, the impact on local industry and trade balance must be carefully assessed, to ensure that the economic benefits outweigh the risks.
Second, alignment of Indonesia’s goals and values with that of BRICS or any other coalition. This decision must conform with Indonesia’s national agenda and priorities. The effect on regional and global cooperation, especially with Asean and other neighbors, must also be carefully assessed in order to avoid disruptions in existing relations.
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Third, political and strategic implications. Joining BRICS or any other coalition can profoundly change the dynamics of international relations and Indonesia’s diplomacy. Analyzing how the membership will affect regional relations and stability to understand its longterm impact is of great importance.
In conclusion, the decision to join BRICS or any other coalition is a complex step that requires thorough analysis. The economic, political and strategic impact must be carefully evaluated by taking into account the commitment and preparation required. Consultation with experts and relevant stakeholders, as well as an in-depth understanding of its long-term impacts, should drive the decision-making process.