IO – From Rome to Jakarta, from Mario Draghi to Jokowi. The 2022 baton of the presidency has been passed on to Indonesia, in a global forum that brings together the world’s largest economies, from December 2021 until the G20 Summit, to be held in October 2022.
From a public policy perspective, the world’s trust in Indonesia must be completely covered and capitalized on so that the country may progress from being merely a successful event organizer to a global leader capable of providing solutions to the world’s most important problems.
Consisting of 19 countries plus the European Union, G20 members are the most influential countries, representing more than 85 percent of world GDP, 80 percent of global investment, 75 percent of international trade and 66 percent of the world population. In Southeast Asia, Indonesia is the only permanent member.
The country has every reason to be proud of becoming the G20 host, because 2022 is seen by many as the herald of stronger global recovery from the impact of the Covid-19 pandemic. Indonesia chose Bali as the venue and espoused the slogan “Recover Together, Recover Stronger” to reflect its optimism and resolve.
Not due to Indonesia’s Covid handling success
In truth, contrary to what many people believe, the Indonesia G20 Presidency is not an “award” for the country’s ability to rein in and recover from the pandemic. As a matter of fact, Indonesia was one of the countries with the least effective strategy for Covid-19, according to Bloomberg’s Covid Resilience Ranking, published on July 27, 2021. Indonesia was at the very bottom of the 53 countries surveyed.
It scored the lowest on the 12 data indicators, spanning virus containment, quality of healthcare, vaccination coverage, overall mortality and progress toward restarting travel and relaxation of border restrictions.
On lockdown severity, Indonesia scored 69, compared to Malaysia’s 81. On Covid-related deaths, Indonesia’s was the highest, above 1,300 people per day and the proportion of double-jabbed population was only around 36.3%, placing it in the same league as Bangladesh and the Philippines.
Tedros Adhanom Ghebreyesus, Director General of the World Health Organization (WHO) pointed to Indonesia and other African countries as exemplifying the gap in access to vaccinations between rich and poor countries. Tedros called it a “catastrophic moral failure” to provide every global citizen with equitable access to Covid-19 vaccines.
The country that ranked on the top is Norway. The Scandinavian country rose 10 places from the previous ranking, scoring 77.2. As of December 2021, Norway has successfully vaccinated 71.6 percent of its population.
G20 Presidency should become a momentum for Indonesia to improve its Covid-19 handling. The world will observe how Indonesia continues its Covid-19 measures. Thus, this is a great opportunity to prove that Indonesia is able to become the third best country in containing the devastating pandemic.
Beware of potential reputational damage
Indonesia’s Covid-19 handling must be improved, particularly in the face of threat posed by the Omicron variant which was reported in neighboring Singapore on December 5. Indonesia still seems relaxed in anticipating the “super mutant”, in contrast to Japan and Israel, which immediately closed their borders to foreign arrivals. Indonesia has only restricted arrivals from 11 countries, mostly African countries and Hong Kong.
It is feared that the window of opportunity is closing fast as Omicron spreads worldwide. Thus, the closure of airports and seaports must be carried out immediately as the measure would become useless if the new variant manages to slip into Indonesian territory.
Policymakers should act quickly and decisively to prevent Omicron from causing surge in new cases and hospitalization, especially considering that in 2022 Indonesia should see a downward trend in positive cases of any Covid-19 variant.
The failure to suppress Covid-19 cases in 2022 will badly damage the world’s trust in Indonesia and, of course, business sentiment crucial to drive economic recovery. If trust dwindles, it would be more difficult for the government to woo foreign investment to create more jobs and reduce unemployment and underemployment level.
G20 and the revival of Bali
Bali will host the upcoming G20 Summit planned in the fourth quarter. The “Island of the Gods” will witness G20 meetings at various levels, including ministerial and head of state. Many have high hope that G20 Presidency will serve as a catalyst to spur the recovery of Bali’s battered tourism sector.
As the conduct of G20 meeting is expected to be physical, this will have a positive multiplier impact on Bali’s economy and open up many job opportunities. However, the possibility of an online meeting could not be ruled out if Indonesia’s Covid-19 situation worsens in 2022 due to policymakers’ slow response in tackling Omicron.
Of course, an online G20 Summit is the least desirable as it will not generate much spillover effect to the local economy in terms of tourism revenue and real sector recovery as many hope.
A prominent forum to solve global issues
The G20 was formed in 1999 in response to the Asian financial crisis, also adversely impacting financial markets in developed countries. The initiator of the forum believed that the Asian financial crisis showed that developing countries have systemic economic influence in the global economy. This raises awareness of the need to involve developing countries in the leading forum for global governance.
G20 also responds to non-economic issues such as the 9/11 terrorist attack through a lens of economic and financial cooperation. The global financial crisis in 2008 also saw the effective response of G20 in helping the world avert the possibility of economic depression. Today, the G20 is faced with the challenge of supporting and boosting global economic recovery from pandemic doldrums, among other crucial issues.
The G20 strength lies in its relative informality and flexibility compared to other formal institutions such as the United Nations (UN), which is bound by international rules.
This enables the G20 to be more responsive in providing a consensus-based and inclusive framework for discussing solutions to global economic governance agenda. In addition, the G20 is especially known for the compliance of its members in implementing terms of agreements.
Toward Indonesia’s Global Leadership
During its presidency, Indonesia can prepare several important agendas that underpin current global issues, namely healthcare equality and inclusion, digital transformation and the transition to sustainable energy.
On the first issue, Indonesia can represent the voice of third-world countries in the issue of inclusive healthcare. The world is witnessing a deep disparity around vaccine distribution, especially between rich, vaccine-producing countries and poorer countries that lack access to vaccines. While fair access to vaccines is considered a basic human right, unfortunately not all countries are able to secure a supply for their people. On the other hand, Western countries have fully vaccinated more than 70 percent of their citizens and are even implementing a third dose (booster).
This stark disparity needs to be addressed by the G20 and should lead to commitment and consensus among G20 countries to increase vaccine access for all countries, especially the ability of developing countries to obtain affordable vaccines.
However, before raising the issue of vaccine inclusion globally, Indonesia must first lead by example on its domestic vaccination. There is still large disparity in the vaccine uptake between Java and regions outside Indonesia’s most populous island. The problem is not due to supply, but the logistical challenge involved in distributing the vaccines to remote corners and educating the public on the importance and benefits of vaccination. These challenges need to be addressed through a “structured, systematic and massive” vaccination campaign on the ground, not just talk.
Second, the Covid-19 pandemic represents momentum to foster digital transformation in various aspects, including the financial sector. While digital transformation is a necessity, many countries do not have the ability to build digital infrastructure and ecosystems because such investment is expensive. Furthermore, digital technology is controlled by developed countries such as the US, China and Russia who vie for dominance. We can see this in the US-China 5G competition. Unhealthy competition for technological superiority will only limit digital access for developing countries.
Indonesia can use its G20 presidency to advocate for global digital economy regulations, based on fair and healthy competition, as well as the capability of providing digital access to the entire global community. The world needs a global technology ecosystem that is not just fast and efficient, but also inclusive. Indonesia must be a pioneer in implementing global governance for digital technology, especially that based on 5G, big data and artificial intelligence. Global technological cohesion will lead to easier digital interaction among countries, a trend which can ultimately spur their economic growth.
Third, as for green energy transition, the global commitment to preserve the environment is still lacking amid environmental degradation that has exerted a significant impact on human life. The COP26 meeting in Glasgow a few weeks ago represented good international commitment to the environment. Indonesia, for its part, has signed a global coal to clean power transition statement at the COP26 summit, to gradually phase out coal-fired power plants by 2040.
However, the transition to green energy is a huge agenda which requires international cooperation. Indonesia has already implemented a carbon tax in the newly-passed Harmonized Tax Law (HPP). This shows that Indonesia is one of the developing countries at the forefront of tackling environmental issues.
A raft of disasters that have occurred recently in Indonesia, from flash foods to the eruption of Mount Semeru, should raise people’s awareness of environmental issues and lead to the passage of regulations that are not exploitative of the environment. Environmentalists’ criticism of Indonesia is that pro-environment policies in the country are still largely on paper, while environmental damage is occurring at an exponential rate.
Exploiting its diplomatic savviness, Indonesia should make G20 a moment of truth for world leaders, regarding the importance of more eco-friendly economic investments and how exploitation of natural resources without environmental compensation is a crime.
Of course, Indonesia also needs high economic growth. To reach the world’s five largest economies, Indonesia needs consistent GDP growth of between 7 percent to 8 percent until 2045. Some experts say that with its current economic model and structure, if Indonesia is to pursue 8 percent growth, the rate of environmental destruction will double to 16 percent every year.
Climate change has increasingly impacted human life on a more dramatic scale. The devastating wildfires that scorched California, Turkey, Australia and other countries in 2021 should be a reflection of the importance of the G20 members to work more closely together to find solutions to a threat of climate change.
If a country does not agree to reduce its carbon emission, more severe climate change impact cannot be avoided. International cooperation on climate change cannot be achieved partially and single-handedly: the world must be solid in its commitment, acting with one voice. This is where the true challenge lies.
To a greater extent, Indonesia’s economy still very much depends on commodities and primary sectors. Palm oil and coal are reliable sources of state revenue. However, given its commitment in COP26, the country must be willing to invest heavily in technology and seriously manage its human resources. The vision to make Indonesia the world’s number four economy must be accompanied by a new economic model, one driven by investment in eco-friendly technologies and innovation, instead of highly exploitative primary sector.
Great hope for the government
Indonesia needs to adopt a new paradigm in its G20 presidency. The old approach, where it was merely an event organizer, as when it hosted the IMF and World Bank meetings in 2018 needs to be changed. Even though as an event organizer it would receive many benefits, in terms of foreign exchange revenue, reputation boost and much-needed push to the tourism and real sector, it would be a waste of potential if this is solely the aim.
As a great nation, and as mandated by its Constitution, Indonesia has the duty to make a contribution to world peace; in other words, Indonesia’s contribution to humanity and the world is a sacred constitutional duty. Therefore, it must prepare the three major agenda mentioned earlier seriously. The government must engage in various diplomatic means so that the inclusion in pandemic handling, digital transformation and green energy transition are widely accepted as a mutual commitment in the G20 summit later next year.
Indonesia’s role as an active peacemaker is even more critical, as the world is witnessing rising tensions in Ukraine, the South China Sea and Taiwan, let alone the humanitarian crisis such as that of the Rohingya, the military coup in Myanmar and a migrant crisis. These are all important issues that global leaders must resolve. Therefore, Indonesia needs to be shrewd and capitalize on its role as the president of the G20 to set the agenda for world advancement and peace.
The G20 presidency is a golden opportunity for Indonesia to contribute to the recovery of a global economy that still reels from the impact of the Covid-19 pandemic. If this mandate can be carried out, the world’s trust in Indonesia will increase again, and the country will reap many benefits.
Therefore, the G20 presidency must be maximized. Being a successful event organizer is a point of pride, but leaving a lasting legacy for humanity is far more important.
Indonesia should be a catalyst in reducing current global tensions. We must not let a US-China sharper polarization disrupt and damage the global economic order. The competition between the two superpowers should not have a destructive impact on other countries’ economies.
Indonesia should be a pioneer in creating the “rules of engagement”, so US-China economic competition can become healthier, in a spirit of good will, global camaraderie and multilateralism – which thus far has been eroded.
In hosting the G20 Summit, Indonesia can learn from its success in holding the IMFWorld Bank meeting in 2018. However, Indonesia did not optimally offer existing international financial solutions then. This time, Indonesia must move up the league from being a successful event organizer to an active actor, one capable of disentangling and resolving pressing global issues. The ball is now in Indonesia’s court.