Misinterpreting diplomatic (or rather economic) dividends

A recent piece by Tantowi Yahya, a member of the House of Representatives titled “Foreign policy versus Indonesia Inc.: Time to reap diplomatic dividends” correctly exposed some of Indonesia’s past diplomatic successes that should have yielded better economic outcomes. Unfortunately his analysis failed to capture the “real” problem — reaping diplomatic, or economic, dividends from abroad requires some business maturity and the willingness to compete with the rest of the world.

Indonesia played a major role in Myanmar’s democratic transition. Myanmar was a staunch supporter of our struggle for independence. Not only did it mobilize conferences to discuss the fate of our nation back in 1947, it also went as far as allowing the “Seulawah” Dakota, RI-001, Indonesia’s first aircraft, to land in Rangoon (now Yangon) a year later as an expression of solidarity. It is only in good faith that we, the people of Indonesia, return that favor.

Back in 2013, I attended the Indonesia Myanmar Dialogue; issues of democracy, human rights, freedom of the press were intensely discussed. I sensed genuine trust building between the two peoples. Politics and economics are often intertwined, yet there is little evidence that a good political relationship necessarily leads to economic returns.

In Myanmar, the issue of economic cooperation was never neglected as it is an essential part of development. But when push came to shove, it was our own businesses that lacked interest in Myanmar. At around the same time, the opportunity to build Myanmar’s telecommunications infrastructure was up for grabs.

Indonesia lost the bid to Qatari and Norwegian telecom companies despite efforts to persuade one of our own very best to invest in Myanmar. There was sadly no interest on our side. Missed lucrative opportunities in other regions are well known not just in Myanmar, but also other regions where we have strong relationships.

Facilitating our businesses abroad is an essential part of diplomacy. But then it’s all about profits and how well you can actually produce and deliver the goods.

If doors are opened but projects do not make any business sense for one reason or another — like high transportation costs — then there is nothing one can do even with successful diplomatic maneuvering. Tantowi claims that our political investments in other countries have been exploited by other nations. But it is simply because we have not been cut out for it. We cannot match their asking price.

Yes, diplomacy opens new doors. But that does not translate into the immediate reaping of economic dividends. In a functioning democratic society it is not possible to force our businesses to invest in high-risk projects, especially when the investment involves dealing with foreign customs and rules of law. Not to mention the pressure to compete with other competitors from the rest of the world.

The reality is that Indonesian businesses are too comfortable in their own backyard. Our businesses lack incentives to go abroad. They are not to blame as profits are rising at home. Business potential is also expanding in other regions outside the major islands. This is simply the business reality.

How many Indonesian firms are globally competitive and can invest in foreign projects? Not many, and how many of our businessmen, or any of our citizens, have visited Africa (Senegal, etc.) in recent years? Figures are significantly insignificant.

Further, diplomacy cannot produce “Indonesia Inc.” as claimed by Tantowi. First, building “incorporated Indonesia” requires the ability to produce goods and services on a global scale. Demand changes rapidly. And as long as our local firms can keep up with global trends we are in business. But our manufacturing sector has declined and we are instead going back to exporting commodities. Secondly, times have changed.

In a more democratic Indonesia mobilizing businesses could be a serious challenge for our own bureaucracy.

So before we demand the reaping of greater diplomatic dividends from other nations that can help transform Indonesia to become more business-minded, one needs to first come to terms with the basics. And that is to build our own capacity, such as by honing skills, improving productivity and innovating new technologies. Paving the road toward an incorporated Indonesia must come simultaneously from the top and bottom. It is not a one-way street.

Changes do not come overnight. Diplomacy is in it for the long-haul. And that goes for both political and economic dividends that we so often demand from major parties with whom we cooperate.

I would rather put my money on fixing our capabilities at home than having to relying on diplomatic

Source: Jakarta Post

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