Pence Visits Indonesia to Discuss Trade, Reassure Asia Trump Will Remain Engaged

By Murray Hiebert —

President Joko “Jokowi” Widodo of Indonesia addresses the media following a troop inspection. Source: Global Media Sharing’s flickr photostream, used under a creative commons license.

Much of Vice President Mike Pence’s trip to northeast Asia has focused on containing North Korea’s nuclear weapons program, but when he lands in Indonesia on April 20 his attention will pivot to reassuring the rest of the Asia Pacific that the United States will remain engaged with the region. A Trump administration official briefing journalists said one of Pence’s goals would be to demonstrate that “withdrawing from TPP [Trans-Pacific Partnership] shouldn’t be seen as retreat from the region.”

Trade will no doubt be one of the top priorities for both Pence and his Indonesian counterparts when the vice president meets with President Joko Widodo (Jokowi), Vice-President Jusuf Kalla, and Indonesian and U.S. business executives. U.S. officials have said the vice president will carry with him President Donald Trump’s talking points about “how to level the playing field” in trade and investment.

Indonesian officials have been alarmed that the Trump administration targeted their economy, the largest in Southeast Asia, on a list of 16 countries to be investigated for their contribution to the large U.S. trade deficit. Although Indonesia’s trade with the United States is relatively small for the country’s size, it ran a surplus of roughly $13 billion last year thanks to large exports of textiles, footwear, seafood, and natural resources.

U.S. companies seeking to trade with or invest in Indonesia have long complained that the country is one of the most protectionist in the region. Just days before Pence’s arrival in Jakarta, the U.S. government announced that it was starting an investigation into imports of Indonesia’s biodiesel to determine whether it was being dumped and heavily subsidized. The previous U.S. administration brought a case to the World Trade Organization against Indonesia over the country’s policies on the import of horticultural and animal products, a charge that Jakarta is disputing.

Jakarta reached a temporary agreement with Freeport Indonesia — a subsidiary of U.S.-owned Freeport-McMoRan — a week before Pence’s arrival, removing from the vice president’s agenda one of the most contentious issues facing U.S. investors in Indonesia. Under the agreement, Freeport Indonesia, which had been barred from exporting copper concentrate since January, accepted an eight-month special mining license in exchange for an end to the export ban. The government had suspended copper exports as part of a strategy that would force foreign mining companies to convert existing contracts to special mining licenses that require divestment of 51 percent of their shares to local partners over the next decade. In February, Freeport had notified the government that it would seek international arbitration if no deal could be struck.

Under Jokowi’s leadership, the government has launched economic reforms, finally got moving on some badly-needed infrastructure projects, started to shift the economy from dependence on commodities toward manufactured products, and even expressed interest in joining the TPP before Washington jettisoned the 12-nation trade agreement. Indonesian officials say they would be very interested in U.S. investment in infrastructure, particularly linking the country’s key islands and boosting energy output, pharmaceutical production, seafood processing, and port management systems.

Pence will arrive in Indonesia the day after a highly polarized election between incumbent Jakarta governor Basuki Tjahaja Purnama (Ahok), an ethnic Chinese Christian, and former education minister Anies Baswedan, a Muslim intellectual. Conservative Islamic activists have campaigned actively against Ahok, citing a verse in the Koran that they interpret to prohibit the Islamic faithful from supporting non-Muslim leaders. When Ahok jokingly told a group that they were being misled by this verse, he set off large protests and is now in the midst of a blasphemy trial, delayed until after the election. Ahok, who gets high marks for his competence, has since slipped in the polls.

With Indonesia having the world’s largest Muslim population, officials will also want to get a measure from Pence about the Trump administration’s views of Islam. Indonesian officials earlier expressed concerns about Trump’s administrative measures restricting travel from six Muslim countries. Although the ban has been blocked in U.S. courts and did not directly affect Indonesia, Vice President Kalla warned earlier that it could “fuel prejudice against Muslims.”

Indonesian officials say they will want to highlight for Pence that their brand of Islam is “moderate.” They have stressed “the need to separate terrorism and Islam” and that Indonesia since the devastating terrorist bombing attack in Bali in 2002 has been “fighting radical ideology.” Even though Jakarta has long cooperated with the United States on counter-terrorism, Indonesia officials say that it would be best if the U.S. vice president did not highlight this cooperation in public. “Pence’s visit has to take us away from counter-terrorism,” says one official. “We can’t rest everything on counter-terrorism.”

U.S.-Indonesia political and security ties have come a long way since the two countries agreed to establish a “comprehensive partnership” in 2010 followed by a “strategic partnership” two years ago during Jokowi’s visit to Washington. The two countries have stepped up military exercises and Jakarta has increased military procurement, including attack helicopters, warplanes, and spare parts for transport planes. They have also promoted increased maritime security cooperation, particularly as China has stepped up its defense of fishermen detained for illegal fishing in Indonesia waters around the Natuna Islands. Indonesian officials say they would welcome more support from Washington under the Foreign Military Financing and Maritime Security Initiative programs to boost the country’s maritime domain awareness and human resource training from the U.S. Coast Guard.

In addition to his meetings with Indonesian officials and the business community, Pence is also expected to visit the secretariat of the Association of Southeast Asian Nations, or ASEAN. He will seek to reassure ASEAN, which witnessed the highest level of increased attention during the Obama administration rebalance to Asia policy, that engagement with this dynamic region remains a high priority for Washington. All 10 of the ASEAN foreign ministers are slated to visit Washington on May 4 to meet with Secretary of State Rex Tillerson.

Mr. Murray Hiebert is a senior advisor and deputy director of the Southeast Asia Program at CSIS. Follow him on twitter @MurrayHiebert1.

Murray Hiebert

Murray Hiebert

Murray Hiebert serves as senior adviser and deputy director of the Southeast Asia Program at CSIS.

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