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Dewey Sim

The United States has a “rare” opportunity to become a key partner for Indonesia in areas such as emerging technology and digital infrastructure despite Jakarta’s close economic ties with China, a study has claimed.
But Washington needs a more ambitious and strategic form of statecraft to do so, according to the report from the Centre for a New American Security, a Washington think tank.
The researchers argued that Indonesia had become a “key front” in the US-China rivalry to shape critical digital infrastructure and ecosystems as both superpowers acknowledged the growing importance of Southeast Asia’s largest economy, with its abundant energy and mineral resources.
Beijing has cemented its position as the region’s key trading partner, including through its Belt and Road Initiative. Washington meanwhile has its Indo-Pacific Economic Framework for Prosperity, seen as a way to counter China’s growing economic clout.
While Indonesia has long pursued a policy of strategic autonomy – where the US is its preferred security partner and China is key for investment and trade – the researchers said this approach increasingly conflicted with the reality of deepening political, economic and technological ties with China.
“This may have been possible in an era of warmer Sino-US relations, but as Beijing and Washington increasingly decouple their economies – especially for sensitive technologies – this balancing act could prove untenable,” the report said.
It also spelled out how China had “shrewdly cultivated” Indonesia, including becoming the country’s largest foreign investor and seeking to position itself as the tech partner of choice.
While it would be unrealistic for the US to think it could supplant China as Indonesia’s top economic partner, “this does not mean Washington should wave the white flag” the report added, calling for a “a more focused strategy to meet Indonesia’s growing demand for diverse, resilient digital infrastructure and to secure key technological bids where US firms excel”.
The report added that the US and China were locked in a “fierce” competition to become Indonesia’s technology partner of choice as the country looked to the fast-growing sector to diversify its economy and boost growth.


It said China’s Digital Silk Road, the technological arm of the Belt and Road Initiative that was launched 10 years ago – had locked foreign firms out of Indonesia’s first-generation digital infrastructure, but the US had “powerful advantages” as Jakarta sought to modernise its digital infrastructure and economy.
In particular, the report pointed to US dominance in cloud services and artificial intelligence as offering a “rare opportunity to box out Chinese firms”.
US firms, the report argued, should focus on key policy debates and procurement decisions that would shape Indonesia’s maturing digital ecosystem as it transitioned to the age of AI – something that would “require a far more ambitious, strategic and integrated form of statecraft than Washington has typically pursued”.
It suggested seeking key public and private contracts in cloud services and advanced AI as well as ways to “leverage the power of US sanctions and incentives to erode Chinese advantages in strategic multiparty technology transactions”.
On Thursday, Hilmi Kartasasmita, a former adviser to the Indonesian presidential office, said he expected the country to continue its policy of hedging between the US and China to avoid “becoming overly reliant on any single power bloc”.
But he told an online discussion hosted by the think tank that China’s physical closeness sometimes gave it an edge over the US.
Muhammad Habib, a researcher at the Centre for Strategic and International Studies, said apart from working with the US and China, Indonesia needed to push for stronger cooperation with other middle powers.
“I think we need to think and also see the world beyond great powers,” he said.


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Although Jakarta has close economic ties with Beijing, a report says the push to boost its hi-tech economy could present openings for American firms


Although Jakarta has close economic ties with Beijing, a report says the push to boost its hi-tech economy could present openings for American firms.


Could a ‘more focused’ US gain an edge over China in contest for Indonesian tech business?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Although Jakarta has close economic ties with Beijing, a report says the push to boost its hi-tech economy could present openings for American firms

Although Jakarta has close economic ties with Beijing, a report says the push to boost its hi-tech economy could present openings for American firms