Going Strong: The US-Indonesian Partnership

Harvard International Review, Fall 2012 | Go to article overview

Going Strong: The US-Indonesian Partnership


You've referred to cultural understanding as something needed between Indonesia and the United States and that's one of your focus areas under the Comprehensive Partnership. How's it going so far?

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To build the kind of relationship that we want, we need more Americans to know more about and understand better Indonesia. And we need to overcome some perhaps misperceptions that some Indonesians have about the United States. There're a lot of ways to do that but I think a key way is more exchange programs and university partnerships. So that's where we've put a lot of emphasis. There's a lag time from the time you start to the time that you get the numbers on students. But the initial indications are certainly we've got more scholarships and more funded programs. We're certainly seeing a lot more US universities coming here and recruiting students.

Obama has visited twice. He's built on his special relationship with Indonesia. And the outcome of the visits is the Comprehensive Partnership. Could you comment more on that and any other outcomes of his two visits?

The Comprehensive Partnership that President Obama and President Yudhovono launched in November 2010 was designed to bring the two countries closer together through more government-to-government consultation and cooperation, but also trying to build more links between the societies. So there's a big focus on business promotion, on education, environment, on security, on many different areas. We announced significant new scholarships, and "funding to help Indonesia to protect its environment and reduce greenhouse gas emissions. We had an agreement for OPIC [Overseas Private Investment Corporation] to resume operations. We resumed the Peace Corps program here, which is flourishing. Last November during his visit to Bali we signed the MCC compact [Millennium Challenge Corporation compact] that will mean US$600 million from the MCC to Indonesia over the next five years to focus on environmentally friendly economic development, health and nutrition, and to improve governance. And on the security side we've seen a significant increase in military-military engagement including an agreement to transfer twenty-four F16s to Indonesia to enhance its military capabilities. So it's pretty broad range.

The United States has contributed significant funds to Indonesia and the Climate Change Center was created in 2010. How's it going on the climate change front?

Climate change is a long-term effort. We've focused on steps to help preserve the marine environment because Indonesia has got the highest marine biodiversity of any country in the world. So we think that's very important. We have a series of programs including from the USAID, the Department of Treasury, debt swap programs, as well as the MCC Compact, which is going to promote low-carbon growth. And the Climate Change Center is producing real results that are relevant to policy-makers. To be honest, there's a lot happening but it's hard to measure short-term; to say, OK as a result of this we've saved "X" amount of carbon. And this is Indonesia; these involve lots of difficult challenges of governance and law enforcement.

On the investment side, everyone is looking at Indonesia. Yet investor interest is tempered by caution as well. What do you say when asked about opportunities here?

I tell people that there are tremendous opportunities here. You can make money here. That said, I also tell them it's not easy. Indonesia scored 128 on the World Bank's 2011 "Doing Business" Index [that measures the ease of doing business in countries, with 183 as the lowest score]. That fact tells you about the challenges. You sometimes have unclear regulations. You have some uncertainty around the legal system. You have corruption. And in the last several months I think we've seen a series of regulations come out that have perhaps added to the concerns, in terms of protectionism and nationalization; challenges for investors that could undermine investment and growth in Indonesia. …

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