Keyword

Faisal Basri is one of Indonesia’s pre-eminent senior economists, in addition to being an academic, former politician, and a founding member of Indonesia’s National Mandate Party (Partai Amanat National). He has served as Commissioner of Indonesia’s Competition Agency (Komisi Pengawas Persaingan Usaha), economics advisor to President Abdurrahman Wahid, Chairman of the Institute for Economic and Social Research, Education and Information at Indonesia’s Chamber of Commerce, and Chairman of the Oil and Gas Governance Reform Team.

Could you [first] tell me a bit about your work and professional experience?

I’ve spent almost all of my career on campus, teaching and researching, since 1981. I’ve been teaching since I was a student. Then, on campus, I became Director of the Institute for Economic and Social Research (Lembaga Penyelidikan Ekonomi dan Masyarakat), and then, Chairman of the Department of Economics on campus. After that, I entered politics, where I took part in the establishment of the National Mandate Party (Partai Amanat Nasional, PAN) and became its secretary-general. But I only lasted two years—it wasn’t for me. So, I returned to campus to teach and continue my research. Then, I became Commissioner of the Indonesian Competition Agency, or Komisi Pengawas Persaingan Usaha (KPPU)—I was there for six years. Then, I became director at a private higher education institute, then a few other things: I was a presidential advisor during the Gus Dur (Abdurrahman Wahid) era, assistant president of economics. Then, I was at the Indonesian Chamber of Commerce (Kadin), where I became the chairman of Kadin’s Research Institute called LP3ES (Lembaga Penelitian, Pendidikan dan Penerangan Ekonomi dan Sosial). Then, I was appointed chairman of the Oil and Gas Governance Reform Team (Tim Reformasi Tata Kelola Minyak dan Gas Bumi, Tim Anti-Mafia Migas). And a few other things. That’s more or less a general picture.

Are you still teaching at the University of Indonesia?

I retired because I returned to PAN so that I could run for governor of Jakarta as an independent candidate, along with Jokowi [in 2012].

So, from all your professional experience, what have you learned or discovered, or what do you know, about the Indonesia–China relationship, particularly in terms of the economic and the political?

Coincidentally, my undergraduate studies focused on international economics and, of course, international economic relations: trade; investment; then regionalism—I studied ASEAN (Association of Southeast Asian Nations). My undergraduate thesis was on ASEAN. And then I advanced my research, looking at international trade, international economics, because there was little focus at the Institute of Public Education (Lembaga Pendidikan Masyarakat, LPM), which concentrated on international economics at the time. So, if there was a research project from the Ministry of Foreign Affairs, or from one of several institutions with an international connection, I was always involved, including in projects on China. I also taught at the Faculty of Social and Political Sciences at the University of Indonesia (FISIP UI), in the International Relations Department. Currently, we have a project from the Foreign Affairs Ministry on the Indonesia–China relationship. But my focus isn’t China—it’s international relations.

But from what you know, do you perhaps have an opinion on the impact of the One Belt, One Road initiative on Indonesia. I’m somewhat confused as to why [President] Jokowi and [Coordinating Minister of Investment and Maritime Affairs] Luhut have favoured China over Japan, for example. So, it’s clear that Indonesia really needs new infrastructure, but if, for example, we look at the Mass Rapid Transit (MRT) in Jakarta, it was built by Japan. It was high-quality and everything arrived on schedule. If we look to the Jakarta-Bandung fast-train, however, it’s a mess. And I know, maybe last month, you were interviewed about the fast-train, and from the beginning the budget agreed to by Indonesia and China was around $5 billion, and now it’s already blown out to $8 billion, maybe more, who knows? So, that’s what I was hoping to discuss with you. Why do you think Indonesia has opted to go with China over Japan in terms of the construction of infrastructure—and is there, perhaps, something else going on in the background?

OK, so firstly, I happened to meet with Luhut at his house, so I can share this with you in greater depth. I was invited to his house, and I was happy to attend. Then, in relation to the fast-train, I also recently met with Deputy Minister of State-Owned Enterprises, Kartiko (Kartika Wirjoatmodjo). He was the one who restructured the finances. So, I know first-hand why they went with China over Japan. Initially, the proposal was drafted by JICA (Japan International Cooperation Agency). Then, there was also a proposal from China, which used the same consultant, so things already looked suspicious. Ultimately, China was chosen. Why was China chosen? Because China didn’t require a government guarantee (jaminan negara), so it was pure business-to-business. It’s not pure at all—at all—but [it was] business-to-business. Japan requested [of Indonesia] a government guarantee, so it would set the government’s mind at ease. So, the question is—[and bear in mind] I didn’t talk with the Japanese, but I analysed things based on my experiences with Japan, because I used to have routine meetings with the Deputy Japanese Ambassador in Indonesia [some] 15 years ago. He told me that Japan had proposed a Jakarta-Surabaya railway—via Cirebon, via Semarang. It was really good, in terms of distance and a raft of other things. But the Indonesian government, for some reason, insisted on Jakarta-Bandung. So, the Japanese also worked on that, but in their eyes, Jakarta-Bandung wasn’t feasible. Therefore, they didn’t want a business-to-business arrangement—they only wanted to finance the project and to provide technical assistance.

According to Luhut and Kartiko, Japan was stubborn, while China was more flexible, so China was chosen. But I think, if we start from the beginning, the project itself wasn’t feasible, which explains why Japan wasn’t interested and why it wanted a government guarantee. For example, if, in the middle of the project, it turned out not to be profitable, and it had to be subsidised, the Japanese government didn’t want to have to subsidise it. That was a matter for the government, so it was logical in my eyes. And Japan was only going to charge 0.2% interest; China was going to charge 2%. So, the cost of capital was more expensive—that was the first thing. Luhut also conceded that the project was problematic and that he was asked to sort it out. He said it’s actually garbage—that he had inherited garbage. They gave him garbage. Garbage. Why? Because it didn’t undergo a normal process—it was forced through by Rini Soemarno. So, Rini Soemarno, at that time, was a presidential election campaign fundraiser for Jokowi, so she had a special connection to Jokowi. All ministers attended a meeting in [Coordinating Minister for Economic Affairs] Darmin Nasution’s office and he himself, the Coordinating Minister for Economic Affairs, didn’t support the proposal. But it was Rini who forced it through, and the President agreed. So, it was a fait accompli.

At the same time, Rini was also an Indonesian government special envoy for China investment matters. You might recall or have heard that Jokowi really wanted to encourage investment, so he appointed several ministers as special envoys: Rini to China; the Minister of Energy and Mineral Resources [Sudirman Said] to the Middle East to deal with oil; then [Minister of Communications, Ignasius] Jonan to Korea, and several other ministers, which I can’t recall, but they were special envoys. Rini played a very important role at that time as special envoy to China—not only the fast-train, but other loans, 100s of which Rini herself procured. So, Rini procured a US$6 billion loan from the Development Bank of China for three state-owned banks: Bank Mandiri; BRI (Bank Rakyat Indonesia), and BNI (Bank Negara Indonesia). At the first stage, each bank received US$1 billion; at the second stage, another US$1 billion. So, $3 billion; $3 billion; [and] $6 billion [in total]. And Kartiko, the deputy minister of State-Owned Enterprises, confirmed that when I met with him last month, [while] Luhut [confirmed it to me] just last week. So, the question is, why did these officials, whom I frequently criticise, invite me to dinner? I asked myself the same question. Part of what they told me is already in the public domain. So, they also told me the bad stuff. They have to handle it together. It’s almost impossible that nothing is going on behind the scenes.

That’s more or less the background, up to when [Ignasius] Jonan didn’t take part in the [fast-train] ground-breaking, as Minister of Transportation. Ultimately, [Former Transportation Minister] Emil Salim also declared in an interview that [the high-speed rail] was an impermissible practice, and that it should belong to the Minister of Transportation. At least, the Minister of Transportation should be consulted but this didn’t happen. Consequently, inter-ministerial relations at the time were tense—that’s the first thing. Then, as I said earlier, I’ve been writing in my blog about the fast-train for the past five years. You can say that this project isn’t feasible. Worldwide, the average distance of any fast-train is 500 km, so it isn’t feasible. I have said that this fast-train is a property project, not a transportation project, because of the influence of Lippo Group. Therefore, they have a station near a big Lippo Group project, the name of which I can’t recall.Footnote 1 It’s a large property development near Karawang—a Meikarta project, a new city in Karawang. So, there’s a new station in Karawang.

Then, there’s Walini. There used to be a station there but now it’s been dropped for tourism construction or whatever. The point is, it’s a mess. At the end of the line in Bandung there is a project—at the final station, there is a large Summarecon Agung Group property project. And I met with Mochtar Riady [Indonesian financial magnate and the founder and Chairman Emeritus of Lippo Group]—he was critical of me and what I said about the fast-train not being feasible, but in front of around 500 Chinese entrepreneurs, he said it’s feasible. I gave a presentation there, then Mochtar Riady was given a right of reply to my presentation. So, it’s full of vested interests and it’s not a transportation project. There’s a lot of property involvement there and you can simply calculate—not estimate—how much profit these property kings are making. It’s because of the fast-train. At the beginning, [the fast-train project] was already poor. If an infrastructure project is lumpy, it has to be seen through till the end. It’s difficult to cancel midway through and [to do so would be] politically unsavoury. We warned them from the outset as to why it needed to be continued. Now, they want to revise it because, throughout the process, Luhut and Kartiko explained to me what the government was doing.

So, the fast-train comprised a 75% debt from the Development Bank of China, with just 25% equity. From the 25% equity—the name of the company is PT KCIC (Kereta Cepat Indonesia China)—60% of the consortium is Indonesian; 40% of the consortium is Chinese. Of that 60%, there are four state-owned enterprises—Kereta Api Indonesia (PT KAI) (25%); Jasa Marga (12%); Wijaya Karya (38%); and PTPN Perkebunan (25%), the plantation company, because it contributed Walini—Walini is a plantation area. But this state-owned enterprise—this is a big project, right?—this state-owned enterprise isn’t particularly capable. No one had deposited any capital. So, for example, Jasa Marga didn’t deposit any money, but Jasa Marga’s deposit was the leasing of elevated Jasa Marga land along the Jasa Marga toll road. Then, Walini (PTPN) contributed land. Wijaya Karya works on concrete. PT KAI also doesn’t have much money—ultimately, they didn’t contribute any capital. It fell to the state to help them—the bank decided to draw on IDR 4.33 trillion from the state budget, so it’s not business-to-business anymore. So, there is also a government guarantee, because it ultimately drew on the state budget at the same time. But that’s how it is.

I said in an interview you may have already listened to that the capital—the internal rate of return (IRR)—wouldn’t even be returned by doomsday (kiamat). I mean, in terms of the project, what is the rate of return? That return has to be greater than the interest rate. If it’s lower than the interest rate, the project isn’t feasible because it would be better to store the money in the bank and accrue interest, right? The IRR here was negative, according to my calculations. According to the government’s calculations, of course it’s feasible. There’s no way the government would have carried on, but they relied on assumptions that were beyond reason. So, the IRR could be feasible because it depends on assumptions, right? [But] those assumptions were unachievable. I’ll show you the calculations later—they’re only rough. I don’t have the document, but it is very easy to calculate. The fast-train’s capacity is 601 passengers; the fare is IDR 290,000, which I rounded off at IDR 300,000. Then, how many trips? How frequently does the train make the journey? I calculated it as 18 times per day: 18 times from Jakarta; 18 times from Bandung; 36 times. And I assumed the train would be at 100 per cent capacity—full of passengers. Unbelievable, right? Even then it wasn’t feasible with those assumptions. The project would later have investment costs, then operation costs, right? I calculated the operation costs as being higher than the daily income, so it would also lose money. Every year, state funds will have to be allocated to subsidise it, so it’s truly scandalous.

According to the OJK (Financial Services Authority) website, China has already given US$3 billion.

$6 billion. (3 × 2).

Oh, twice. Mandiri, BRI, BNI?

Without the banks requesting anything. So, here’s the money—like that. Banks normally [respond] to a request, right? This is to expand, right? And they don’t have any serious liquidity problem.

So, why do you think China was prepared to grant so much money? There’s no way Japan would have done that, is there?

Japan is tight, rigid, normal—everything is on the table; nothing happens under the table, right? Governance in the Jokowi administration is becoming increasingly poor. They work well with other states that have relationships with actors whose governance is also poor. So, they’re tuned in—that’s the key—they don’t need transparency or accountability. So, I’m often requested by the KPK (Komisi Pemberantasan Korupsi or Anti-Corruption Commission) to provide input. Last month, I attended the KPK. Then, Laode [Muhammad Syarif], the former KPK commissioner, told me that there isn’t one single corruption case related to China. If, for example, there is a transaction with China in a corruption case, or a corruptor escapes to China and their case could be resolved by the Chinese government, China doesn’t cooperate at all. [The Jokowi administration] is comfortable [with this scenario].

So, China doesn’t want to cooperate with the KPK? Of course. And if the KPK wanted to investigate a case connected to China they’d have to cooperate with China, without which it would be difficult, right?

Yes, correct, and they’ve tried over and over and never been successful. But to return to your question, why is China so easy like that? Perhaps Chinese actors are also corrupt, because even though it’s said that corrupt officials are hanged, the data show that those corruptors arrested by the Chinese government are those without close ties to Xi Jinping’s government. So, if one of Xi Jinping’s people is corrupt, they’re afforded protection.

OK—I get it because, as you said, if governance is lousy on both sides, both actors are a good fit, right?

Water and oil don’t mix, right? Only oil and oil, or water with water. Perhaps it’s natural law, right?

That’s it—natural law. So, do you think that vaccine diplomacy—because the majority of Indonesians, to my knowledge, have been vaccinated with Sinovac or Sinopharm, right?

Yes—I’ve also had Sinovac twice. I didn’t have a choice.

Yes, that’s the thing, but has it had an impact on the Indonesia–China relationship at the political level?

If you and I engage with the Indo-Pacific concept, on the Western side there’s the US, France, the United Kingdom, Japan, Australia. They wanted to exclude China, right? But the concept of the Indo-Pacific in Indonesia supports China’s inclusion. In terms of global geopolitics, Indonesia plays an important role in terms of encouraging China to enter the arena. Clearly, that’s Indonesian foreign policy. Even though what’s happened subsequently differs somewhat, Myanmar has been supported by China, and ASEAN has never been tough on Myanmar, apart from recently. China tried to approach ASEAN to invite Myanmar to an ASEAN sessional hearing, but ASEAN refused. So, I don’t know why Indonesia hasn’t supported China, or has rejected China’s diplomatic advances to include Myanmar, because Myanmar is a member, right?

But do you think there is a reason China wants to make Indonesia the Sinovac vaccine production hub of Southeast Asia?

I don’t think so.

So, it’s just because Indonesia is the largest country in Southeast Asia?

If we look at the Indonesia–China economic relationship, China is the largest destination for Indonesian exports—the largest. China is also the largest origin of Indonesian imports. For China, Indonesia isn’t the largest, but for Indonesia, China is the largest. Then, in terms of FDI, foreign direction investment, Singapore is the largest annual foreign direct investor into Indonesia. Second is Hong Kong; third is China; fourth is Japan. I forget from thereafter. The US is still a big contributor, even if, cumulatively, Japan is the biggest. From the beginning, Japan remained the largest [FDI contributor], but, in the last five years, the composition [of FDI contributors] was as I mentioned. China is very much aware that the China issue in Indonesia is very sensitive, given the number of anti-China incidents [that have occurred in Indonesia]. So, I think China tries to ensure that it isn’t seen to be dominating Indonesian FDI—that’s what the data and facts reflect. A few days ago, I met with someone from the US embassy, from their political wing—just a few days ago, in the afternoon for a coffee. He confirmed it. So, I said, ‘Actually, in Indonesia, the largest foreign investor is China. Why? Because Chinese companies enter Indonesia via Singapore and Hong Kong, in order to make it seem more diversified. It makes sense, right?’ It makes sense. And I said to this US embassy official, ‘You obviously know the data, right?’ So, he said, ‘Yes, that’s [correct].’ So, what is unique about this is that Singapore is number 1; Hong Kong is number 2; China is number 3; and investment from Singapore is huge—[around] US$7 billion [per annum]. So, it’s unique. And I am certain; very certain—not 100 per cent—but very much sure, that the greatest beneficial owners of FDI in Indonesia are from China.

The question is, why? Because China is different from the US. China doesn’t have what the US has—the US has greater self-sufficiency, right? [The US] has oil, gas, coal, a large agricultural industry. The point is that the US is not particularly reliant on other countries economically. China is not the same. China has an energy deficit. China is the second largest producer of coal, and yet it continues to import coal. America doesn’t need to import coal. [China] is truly dependent on raw materials, and Indonesia has a lot of the raw materials that China needs. Whatever that is, Indonesia has almost all of it: coal, crude palm oil, tin, nickel, a whole variety; it’s perhaps only copper that China doesn’t need.Footnote 2 The smelter was put into operation to gain access to China, and there are hundreds of thousands of hectares. Freeport has already returned land concessions to the government and, as you might know, a lot of people scrambled for these concessions, including Luhut. Luhut has mining activities in Papua, right? So, Luhut brought China into the picture later, and this is connected to geopolitics. I don’t understand why, but it’s to do with the balance of power. China and Australia are going to build nuclear submarines near Papua—it’s all about China’s response because Indonesia is too important geopolitically—[Indonesia] is the main ‘business’ in the Asia–Pacific.

I’m sure you’ll know something about this next question: do you think the proposed bilateral currency swap agreement between Indonesia and China will have a positive or negative effect? My sense is it will have a positive effect on the bilateral relationship because now, the US dollar won’t be as crucial or won’t influence Indonesia–China trade deals, but you might have a more in-depth take.

A lot of countries have bilateral currency swaps in place, not just with China. They exist within ASEAN, and with Japan too. But it’s an agreement. In practice, such a facility is rarely used. So, business-to-business, US hard currency is still used, despite such efforts. If Indonesia exports to China, China pays in yuan/renminbi. If Indonesia were to import from China, it would use the rupiah, then reconcile the difference later; for example, Indonesia in rupiah, China in renminbi, but, in reality, [that difference] is marginal. Such agreements do indeed exist.

What do you think are the main factors influencing the Indonesia–China bilateral relationship? I’m also interested in the role of business groups, former politicians, former military generals, academic circles, journalists, and family ties. From what you know, who is the most influential in terms of the bilateral relationship?

Chinese entrepreneurs in Indonesia. They’re most comfortable conducting business in the same language, the same culture, and there are still emotional ties to their ancestors. That’s the most important thing. Many entrepreneurs in Indonesia own factories in China, specifically to produce goods for the Indonesian market. In terms of those officials—generals, and the like—they call it an extractive industry; those with government concessions. In the case of nickel, it’s very easy. Indonesia has prohibited itself from exporting nickel to the rest of the world since the beginning of 2020, but I obtained data from the China Customs Administration stating that China imported US$3.4 million worth of nickel from Indonesia in 2020. And between January and August 2021, China imported 404,000 tonnes [of nickel].

Is this in any way related to what I read a few days ago, where you were quoted about the influx of Chinese foreign workers entering Indonesia? You said, ‘They’re not specialists; they’re chefs, drivers, etc.’Footnote 3 So, people are coming—notwithstanding the ongoing pandemic—they continued to enter Indonesia between January 2020 and August 2021—33,834 foreign workers entered. Do you think this is related somehow? I mean, foreign workers, the prohibition on nickel exports and the like, and how China continues to import [Indonesian nickel]?

(…)Why were there as many as 33,000 arriving at Sam Ratulangi Airport? It means they weren’t tourists; rather, they were workers sent to the areas around Sulawesi: Morowali, Konawe. I’m relying on a proxy, but my proxy makes sense, right? Workers were coming, but how? I also have information on that. They hired aeroplanes—they weren’t on regular flights; there were no regular flights from China. From [China], they hired smaller planes: Wings Air, to go to Morowali. From Morowali, they fanned out everywhere. There is no way I could obtain that manpower data—no way—but no one denied it. No one said I was stupid, muddled—not one, even up to the present moment. So, we use whatever tools are available to reveal what happened. Meanwhile, Luhut told me there were only 3,400 workers that came from China. I said, ‘Pak Luhut, you’re lying.’

And what did Luhut say?

He was silent. Then, he said: ‘Oh, Faisal – China built the factory. We don’t have anyone who could have [built] it. So, this is their turnkey for bringing in workers. After the factory is complete, they go home.’ That was Luhut’s argument to me. I said: ‘Why are there [Chinese] gardeners, Pak? Why are there [Chinese] security guards, Pak?’ And I showed him their qualifications because one of the smelter factories had an open recruitment policy in China, and I had [the relevant documents] translated into Indonesian by a sworn translator. I have all the documents in Indonesian, and it’s all there: gardeners, excavator operators, warehouse attendants, statistical experts. They had nothing to do with the factory. For example, there was a marksman. I was surprised—there’s a marksman?! No—they shoot the furnace; the kiln has to be fired upon like a gas stove, right? There has to be a special type of marksman. ‘So, there’s no problem with one of them entering Indonesia,’ I said.

Yes, if [the person] is an expert; if Indonesia doesn’t have the expertise, there’s no problem.

So, a government regulation was issued, Number 34 of this year (2021), enabling foreign workers to fill 2500 positions in Indonesia. Recruitment has been liberalised, except human resource development. Human resources can’t be filled with foreigners. So, it’s free now; it’s been legalised.

That’s related to the Law on…

[The Law on] Job Creation. It came from that.

It seems to me like there’s a lot going on behind the scenes. I’m not sure if you want to talk about what I had in mind next—I have a few other questions, but they’re all related to military and geostrategic issues.

I want to raise one point related to Indonesian sovereignty. I helped Susi [Pudjiastuti] when she became Minister [of Marine Affairs and Fisheries]. I was appointed by Susi as a task force member—it was called Task Force 115. Why 115? Because it was based on Presidential Regulation 115.Footnote 4 There, [within the task force] there were maritime specialists and the like. Coincidentally, at the time, I had just finished up with the Oil and Gas Mafia task force. Two days after I finished my time there, Susi came into my office and asked me to join Task Force 115, which I did happily. So, I went from the Oil and Gas Mafia task force to the illegal fishing mafia [task force]. At that time, Susi was very tight on state sovereignty. She monitored—there was a special monitor in her office and in the workroom displaying the movement of all vessels in Indonesia in real time. It showed the Chinese vessels—and a lot were captured. You may have heard in the news that Chinese vessels were captured, but it never happened. Chinese fishing vessels were safeguarded by their coastguard when they would enter the Natuna waters. This is my concern. This is our sovereignty. And there is a large oil and gas reserve there, and China is very aggressive in the South China Sea. I was worried we’d [be forced into a] compromise, because Susi and Luhut used to fight a lot—[they] would argue amongst themselves; cabinet meetings would become heated [with] the two ministers debating. Luhut wanted Chinese vessels to be permitted to enter.

Why? [I mean,] I know why, but [tell me].

[There’s] a lot of money there.

Exactly.

A lot of money. Before Susi became minister, there was an MOU that made provision for a quota of 2000 Chinese fishing vessels to enter Indonesian waters, officially. That’s what Susi cancelled. I heard about this first-hand from Susi and was provided with the documents. I was also provided with an office at the Ministry of Fisheries, but I never used it. I don’t usually go into the office.

In 2016, there were many Chinese incursions in the North Natuna Sea , and Jokowi, of course, made that announcement and held that cabinet meeting in the North Natuna Sea (Connelly, 2016). And I just heard that there was a Chinese warship [in the North Natuna Sea], but Jokowi didn’t say anything; there was no official government announcement (Kompas, 2021). So, this made me think there’s something suspicious going on. Why in 2016 was Jokowi quite firm, while now he didn’t say anything? Was it because when Susi was still minister, she was very popular, and Jokowi couldn’t ignore what she said. If Susi wanted to make a fuss, the majority of Indonesians would side with her? Do you agree with that assessment?

I agree. At the time, I heard it from a friend, an American. He does a lot of work in Indonesia. He submitted his research findings on the popularity of Indonesian figures [and] Susi was number one. He even asked me, ‘How could we make Susi a presidential candidate?’ It got to that point because based on that survey, Susi had a real chance. So, Susi wasn’t given another position because of her popularity; she had to be kicked out of the cabinet because she was dangerous.

Ahok was [arguably] the same. Those in Jokowi’s inner circle saw it as an opportunity to excommunicate him because they wanted to be Jokowi’s next vice president. So, from the military’s perspective, with these conflicts in the South China Sea, etcetera, do you know if there is a difference of opinion within military circles in terms of [Indonesia’s] cooperation with China?

I’m sure there is, but conditions are getting softer because Prabowo is also weak on China. I don’t know why. Prabowo never issued a statement about the Chinese warship entering [the North Natuna Sea ]. Whereas he’s the Minister of Defence. Everything’s perfect, is it? Whereas when Prabowo was campaigning for the presidency, he talked about sovereignty, etcetera, but now he’s very weak.

Why do you think that is?

As far as I know, Prabowo also has business relations with China. All of a sudden, the Indonesian government permitted the construction of two new cement factories in East Kalimantan. One of the cement factories is a joint venture with Prabowo. The other one, so I’ve heard, is with Luhut. Previously, Prabowo and Luhut managed Kiani Kertas.Footnote 5 The two of them are connected. So, it’s not the national interest, but private interests and personal interests that are destroying Indonesia. Can you imagine? Conflicts of interest make for the worst conditions in Indonesia. The deputy minister I mentioned earlier, Kartiko, is the deputy minister of State-owned Enterprises and is also now the deputy chairman of the Indonesian Chamber of Commerce (Kadin). Can you imagine? And I warned him, because he was a junior classmate of mine—I’m already old: 62 years of age; almost 20 years older than Kartiko. I said, ‘Mas Tiko, the root of corruption is conflict of interest.’ As a result, Kartiko walked away from the deputy chairmanship of Kadin because he is a representative of the government and the people, not of businessmen. But how loose. Doesn’t it make you sad? These are the worst conditions in Indonesia.

How do you think Indonesia should balance its interests vis-à-vis China and its interests vis-à-vis Western countries, such as Australia, the United States, and others?

Make it all transparent. Everything on the table and then we evaluate what is best for Indonesia. That’s one. Secondly, Indonesia’s concern is a peaceful Pacific, such that military spending is low. We don’t want to enter into an arms race. Indonesia has a lot of debt. Our income per capita is still low. If we were to [enter into such a race] and face these tensions, Indonesia’s relationship with Australia would turn sour and suspicious, right? Australia has nuclear capabilities again, [but] ASEAN has a nuclear weapon-free zone agreement. If mutual suspicions grow, arms expenditure will increase, which would be really bad for Indonesia. That’s why we want peace and stability. Indonesia plays an important role—it keeps its distance from China and the United States. Indonesia is free and active (bebas dan aktif), in accordance with our Constitution, and Indonesia is respected by all parties because of its stabilising influence. That’s my view, as a layman.

OK—that makes sense. So, what’s the best way for Indonesia to balance its cooperation with China and its cooperation with Japan?

Make everything open; put metrics in place. What does Indonesia need? What are the strong characteristics of the United States, of Japan, of China, of Korea, of Australia? We need to meet those metrics so that peace and stability are guaranteed. Our interests also need to be met. That would be a very constructive [approach]. In terms of the military, I was recently asked to deliver a lecture at Seskoad. Are you familiar with Seskoad? It’s the Army Command and Staff College (Sekolah Staf Komando Angkatan Darat) in Bandung. All generals go through Seskoad before they become generals. I was invited to deliver a lecture to 400 participants at Seskoad, some of whom were from overseas: from Papua New Guinea, from India, from Australia, although it was via Zoom. It seemed to me that this group of generals there was concerned with the China issue because of communism—the military is allergic to communism. They don’t see the progress but it’s always in the back of their minds; there’s a trauma in the military vis-à-vis China’s support of the Indonesian Communist Party. It’s still palpable.

Are there officers in the military who object to Prabowo’s response to China’s actions in the South China Sea, for example?

I’ve never heard of any. Perhaps there are but I’ve never heard of any.

Surely there are those who disagree or who would want Prabowo to be firmer with China. Wasn’t [Military Commander-in-Chief] Andika educated in the United States?

Yes.

So, is he likely to be more pro-West and pro-US?

The scenario is that he’s paired with Puan [Maharani] or something to that effect. He’s incredibly ambitious, even if, to me anyway, he lacks the necessary political capital. He’s also a liability. I don’t really see him as a promising candidate in Indonesia.

So, what do you believe are the biggest challenges for Indonesia related to the bilateral relationship? Perhaps good governance? That’s what we’ve already discussed and, as you said, [Indonesia and China are like] ‘oil to oil.’

I strongly support the research findings of Daron Acemoglu and colleagues who wrote that phenomenal work on democracy and development. What is interesting about their conclusion is that they’re political scientists and economists, collaborating together, so it’s really good—Why Nations Fail, The Narrow Corridor, and that phenomenal work on democracy and development—on causality, on relationships.Footnote 6 Because [Seymour Martin] Lipset in 1959 said development first, democracy later, right? So, we saw the emergence of USAID, AusAID, to help newly independent countries develop, so that democracy would follow. The United States didn’t care—if the regime was authoritarian, it would still help, right? Including Suharto. That’s changed now. I don’t know whether it’s influencing foreign policy, but that study says, ‘Democracy does affect growth.’ So, democracy first. In Indonesia, our democracy index score under Jokowi has continued to fall (Economist Intelligence Unit, 2020). Therefore, I feel like the most important element in the coming years is how we improve the quality of democracy in Indonesia. At least, the core of democracy is freedom of speech. This is what I’m worried about because our model is freedom of speech, right? If we can’t speak, like what I have said in public, then they prevail. This is what threatens the oligarchs; the oligarchs are unimpeded and then the relationship between the rulers and businesspeople will destroy Indonesia—destroy it. So, that’s why Indonesians have to continue to voice their concerns free from coercion, without being imprisoned. That’s why they’ve tried to muzzle us. That’s the biggest challenge. We can’t reach a point where we lose our greatest treasure, which is our freedom. It’s being repressed at the moment. After that, we have a lot of things we can do. We can make corrections; I can speak freely, but freely doesn’t mean without basis. What I mean is that people should be able to convey a concept without fear, because now that fear is everywhere. Even radical activists are scared to speak out now. And life in prison is sickening. You don’t see the sun if you’re in police headquarters. I once visited a friend at the prison at police headquarters and it was frightening. At the same time, campuses are quiet, because on campus—rectors, deans, etcetera—they are slaves to power. You should see the state the University of Indonesia is in now (thumbs down). It’s systemic. I think it’s dangerous. It’s the root of that danger.

That’s interesting because I never thought that the Indonesia–China bilateral relationship could have an impact on constitutional guarantees. It’s Article 28E(2) [that guarantees freedom of speech]. When you’ve criticised the Jokowi administration’s China policies, have you been afraid? Perhaps not that you’d be put in jail, but that you might be sanctioned or silenced by a government actor?

It’s not a problem if I’m silenced. I’ve never received anything from the government. (…) A few days ago, there were 10 people, on Sunday afternoon. We met at a restaurant at SCBD (Sudirman Central Business District) called Batik Kuring. There were alumni from IPB (Institut Pertanian Bogor, Bogor Agricultural Institute) and ITS (Institut Teknologi Sepuluh Nopember, Sepuluh Nopember Institute of Technology) Surabaya. There were also several others. They [explained that they] were concerned that I’d be poisoned. I said, ‘I don’t deny it.’ But they are concerned that someone will try to harm me. They’ve advised me to take my own water wherever I go. Indeed, I take water with me wherever I go. But when I was at Luhut’s house, I drank the tea they served, because I didn’t think Luhut would poison me. Coincidentally, when I met Luhut, he was flanked by two people: they are my former students. It was a type of guarantee—they were my witnesses. I was content. (…) When my children were young, there was a cardboard box bomb placed out the front of my house and the bomb squad had to come, but it was only a hoax because the box had cables in it, but it was empty. There was no bomb. They were essentially sending me a message telling me not to be so outspoken.

Who was it from?

I don’t know. I attended the police station. But I told you what happened to my home—it was just an empty box designed to scare me. But 1998 was definitely the most dramatic in terms of threats. I was scared. I live in a Kopassus (Army Special Force Command) area, but the most dramatic situation was when I was chairman of the oil and gas governance team—the oil and gas mafia. That was because trillions of rupiah were at stake. This money was flowing in every direction. Because what I found at the time was that almost everyone was involved. All of PDI (Partai Demokrasi Indonesia, Indonesian Democratic Party) were involved; generals; kidnappers; SBY (former president Susilo Bambang Yudhoyono) was involved, his family—all their names were there. It got to the point where Kopassus were sent to my house, but I said, ‘Later, if I receive any more threats.’ There turned out not to be anymore.

Do you have a prediction for the direction of the Indonesia–China relationship, in the short-, medium-, and long-term? Obviously, it will depend on who the next president is, but if you have any predictions, please share them with me.

In the short-term, it seems the government will be heavily reliant on China. So, because of that, China will undoubtedly be asking for something. And because neither [Indonesia nor China] are transparent, [and] governance is poor, we don’t know what concessions will be granted. We can’t hope for much. High quality investors can’t enter Indonesia now, so Indonesia is relying on China and dictator states: Qatar, Abu Dhabi, Saudi Arabia, etcetera. A few days ago, Jokowi returned to Dubai [after visiting] the United Kingdom. These countries granted Jokowi a lot of concessions and granted Indonesia billions of US dollars in investment aid. That’s why the Cikampek toll road is now called Sheikh UAE [Mohammed bin Zayed Skyway], right? We already know—it’s already transparent.

In the medium-term, I feel that, finally, this current government’s relationship with China will hit the roof and the scandals will be exposed. They will at least be scrutinised by the incoming regime and exposed. I know for a fact that the KPK is investigating the smelter case—they told me directly. So, what will happen? Now, they’re blackmailing because there’s an unholy coalition between these criminals—it’s unholy.