Connect with us

SOUTHEAST ASIA

Luhut a Man With The Plan For a Richer Indonesia

Published

on

Luhut Binsar Panjaitan. Antara Photo

Retired general turned businessman and politician, Coordinating Minister for Maritime Affairs and Investment Luhut Panjaitan may cut a controversial profile, but he is single-minded in his determination to use Indonesia’s vast natural resources to make the country part of the global supply chain.

Brushing aside widespread skepticism and the inevitable sniping about his own personal interests, the man often referred to as the “minister of anything” knows he has only the four years left in President Joko Widodo’s tenure to lay the foundation for that goal before he steps away from public life.

“One day this country is going to be very powerful,” he told the Asia Times in an extended interview, an impressive team of young professionals sitting around him at a long office table. “In ten to 15 years, Indonesia will be a very different place.”

Most analysts agree the 73-year-old Panjaitan has always possessed the ambition, drive and clout to be the nation’s president. But as a Christian, the straight-talking Sumatran batak was never going to rise to Muslim-majority Indonesia’s highest office.

Instead, he has become Widodo’s right-hand man with a bewildering array of jobs, ranging from senior political adviser to point man for Chinese investment and now the chief strategist in tackling the coronavirus pandemic that has so far claimed over 7,800 lives.

More than anything, Panjaitan’s weapon is the 2009 Mining Law, which in banning the export of unprocessed and semi-processed ore aims to boost smelting capacity and add value in a way he hopes will transform the face of Indonesia.

When it comes to nickel, the policy has been a profound success. Starting during the previous Susilo Bambang Yudhoyono presidency, Chinese companies have so far invested more than US$11 billion in three smelter complexes at Morawali and Konawe, on the east coast of Sulawesi, and at Weda Bay, on the main Moluccan island of Halmahera.

The two eastern Indonesian islands contain most of Indonesia’s 21 million tons of nickel reserves, the largest in the world ahead of Australia, Brazil, Russia, New Caledonia, Cuba and the Philippines.

Tied to that is Panjaitan’s dream of establishing an electric vehicle industry, with South Korea car manufacturer Hyundai as an initial $1.5 billion investor and LG Chemical interested in building an associated lithium battery plant on the same site near Jakarta.

One of the motivations is the European Union’s intention to phase out diesel and petrol cars, in some countries as early as 2030. Indonesia may be a lot further off, but it has recently issued new regulations on electric vehicles that will allow them to be sold on the domestic market.

China’s Tsingshan Steel plans a second lithium battery plant at its $2.2 billion Weda Bay Industrial Park processing complex, which Panjaitan now insists will also be the home of PT Freeport Indonesia’s (PTFI) long-delayed second copper smelter.

With Panjaitan indicating the Chinese have agreed to build and operate the plant, it will relieve the government and Phoenix-based minority partner Freeport McMoRan Copper & Gold (FCX) of the financial burden of running an operation that is estimated to lose $10 billion over the next 20 years.

The technical logic is twofold. Not only will the smelter provide Tsingshan’s Weda Bay processor with the large supplies of sulphuric acid it requires, but it will also serve as a ready source of copper cathode, which can be turned into the wiring and other components needed for the electric car venture.

Although the Gresik smelter has not drawn any ancillary industry apart from a fertilizer plant in the 20 years it has been in operation, Panjaitan is confident that overseas investors, particularly Chinese companies anxious to move offshore, will be attracted to the complex.

Indonesia has 80% of the elements needed for lithium battery production, including cobalt, manganese, aluminum and even rare earth elements. But also on the horizon is a recycling plant at Halmahera that will eventually remove the need for new minerals in the production process.

Tsingshan and French partner Eramet, which brings its mining expertise to the partnership, began producing low-grade ferronickel for the world’s stainless steel market earlier this year. Its four production lines are expected to turn out 33,000 tons of ferroalloy a year.

At the $7.8 billion Morawali complex, Tsingshan and Indonesian partner PT Bintang Delepan operate a three million ton a year nickel pig iron smelter, a 500,000-ton carbon steel facility, soon to expand to 3.5 million tons, and a 600,000-ton high-carbon ferrochrome plant.

Further down the coast, in Southeast Sulawesi, China’s Virtue Dragon Nickel Industry last year completed the $1.4 billion first stage of its three-phase Konawe complex, which will eventually have a production capacity of three million tons of ferronickel a year and employ as many as 3,000 local workers.

Panjaitan, who has a testy relationship with the parent company, had always insisted that Freeport build the new $2.8 billion facility near the country’s sole, Mitsubishi-run copper smelter at Gresik on the East Java coast, where $130 million has already been spent on site preparation.

But circumstances have changed. First, it was the government’s acquisition last year of a 51% stake in the Indonesian subsidiary, in exchange for an extension to FCX’s contract until 2041. Now the Covid-19 pandemic has put state finances under pressure and raised questions about spending priorities.

Unlike nickel, copper refining is a notoriously marginal business, particularly when the final process of turning concentrate into copper cathode adds only 5% to the value.

Officials argue that a smelting hub in Halmahera will create cost-saving synergy, both in construction and operation. But doubts remain. “The only fly in the ointment is the economics,” says one mining executive. “It sounds viable, but there is also a danger that it may turn out to be a white elephant.”

Meanwhile, Panjaitan has forged a burgeoning relationship with Australian iron ore magnate Andrew Forrest, who has been a frequent visitor to Jakarta to discuss his possible involvement in major hydro-electric projects on North Kalimantan’s Kayan River and on the Mamberamo River in Papua.

After meeting with President Widodo on September 4, Panjaitan and Forrest signed an initial letter of intent to work on the joint development of what it called “new and renewable energy to support an environmentally friendly industry” without mentioning any specific projects.

Planned as the source of energy for a series of aluminum-manufacturing clusters on the bauxite-rich island, the $17.8 billion, 9,000MW Kayan River venture is currently part of China’s Belt & Road initiative. But Panjaitan says that does not preclude other participants.

A renewable energy advocate, Forrest’s most recent visit to Indonesia involved a stopover in Papua New Guinea (PNG), where he signed an agreement to revive the $5 billion, 2,500MW Purari River hydro-electric project, northwest of Port Moresby, which has been stalled for years.

The billionaire’s interest in PNG has aroused speculation that he may be looking at Bougainville’s giant Panguna copper mine, which has been closed since the 1989 civil war. Analysts note that Bougainville is only 3,000 kilometers away from the Weda Bay facility.

Although Bougainville’s status as an autonomous region of PNG remains in question, a team from Forrest’s Fortescue Metals Group inspected the mine last year. Analysts say it would be no surprise that the firm would be interested in a copper asset as it looks to diversify.

Interestingly, that already includes lithium battery production. Fortescue has been exploring for lithium in the vast Pilbara region of West Australia since last year, but the Australian Financial Review reports it has left the door open to buying into an established lithium project.

“I think everyone has realised that this is a once in a generational shift in natural resources that are going to underpin what happens in the electric vehicle market,” Martin Donahue, managing director of lithium company Kidman Resources, told Fairfax Media in a 2017 interview.

Panjaitan says his vision of Indonesia becoming an industrialized nation crystallized when he was trade minister in the short-lived government of Muslim cleric Abdurrahman Wahid in 2000 to 2001. “Now I’ve got the opportunity,” he says, “I’m just carrying on with it.”

It is easy to be impressed by his grasp of the subject matter and the enthusiasm he brings to the job. “I’m just the one who says yes and no,” he explains. But after sitting in on one of the seven or eight Zoom meetings he has each day, it is clear he knows the right questions to ask.

Panjaitan focused on a business career during the presidencies of Megawati Sukarnoputri and Yudhoyono. In 2004, he founded his own company, PT Toba Sejahtra, with interests in oil and gas, coal, electricity generation and agriculture, mostly in Kalimantan and Sumatra.

It was as the owner of a Kalimantan timber concession — and his daughter’s insistence that he refrain from wastefully using the wood for pulp and paper — that bought him into contact with Widodo, then a little known Solo, Central Java furniture maker.

Over the last six years, he has become the president’s most trusted adviser. Initially, it was on political issues, but since becoming minister of the revamped Coordinating Ministry of Maritime Affairs and Investment in 2016, he has become increasingly involved in natural resources policy.

Asked about persistent claims that he is using his powerful position to win benefits for himself, Panjaitan takes the question in his stride: “At my age and as a retired general, I have everything,” he says. “Enough is enough. I don’t dream of having more than what I have now. In Indonesia today, you can’t hide anything. (Asia Times)

Advertisement
Click to comment

SOUTHEAST ASIA

Hun Sen’s labor sop will cost Cambodian industry

Published

on

Cambodian Prime Minister Hun Sen’s political move to hike the minimum wage for textile and footwear workers threatens to undermine the crucial industries, which combined account for two-thirds of the nation’s exports.

Under the executive order, announced last week, garment and footwear factory workers’ minimum wages will increase around US$2 to $192 per month beginning January 1, 2021.

Employer groups that have argued for wage reductions for next year say that this additional burden could make the sector even more uncompetitive and hinder recovery amid the pandemic-induced economic crisis.

Almost a quarter of Cambodia’s workers have been laid off since the pandemic began and after the European Union partially knocked Cambodia from a privileged tariff-free trade scheme, known as Everything But Arms (EBA), in reprisal for Hun Sen’s democratic backsliding.

The National Council for Minimum Wage, a tripartite body composed of representatives from the government, trade unions and employer groups, meets annually to discuss minimum wage increases. But it couldn’t reach an agreement for what the basic salary should be in 2021 after weeks of debate.

Most industries in Cambodia have no set minimum wage, but the salary of textile workers tends to be the highest.

Trade union representatives went into this year’s discussions demanding a wage hike of $11.59 for next year, which they say is a necessity given the ever-increasing cost of living in Cambodia. Employer groups, which had tried to have these discussions postponed by a year, demanded a $17 cut.

There are conflicting reports as to why Hun Sen intervened. One claim is that the National Council for Minimum Wage simply couldn’t agree on a figure so turned the decision over to his government to settle the impasse.

Another suggestion is that the council agreed to keep wages the same for next year, only for the prime minister to then intervene with his raise.

This isn’t out of character for the national leader. In 2014, 2015 and 2018, Hun Sen added a few dollars to higher minimum wages that his ministers had previously agreed.

While unions and business groups have tacitly accepted the decision of Cambodia’s strongman leader, who has been in power since 1985, neither side are pleased with an outcome that appears to most benefit the government.

Hun Sen is keen to maintain some calm in a country that has seen escalating youth-led protests in recent months, especially after the arrest of prominent trade unionist Rong Chhun in July. Placating garment workers with even a limited wage bump is the other side of the coin to his government’s violent crackdown on these latest protests.

It was also a populist measure by Hun Sen who has been keen in recent years to woo garment workers, who in the past typically voted for the now-banned Cambodia National Rescue Party (CNRP), the largest opposition party until its forced dissolution in late 2017.

A promise to boost the minimum wage was key to the CNRP’s campaign ahead of the 2013 general election, at which it won 44% of the popular vote. Afterward, this policy was immediately appropriated by Hun Sen’s ruling Cambodian People’s Party (CPP) as a way to curry favor with this part of the electorate.

The minimum wage for textile workers rose from just $80 in 2013 to $190 this year. Government propaganda circulated on social media shows images of Hun Sen being embraced by adoring garment workers, alongside the boast that Cambodia is the only country in Southeast Asia that has increased the minimum wage during the pandemic.

Core inflation reached 3.2% in June as Cambodia’s consumer price index hit a five-year high. The cost of living has increased significantly over the past five years. The price of fresh fish, for instance, rose by 11.4% in June compared to the same month last year.

Phnom Penh, home to many of the typically young, female migrants from the countryside who work in the textile factories, is now the sixth most expensive city in Southeast Asia, according to the Numbeo Current Cost of Living Index. It ranked fourth last year.

It is estimated that one in five Cambodians depend on salaries earned in the textile sector, as workers send home large chunks of their wages to families back in the countryside. The considerable decline of the sector during the pandemic has contributed to rising poverty in rural areas, analysts say.

Government data claims that textile exports fell by only 5.4% in the first half of this year, compared to the same period in 2019, an official figure that has raised a few suspicious eyebrows considering the loss of certain tariff-free trade privileges in the EU.

The government also asserts that only 50,000 jobs have been affected by the pandemic-induced economic crisis. But the Garment Manufacturers of Cambodia (GMAC), the main industry body, puts the number of job losses at 150,000, out of around 700,000 pre-pandemic.

In February, Hun Sen promised that furloughed textile workers would receive 60% of the minimum wage, or roughly $114 per month, with the majority being paid for by the state and the rest by employers.

Two months later, however, the leader reduced the amount to just $70 per month. It remains unclear whether Phnom Penh caved to demands from employers for the original sum to be reduced or, more likely, the government realized it didn’t have the funds to make the payments over a medium or long-term period.

Most years, employer groups have gone into minimum wage discussions with the goal of keeping salary hikes as low as possible. Seldom, however, have they demanded a cut in minimum wages, as they did this year.

Textile factory owners contend that the minimum wage is something of a red-herring, as most workers receive more than the basic salary.  Employers must also pay overtime bonuses, a $7 monthly accommodation allowance, good attendance add-ons, and seniority payments for long-serving staff.

It is thought that these bonuses, on average, cost employers an additional $15 per month per worker.

Phnom Penh has put a positive spin on the minimum wage hike. “The raise is also a message to attract more investment and new factories to Cambodia,” Labor Minister Ith Sam Heng told local media.

Yet it is difficult to see how the move to increase costs would necessarily attract new investors. Indeed, if the textile sector is to recover to near pre-pandemic levels it will need substantial investment in the coming years, mostly from overseas.

Some of the factories barely surviving at present are expected to collapse once state bailout funds are withdrawn. Others will need to raise working capital to pay for operations and wages, since earnings from exports are rarely paid up-front.

A recent GMAC survey found that only 35% of factories have enough orders until the end of the year, while quarter 25% reported having no orders until the end of 2020, the Southeast Asia Globe reported last month.

To raise the necessary investment, Cambodia’s textile sector will need to show it remains competitive against its more developed and higher-end rival producers in Thailand and Vietnam.

Not only has the pandemic significantly reduced demand from Western buyers for Cambodia-made textiles, the country also recently lost many of its trade privileges with the EU, traditionally its largest textile market. Last year, the EU purchased the majority of Cambodia’s textile exports.

In August, tariffs were slapped on one-fifth of Cambodia’s exports to the EU, including some goods from the textile sector, though it is difficult to estimate the costs of the new charges.

Kimlong Chheng, director of the Centre for Governance, Innovation and Democracy at the local Asian Vision Institute think tank, has claimed that total removal from the EBA scheme would cost Cambodia’s economy as much as $650 million each year.

Given that only a fifth of trade privileges under the EBA was cut, the cost may be around US$130 million each year.

Much depends on whether textile factory owners shoulder the additional costs of tariffs by cutting into their profits, or whether they shift the additional costs onto clients by increasing prices, making Cambodia’s textile exports less competitive.

Now, factory owners must also find additional money for higher wages. If the textile sector was to recover to near full employment next year, representing around 750,000 workers, the minimum wage hike will cost employers an additional $1.5 million each month, or $18 million annually.

For years, analysts and industry insiders have warned that Cambodia’s textile sector was losing its competitive edge vis-a-vis neighbors.

Vietnam, now a Southeast Asian powerhouse for manufacturing exports, boasts far higher standards of transport infrastructure, a more productive workforce and easier export capabilities for business owners.

Cambodia’s minimum wage was already higher than its more productive neighbors, which in comparison have avoided hefty wage hikes in recent years to maintain their competitiveness.

Wages for Thai textile workers are currently $191 per month, compared to Cambodia’s US$192 from next year. In Vietnam, where wages differ based upon location, the highest salary i$182 per month. In Laos, the minimum wage is just $88 per month.

Another reason for Cambodia’s faltering competitiveness is political unpredictability. For almost two years, textile owners and investors were left guessing whether Hun Sen’s government would loosen its political stranglehold to maintain economic benefits with the EU. He didn’t and now business owners and workers are bearing the costs.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world’s first benchmark cross sector Chinese Bond Indices. Read ATF now. 

Source link

Continue Reading

SOUTHEAST ASIA

Indonesian bill an environmental, economic disaster

Published

on

Firefighters work to extinguish a fire at a peatland forest in Payung Sekaki regency in Pekanbaru, Riau province, Sumatra, on August 2, 2019. Photo: AFP / Wahyudi

Indonesia’s  parliament is poised to pass a massive “omnibus bill” stimulus package by early October to help offset the economic damage incurred by the Covid-19 pandemic. Unfortunately, that package currently contains provisions that will allow unbridled deforestation that will both harm the environment and sabotage the bill’s economic growth potential.

The omnibus bill involves the insertion of 174 new articles into 79 existing laws governing areas including taxation, labor, investment and the environment. President Joko “Jokowi” Widodo’s government has pitched the bill as an essential job-creation tool designed to streamline business-unfriendly bureaucratic processes in order to boost investment.

However, some of the bill’s provisions would also directly increase the risk of massive deforestation by eliminating existing legal protections for primary forest cover.

Specifically, the bill would loosen requirements for environmental impact assessments for industrial and agribusiness projects and empower the central government to approve business and investment in officially designated forest and peatland areas, which are currently protected by a deforestation moratorium.

The bill also eliminates the legal requirement that provinces maintain a minimum forest cover of 30% on provincial land by allowing them to set such standards “proportionately.”

And it includes a provision that could increase the regional risk of catastrophic haze from plantation fires by lifting the existing strict legal liability for companies with fires occurring on their concession areas.

According to an analysis by the Indonesian non-governmental organization Madani of these provisions, their potential impacts are nothing less than catastrophic. The NGO warns that the omnibus bill if passed in its current form could lead to the complete destruction of natural forest cover in the provinces of Riau, Jambi, South Sumatra, Bangka Belitung and Central Java over the next two to three decades.

This assessment is reinforced by a public letter sent to domestic and international financiers by a coalition of Indonesian civil-society and environmental NGOs. They warned that the result of the bill’s passage will be that “Indonesian​​ current laws and regulations will no longer​​ comply​​ with​​ globally accepted​​ environmental and social safeguards.”

These concerns aren’t limited to environmental organizations. In July, the World Bank’s Indonesia and Timor Leste country director, Satu Kahkonen, criticized the bill by warning that in its present form it “is basically not helping Indonesia” because it will “move Indonesia’s environmental legislation further away from the implementation of best practices.”

Tragically, the severe environmental consequences of the omnibus bill will also directly undermine its stated intention of economic stimulus and job creation. That’s because the environmental harms wrought by the bill will harm Indonesia’s  attractiveness as an investment destination and exporter. That will in effect reverse recent hard-won progress by the Indonesian government and the private sector in reducing widespread deforestation and destruction of peat lands.

One of the sectors that have the most to lose from the omnibus bill’s pro-deforestation elements is the palm-oil industry. The sector – whose exports constitute more than 2% of Indonesia’s annual gross domestic product – has made strides in recent years to shake its well-earned reputation as a major driver of forest destruction by implementing “No Deforestation, No Peatland, No Exploitation” (NDPE) policies.

Those policies, in tandem with Indonesian government initiatives, including the enactment in August 2019 of a permanent moratorium on forest clearing for timber and plantation development, helped reduce deforestation in Indonesia in 2019 to its lowest levels in almost two decades.

But rather than decrying the omnibus bill’s pro-deforestation elements, Indonesia’s palm-oil sector has instead taken a position of complicit silence.

The glaring exception to this has been Astra Agro Lestari, a subsidiary of the British conglomerate Jardine Matheson. Astra Agro Lestari, Indonesia’s second-largest palm-oil producer, has significant influence within both the palm-oil sector and the Indonesian government through Joko Supriyono, Astra’s vice-resident director and chairman of the Indonesian Palm Oil Producers Association (GAPKI).

Despite Astra’s adoption in 2015 of an NDPE policy, in February this year, Supriyono expressed unqualified support for the deeply flawed omnibus bill as “a solution to the complexity of licensing in the palm-oil sector.” He described GAPKI’s support for the bill as essential to “the interests of the national palm-oil sector.”

That stance suggests willful blindness to the damage that the omnibus bill poses to the palm-oil industry, both domestically and internationally. Major palm-oil importers including the European Union and United Kingdom are considering increasingly stringent environmental standards for agricultural imports, including palm oil. Those standards, if enacted, will in effect block any Indonesian agricultural exports linked to deforestation that this omnibus bill, in its current form, would fuel.

The Indonesian government and its palm-oil industry have a choice. They can allow the passage of an omnibus bill that will worsen deforestation and undermine economic growth by discouraging foreign investment and stigmatizing key agricultural exports, or delay the bill’s passage and allow for meaningful public consultation on its environmentally harmful provisions to help ensure that economic stimulus measures are built on a foundation of environmental sustainability rather than destruction.

With the Indonesian parliament expected to approve the bill within weeks, President Widodo, legislators and the private sector need to move urgently to address the bill’s flaws before it’s too late.

Phelim Kine is the senior director for Asia at the environmental campaign organization Mighty Earth and a former deputy director in Human Rights Watch’s Asia Division. He is also an adjunct professor in the Roosevelt House Public Policy Institute at Hunter College in New York. – ATIMES

 

 

Continue Reading

SOUTHEAST ASIA

China, Indonesia Sea Dispute Hot and Getting Hotter

Published

on

Security ship crew members of the Ministry of Maritime Affairs and Fisheries prepare for a patrol along Indonesia’s exclusive economic zone in the Natuna Islands. Credit. Ulet Ifansasti/Getty Images

Chinese Coast Guard (CCG) cutter 5204 has become such a familiar sight inside and on the fringes of Indonesia’s 200-nautical-mile Economic Exclusion Zone (EEZ) that it is now suspected of trying to stake out the limits of Beijing’s nine-dotted line of historically claimed sovereignty over the South China Sea.

The Indonesian government issued a formal protest to Chinese ambassador Xiao Qian over the latest intrusion on September 12, in which the Indonesian Maritime Security Agency (BAKAMLA) said the Chinese used the specific term “nine-dash line” in radio messages with an Indonesian patrol vessel.

While China recognizes Indonesian sovereignty over its northernmost Natuna archipelago, it has always refused to provide the exact coordinates of the nine-dash line, a broad tongue-shaped swathe of the South China Sea extending into the North Natuna Sea.

The latest incident suggests that Jakarta may sooner or later have to confront the fact that China is now seeking to lay down markers in claiming traditional fishing rights inside Indonesian waters in a clear breach of the 1982 United Nations Convention on the Law of the Sea (UNCLOS).

“In many locations, the CCG/People’s Liberation Army (PLA) Navy are trying to normalize the presence of their ships and then eventually move into enforcing their fishing rights and the nine-dash line,” says one naval analyst who requested anonymity.

Although not included among ships listed in the CCG fleet, 5204 is a 2,700-ton Zhaojun-Class cutter which normally plies between the Chinese-occupied Spratly islands and the Vanguard Bank, the westernmost reef of the disputed island group known for its oil and gas reserves.

Natuna Sea

Last January, it was also one of three Chinese cutters which intruded 100 kilometers into Indonesian waters in a large-scale incursion that caused Indonesia to scramble F-16 jets from Pekanbaru, southern Sumatra, and dispatch eight naval vessels to the scene.

Since then, the cutter is believed to have made several other intrusions after switching off its automatic identification system (AIS) for up to 36 hours as it ventured close to the maritime border, which lies about 70 kilometers south of Vanguard Bank.

The difference this time is it kept its transponder activated, which as the analyst explained, “means they want you to know.” It also took two days to return to international waters after it was intercepted by an Indonesian patrol vessel.

In its most forthright statement so far, Chinese Foreign Ministry spokesman told reporters at the height of the January stand-off: “Whether the Indonesian side accepts it or not, nothing will change the fact that China has rights and interests over the relevant waters.”

Pompeo told last week’s East Asia Foreign Ministers summit that Beijing had no respect for democracy in the region and called on the region’s nations to fight Chinese domination and cut business ties with Chinese companies with interests in the South China Sea.

Speaking at the same online meeting, Chinese Foreign Minister Wang Yi denied that Beijing claimed all the waters within the nine-dash line as internal and territorial waters, calling it a “deliberate confusion of concepts and a distortion of China’s position.”

China’s Foreign Minister Wang Yi (C on screen) addresses counterparts from the Association of Southeast Asian Nations (ASEAN) countries in a live video conference during the ASEAN-CHINA Ministerial Meeting, held online due to the COVID-19 novel coronavirus pandemic, in Hanoi on September 9, 2020. (Photo by Nhac NGUYEN/AFP)

But he prefaced his statement by asserting that China has “sufficient historical and legal basis for its sovereignty and sovereign rights over the South China Sea,” claiming that under UNCLOS the “historic rights of countries should be respected.”

Four years ago, in a case brought by the Philippine government, an arbitral tribunal convened under a provision in the UNCLOS ruled that China has no legal basis to claim historic rights within its nine-dash line. Beijing rejected the ruling, which lacked an enforcement mechanism.

One noteworthy development was Wang’s support for “actively advancing” the long-delayed maritime Code of Conduct with the Association of Southeast Asian Nations (ASEAN), which aims to prevent armed clashes in the South China Sea.

“China persists in advocating ‘shelving disputes and developing together’ and is willing to pay attention to the energy needs of coastal countries under this framework and seek win-win and multi-win results,” he said.

Indonesian Foreign Minister Retno Marsudi used the East Asian conference to warn the US and China, as she has previously,  not to involve Indonesia and its Southeast Asian neighbors in their competition in the South China Sea.

Coordinating Minister for Political Legal and Security Affairs Mahfud MD has said Indonesia will never be drawn into negotiations over its sovereign rights to waters north of the Natuna archipelago, which is part of the country’s Riau province.

Indonesian President Joko Widodo aboard a naval vessel in a file photo. Photo: Twitter/Presidential Handout

Marsudi and other senior officials also continue to insist there is no overlapping jurisdictions with China and that Indonesia has never recognized the nine-dash line, which first appeared in a map published by the Republic of China in 1947.

The Pekanbaru-based F-16s now conduct regular patrols over the Natunas. So do Boeing 737 and CN-235 maritime reconnaissance aircraft, flying out of Makassar in South Sulawesi, and a squadron of Israeli-made drones based in West Kalimantan. ATIMES


Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world’s first benchmark cross sector Chinese Bond Indices. Read ATF now. 

Continue Reading

Recent Posts

Advertisement
Advertisement

Popular