INTERVIEW
Indonesia seeks closer India ties to strengthen Global South role
Developing countries 'source of solution' for world problems: Finance Minister
Indonesia wants to form closer ties with India, Finance Minister Sri Mulyani Indrawati tells Nikkei Asia. (Photo by Kosuke Imamura)
NANA SHIBATA and TOMOYOSHI OSHIKIRI, Nikkei staff writers
February 14, 2023 18:30 JST
TOKYO -- Indonesia wants to strengthen ties with India to bolster the role of the Global South in world affairs, Finance Minister Sri Mulyani Indrawati said, pointing to international divides over Russia's invasion of Ukraine.
"We will work very closely with India," Indrawati told Nikkei Asia in an interview on Tuesday. "India and Indonesia [are] among a few big emerging countries who are performing very well on the economy, so that's where it (the relationship) provides us with more gravitas, more influence and more respect globally."
India -- the current G-20 chair -- in January brought together over 120 developing nations, roughly referred to as the Global South, in a special virtual summit to share concerns and challenges on a wide range of issues, including food and energy security due to the war in Ukraine. The Global South loosely refers to developing countries in Southeast Asia, Africa and Latin America.
Indrawati spoke of Indonesia's place in the world. "We played a very important role during G-20 presidency last year," she said, adding that her country showed its "ability to bridge the differences" even in difficult times, particularly when they came under pressure from G-7 nations over Russia.
Global South countries tend toward political neutrality and avoiding taking sides during conflict. Instead, they prioritize their own positions and in the case of the Ukraine war, some Global South countries have not kept pace with G-7 sanctions on Russia.
Despite the tensions, many see the G-20 Bali summit in November as a success, with the issuance of a declaration by the leaders that condemned Russia's aggression in Ukraine "in the strongest terms."
The "G-7 is admitting that they need a counterpart [from] the Global South which can provide a balanced view... providing more inclusivity and diversity within the global community, which is healthy, I think," Indrawati said.
Countries in the Global South are "contributing in the global agenda constructively," she said. "They also become a source of solution of many world problems in terms of climate change, financial crisis, pandemic or even now global economy."
Indrawati added, "Many of the G-7 countries are actually suffering quite serious economic situation." G-7 countries now contribute around 43% of global gross domestic product, down from 63% in 1990, according to the International Monetary Fund, as the economies in India and other Global South countries have expanded at a faster rate.
Indonesia has taken over as chair of the Association of Southeast Asian Nations this year. Indrawati said the 10 ASEAN countries can play a "very important role," not just economically, but also politically and in terms of regional security "because of the tension between U.S. and China."
Turning to the domestic, the finance minister is optimistic about Indonesia's plan to relocate its capital from Jakarta to Nusantara on the island of Borneo. The government plans to move key departments there in 2024.
Indonesian Finance Minister Sri Mulyani Indrawati spoke of the important role that developing countries play in the global order. (Photo by Kosuke Imamura)
The plan is expected to cost 466 trillion rupiah ($30 billion) and Indonesia hopes to cover 80% of that from the private sector and with help from the governments of wealthier countries. It is aiming to cover the rest itself.
But with the global economy facing a slowdown amid rising materials prices and the tightening of monetary policy, Nusantara could find it hard to raise funds. Indrawati said, though, that the 20% state funding is solid.
"There will be a lot of opportunity for new investment and private sector participation is going to be there," she claimed, when the basic infrastructure has been put in place.
The World Bank has slashed its 2023 growth forecasts to levels teetering on the brink of recession for many countries. Indrawati, who is also a former managing director at the World Bank, said the rest of this year is going to be "very tough."
She added things could pick up in the second half, but only "if there is no war, if there is no tension."
Developing countries 'source of solution' for world problems: Finance Minister
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