Indonesia's Strategic Pivot: The Gulf Partnership Reshaping Economic Diplomacy
Key Ideas
  • President Prabowo Subianto's visit to Saudi Arabia resulted in US$27 billion economic cooperation agreements, emphasizing a strategic shift towards Gulf partnerships.
  • The Saudi-Indonesian Supreme Coordination Council established during the visit focuses on sectors like green hydrogen, renewables, and water desalination, aiding Indonesia's energy transition.
  • Indonesia's collaboration with Gulf countries like Saudi Arabia, Qatar, and the UAE signifies a shift towards south-south diplomacy for economic resilience amid global market uncertainties.
  • The partnership offers opportunities for Indonesia's industrial growth and resource sovereignty, particularly in areas like EV battery supply chains and downstream hydrogen value chains.
President Prabowo Subianto of Indonesia's state visit to Saudi Arabia marked a significant milestone with US$27 billion worth of economic cooperation agreements, steering Indonesia towards redefining its global partnerships. The visit strategically positioned the Gulf region, particularly Saudi Arabia, as a cornerstone of Indonesia's economic strategy and regional diplomacy. The establishment of the Saudi-Indonesian Supreme Coordination Council spearheaded by Prabowo and Crown Prince Mohammed bin Salman heralds a long-term strategic partnership, focusing on sectors such as green hydrogen, renewables, and water desalination critical for Indonesia's energy transition goals. The economic core of the visit highlighted potential US$10 billion investments in renewable energy projects, green hydrogen development, and water desalination, aligning with Indonesia's renewable energy targets for 2034 and 2060. Furthermore, Indonesia's engagement with Qatar and the UAE in energy, digital economy, and high-tech industries underscores a shift towards south-south diplomacy for economic resilience amidst evolving global market dynamics. Indonesia's resource sovereignty stance and industrial policies have attracted Gulf investors looking to co-create industrial ecosystems, especially in areas like EV battery supply chains and downstream hydrogen value chains. The partnership not only focuses on extractive industries but also industrial upgrading, facilitated by Indonesia's regulatory reforms and the Omnibus Law. The growing influence and principled neutrality of Indonesia present valuable diplomatic capital for Gulf nations navigating complex ties with the West. The strategic alignment reflects mutual benefits, with Indonesia's strategic location and industrial potential complementing the Gulf's diversification strategies and economic ambitions.
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