In 2014, BRICS launched 50 billion dollars as capital to form their own bank, in an effort to compete with the World Bank and IMF. This capital distribution also has concessions for member countries called Contingency Reserve Arrangements which help them when experiencing economic difficulties. Seeing this policy, many other countries want to join, including the United Arab Emirates and Indonesia. This phenomenon is motivated by their experience with the IMF which is considered to have several structural problems. At the end of 2021, several countries will join the BRICS Bank, namely the United Arab Emirates, Uruguay, Bangladesh and Egypt.
In August 2023, the BRICS Conference will be held in South Africa and one of the agendas is to form a new currency. This step is considered a geopolitical effort to challenge domination by Western countries, especially the United States. Over the last few years, BRICS member countries have tried to reduce their dependence on the dollar currency. With the war between Russia and Ukraine which resulted in many US sanctions against Russia, it made it easier for this effort to be carried out. The increase in interest rates and the crisis of lending platforms against dollars is also one of the motivations for the formation of a new currency by BRICS. The potential future collapse of the dollar has made many other countries interested in plans to create new currencies. For now, BRICS is making efforts to develop plans internationally and stabilize new policies.
In 2022, overall, the BRICS had a trade surplus of $387 billion, largely from China’s contribution. BRICS also stated that they are ready to provide self-sufficiency assistance in international trade for countries that have avoided other currency unions. Because the BRICS currency union will not be between countries united by a common territorial border, its members will likely be able to produce a wider range of goods than a monetary union. This policy confirms that there will be de-dollarization efforts carried out by BRICS.
What if Indonesia joins BRICS?
As one of the main players in ASEAN with rapid economic progress, Indonesia has expressed its interest in joining BRICS. Indonesia would likely get bigger platforms in voicing opinions and proposing new policies that could improve its diplomatic and economic conditions. With stronger ties among BRICS member countries, trade relations between related countries will certainly become stronger, so that they can contribute more surplus to the country’s income. BRICS is an organization that is not completely dependent on the dollar and the United States economy, so this can open up new opportunities for Indonesia in establishing economic cooperation. Indonesia’s interest in joining BRICS was strengthened by the presence of President Joko Widodo at the BRICS Summit held in Johannesburg, South Africa. Many people think that if Indonesia joins BRICS, it will be both beneficial and detrimental.
As we know, of all the BRICS member countries, China and Russia play an important role and are countries with large economies, as competitors to the United States. With Indonesia’s entry into BRICS, it will certainly ease existing obstacles in trade relations between these countries. Not only that, the presence of other member countries will provide wider market opportunities for alternative exports outside China. BRICS member countries are emerging market countries, owning control 30% of total global GDP, so it will provide more opportunities for new cooperation for Indonesia in terms of economic and trade.
The Upside
Indonesia is currently very focused on the infrastructures sector, with China as the country that dominates investment in many projects. If Indonesia joins BRICS, there is a possibility that the flow of investment will be smoother and will not be dominated only by China, but also other member countries. The high level of incoming investment will open up more job opportunities and can even create economic equality that brings welfare to its people. Cooperation between countries is likely to boost its education system as well, so that it can create many scholarships, research grants, and student exchange programs. Focusing on a broader spectrum, Indonesia is rich in culture which is one of its diplomatic tools, so that Indonesia can have the opportunity to bring its culture to greater exposure. Concerns about rising US interest rates are increasingly motivating Indonesia to join BRICS so that it will reduce their dependence on the hegemonic powers of Western countries.
The Downside
Indonesia is famous for its non-alignment policy, joining BRICS could bring Indonesia to shift power policy. So far Indonesia has succeeded in balancing its diplomatic relations with superpower countries, namely China and the United States. Inequality in diplomatic conditions might occur if Indonesia joins BRICS. It could be predicted that Indonesia’s entry into BRICS will create a ripple effect. Indonesia as one of the key members in ASEAN can also lose the trust of ASEAN member countries, they would likely see Indonesia’s movement is drifting away from its goals and principles of ASEAN.
Not only that, Indonesia has intensively carried out resource nationalism efforts, as evidenced by several bans on exports of minerals such as nickel and steel. With the strength of political protectionism that Indonesia has been pursuing over the last few years, if this country finally joins BRICS, it will bring a bigger gamble because the share of resources and information will increase rapidly among BRICS member countries. This can only be predicted whether it will benefit or harm Indonesia.
So far there is still a lot of speculation circulating about whether Indonesia will join BRICS. This movement is very crucial and must be highly considered about in detail, looking at all aspects of existing policies. BRICS is an organization with many stakeholders, hence there will be a lot of consideration and discussion in every policy and collaboration that will be made. Indonesia needs to weigh the percentage of all possible negative and positive effects that could arise if it joined BRICS. With the upcoming presidential election next year and President Joko Widodo will not seek re-election, there are internal concerns about whether his various policy progress will be continued by his predecessor. This problem itself is quite complicated, let alone consider all the possibilities for Indonesia’s cooperation with the BRICS member countries that could change its whole existing partneships with countries involved.