Jakarta, June 15, 2023— Chinese investment in developing countries, including Indonesia, through the Belt and Road Initiative (BRI) has come under intense scrutiny. CELIOS researcher Yeta Purnama stated, “In nickel downstreaming, or smelting, coal-fired power plants still predominate, and their carbon emissions pose a serious danger to communities living near smelters. This contradicts President Xi’s commitment to halt all new investments in coal-fired power plants outside China.” She also emphasized the need for more transparent arrangements and good corporate governance to ensure that China’s New Silk Road ambitions do not cause problems.
CELIOS Director of Indonesia-China Studies, Dr. Muhammad Zulfikar Rakhmat, highlighted the risks of debt and Indonesia’s dependence on China. “Being too close to China has implications for Indonesia’s foreign policy, particularly on the South China Sea issue, and could weaken Indonesia’s position. There is a link between investment penetration, debt, and security problems,” he explained. Zulfikar also emphasized the social and environmental impacts of Chinese investment in Indonesia, including at PT Indonesia Morowali Industrial Park and Harita Nickel, as well as occupational health and safety (OHS) issues.
Zulfikar recommended that Chinese investors and creditors promote improvements to BRI standards, particularly regarding the environment, labor rights, and contributions to local communities, including clean battery/EV supply chains. Yeta added, “It is important to strengthen oversight by central and local government officials, as well as build the capacity of Bappenas and the Ministry of Finance to ensure that Chinese debt does not become a debt trap.” Zulfikar concluded, “The government also needs to revise fiscal incentives that harm Indonesia, because the added value is insignificant while the damage caused is immense.”
Chinese investments in developing countries, including Indonesia, through the Belt and Road Initiative (BRI) have drawn significant attention. CELIOS researcher Yeta Purnama stated, “In the context of nickel downstreaming or smelters, coal-fired power plants still dominate, with carbon emissions that seriously endanger local communities near the smelters, contradicting President Xi’s commitment to halt all new coal power investments outside China.” She also emphasized the need for more transparent schemes and better corporate governance to prevent China’s Belt and Road ambitions from facing major problems.
CELIOS Director of Indonesia-China Studies, Dr. Muhammad Zulfikar Rakhmat, highlighted the risks of debt and Indonesia’s dependency on China. “Being too close to China has implications for Indonesia’s foreign policy, particularly regarding the South China Sea, which could weaken Indonesia’s position. There is a link between investment penetration, debt, and security issues,” he explained. Zulfikar also pointed to the social and environmental impacts of Chinese investments in Indonesia, such as in PT Indonesia Morowali Industrial Park and Harita Nickel, as well as ongoing occupational health and safety (OHS) concerns.
Zulfikar recommended that Chinese investors and creditors promote improvements in BRI standards, particularly regarding environmental protection, labor rights, and local community contributions, including ensuring clean supply chains for batteries and EVs. Yeta added, “It is important to strengthen oversight at both central and local levels, as well as enhance the capacity of Bappenas and the Ministry of Finance to ensure Chinese debt does not become a debt trap.” Zulfikar concluded, “The government also needs to revise fiscal incentives that harm Indonesia because the added value is insignificant, while the damage caused is massive.”
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