Description: Indonesia’s sovereign wealth fund, Danantara, reportedly plans on investing up to $8 billion in the development of 17 crude oil refineries on the US market as part of the bilateral trade agreement concluded last week. The contract would be signed with the US engineering firm KBR Inc. as Indonesia looks to deliver on its trade deal provisions with the US where the country so far pledged to invest in the dominant US industries such as oil, aerospace and technology. With the new development, the bilateral trade potential between the US and Indonesia could reach $34 billion with the state – owned energy company Pertamina also considering large scale investments in US oil products. Indonesia also agreed towards easing domestic content requirements enabling companies such as Apple and General Electric to reenter and expand on the Indonesian market.
Impact: After concluding the trade deal with the US, Indonesia’s strategic ambiguousness has significantly reduced which indicates building a structured bilateral partnership and enabling the US access to one of the largest and growing markets in Asia. Indonesia has weighed partnerships with China, European countries and Russia, however, recent commitments to upholding provisions of the US trade deal show the country is gradually leaning towards the western sphere of influence while also maintaining stable relations with influential partners such as China. The US could probably exploit Indonesia’s aggressive economic maneuvers to navigate bilateral relations towards broader spectrums of strategic partnership which would significantly increase their footprint in the constantly turbulent Indo – Pacific geopolitical theater.