Prabowo's Brics debut puts Indonesia's Asean ties and US relations to the test, analysts say

Straits Times

18 hours ago

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JAKARTA – Indonesian President Prabowo Subianto's debut at the Brics summit in Brazil marked a bold step in Jakarta's bid to elevate its global standing, though analysts warned the diplomatic milestone could strain ties with the rest of Asean, the United States and its allies.
The summit – on July 6 and 7 in Rio de Janeiro – marked Indonesia's first participation as a full member of Brics, founded by Brazil, Russia, India, China and South Africa. The 11-member grouping aims to amplify the Global South's influence by promoting cooperation among emerging economies.
Cabinet Secretary Teddy Indra Wijaya said in a statement that President Prabowo viewed Indonesia's membership as a way to 'strengthen its position globally' and 'support global stability and prosperity' through broader international cooperation.
A major draw for Indonesia lies in access to the New Development Bank (NDB), a multilateral lender created by Brics members to fund infrastructure and development in emerging markets. Often seen as a rival to Western-led institutions such as the World Bank, Asian Development Bank (ADB) and the International Monetary Fund (IMF), the NDB offers loans with fewer political conditions.
Associate Professor Yohanes Sulaiman of Jenderal Achmad Yani University told The Straits Times that the NDB's appeal is simple: 'Money without much scrutiny. Keep in mind that many Asian and African countries find the conditions (for non-NDB funding) to be too strenuous and cannot be used for pet projects.'
He cited Indonesia's new capital city in East Kalimantan, the national free lunch programme, and coastal infrastructure as examples of projects that require flexible, timely funding.
Mr Prabowo's pivot to Brics also aligns with efforts to attract foreign investment through Indonesia's sovereign wealth fund, Danantara. During a June visit to St Petersburg, Danantara signed a €2 billion (S$2.96 billion) joint investment deal with the Russian Direct Investment Fund. Mr Prabowo also expressed its gratitude to Russia for its backing of Indonesia's Brics bid.
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In Brazil, Coordinating Minister for Economic Affairs Airlangga Hartarto said Indonesia is ready to tap the NDB to support its green energy transition and sustainability goals. The bank currently manages 120 projects worth about US$39 billion (S$49.9 billion) , including clean energy, infrastructure, and sustainable development.
Associate Professor Teuku Rezasyah at Padjadjaran University and President University noted that Indonesia stands to gain from the bank's 'flexible long maturities, customised grace periods and repayment terms, along with moderate interest rate risk compared with IMF, World Bank, and the ADB'.
He added that Indonesia could pursue 'heart-to-heart negotiations' with the NDB to tailor loans for priority sectors such as agriculture, food security, green energy, and infrastructure.
Asean ripple effects
Indonesia's entry into Brics is already shifting the regional equation. Thailand has also expressed interest to join Brics – a move backed by Mr Prabowo during a visit to Bangkok in May.
Prof Rezasyah said Indonesia's endorsement 'may produce a new caucus inside Asean, outside the already established Malay network involving Indonesia, Malaysia, and Brunei'.
'A new Indonesia-Thailand coalition inside Brics may attract fellow Asean members such as Vietnam and Malaysia to also join Brics,' he told ST.
However, such a development may risk weakening Asean unity and relegating the bloc to 'the second tier' of importance for those who join Brics, Prof Rezasyah warned.
Mr Muhammad Habib Abiyan Dzakwan, a researcher at Indonesia's Centre for Strategic and International Studies, said Jakarta must ensure it allocates sufficient diplomatic resources and political attention to maintain its presence and meaningful participation in Asean-led meetings and initiatives. Otherwise, its relations with the other Asean members could be impacted , he added.
Still, Mr Habib noted that most Asean states respect Indonesia's sovereign decision. ' Asean may just explore possible interfaces, economic partnership, or cooperation without permanent alignment,' he told ST.
Benefits of collaboration with Brics could include stronger representation for developing nations, quicker decisions in global institutions, and better access to technical cooperation, he added.
Prof Yohanes agreed, noting that Malaysia, Thailand and Vietnam are already Brics partner countries that cooperate with the bloc but lack membership privileges. Thailand is now seeking to become a full member – a move that would grant it voting rights, a say in setting the bloc's agenda, and access to financing tools such as NDB funding.
'Everyone looks at Brics in terms of providing more economic engagements, rather than as a statement against the US,' he said.
'Probably the only Asean country which might feel uneasy is the Philippines, and that is because they have been looking cautiously at growing closer relationships between China and both Indonesia and Malaysia,' he added, referring to ongoing tensions in the disputed South China Sea.
Brics is an economic grouping, Prof Yohanes emphasised. 'No country in South-east Asia is willing to deal with Brics if they see it as a military alliance against the US or Europe.'
US warning complicates Jakarta's balancing act
The timing of Indonesia's Brics move is complicated by rising global tensions. On July 7, US President Donald Trump threatened to slap a 10 per cent tariff on 'any country aligning themselves with the anti-American policies of Brics', declaring 'there will be no exceptions'.
The warning came after a Brics joint statement that condemned US tariff hikes and military actions in Iran, labelling them harmful to global trade and supply chains.
On July 8, Indonesia was among the first batch of countries to receive US 'reciprocal tariff' letters for failing to strike a deal in time to ward off the elevated tariffs announced by President Trump in early April. Indonesia faces a 32 per cent tariff, which may be revised if Jakarta reaches a deal with the US before Aug 1. The rate, among the highest in South-east Asia, matches earlier drafts.
Although Indonesia insists it remains non-aligned with Brics, analysts warned that the country could still face fallout.
Prof Yohanes said: 'Obviously, the US, especially under Trump, will not look at this kindly, so we have to see how this goes in the future.'
Prof Rezasyah noted that President Trump's threat could affect Jakarta's current tariff negotiations with Washington. 'It is very difficult for Indonesia to deal with Trump's latest threat, as it may lead to greater suffering in the Indonesian economy, especially when it deals with small and medium enterprises keen to market their products to the advanced economies.'
Mr Habib described the situation as precarious, saying 'unpredictable is such an understatement'.
'This threat of additional tariff would put Indonesia in an awkward and difficult position. It complicates the tariff negotiation we are currently finalising with the US,' he added.
To navigate this, Mr Habib advised a 'selective approach' to Brics. 'Even better, if Indonesia could propose its own agenda to Brics that is more inclusive and non-sensitive,' he said.
He recommended that Jakarta work with Brics and like-minded developed nations on global issues such as health and climate, which may be receiving less attention from the US and its allies.
Prof Rezasyah cautioned that deeper ties with Brics might strain Indonesia's relations with the US and its allies, especially over trade barriers. However, he said Indonesia's presence in Brics could help prevent the grouping from becoming confrontational with the Group of Seven , the world's largest developed economies, given its status as a reliable US global partner.
Despite the diplomatic risks, Brics offers Indonesia a platform to boost exports, attract investment, and push its green agenda. However, translating summit speeches into practical outcomes will not be easy, analysts say.
Jakarta must tread carefully – juggling global ambitions without alienating Asean neighbours or provoking the US. Analysts say the challenge is made harder by President Prabowo's unpredictable diplomatic style.
Unlike past presidents, his foreign policy is driven more by personal instincts than the more stable, foreign ministry-led approach that Indonesia has followed since 1999, Prof Yohanes noted.
He added: 'Currently they (Brics countries) are trying to make deals with Washington, and obviously Indonesia prefers to stay 'non-aligned', but it is a delicate dance… it really depends on Prabowo's whims.'