Indonesia Registers For BRICS And Impacts For Middle Class

The BRICS Plus Summit in Kazan, Russia, 22-24 October 2024 which was also attended by Foreign Minister Sugiono as Indonesia's representative. (BRICS)

JAKARTA Indonesia's registration to BRICS is believed to help restore the declining middle class figures in the last five years. With Indonesia's entry into BRICS, the potential for investment has become large, which can revive the sluggish industrial sector.

Presiden Prabowo Subianto langsung membuat kebijakan penting di sektor luar negeri meski masa jabatannya belum berusia sepekan. Prabowo membawa Indonesia bergabung ke aliansi ekonomi BRICS Plus.

Minister of Foreign Affairs Sugiono even attended the BRICS Plus Summit in Kazan, Russia. He expressed Indonesia's desire to join the economic bloc.

"The joining of Indonesia to BRICS is an active free political manifestation of foreign politics. It does not mean that we are participating in certain camps, but we actively participate in all forums," said Foreign Minister Sugiono in an official statement.

Meanwhile, the Spokesperson for the Ministry of Foreign Affairs, Roy Soemirat, in his statement said that the reason Indonesia joined BRICS was a tangible form of Indonesian foreign politics. To note, Indonesia adheres to active free politics in trying to participate in all international forums, including BRICS.

BRICS, which stands for five influential developing countries, namely Brazil, Russia, India, China, and South Africa (South Africa), essentially aims to strengthen the voices of developing countries in the presence of the dominance of developed countries, aka Global South.

Goldman Sachs economist Jim O'Neill uses the abbreviation of BRIC (Brazil, Russia, India, and China) in his 2001 report which predicts the four countries will become economic forces, especially in 2050.

From BRICS Portal, it was stated that Russia was the party that initiated the formation of BRICS. The history of the formation of BRICS began on September 20, 2006, when the BRICS Ministerial Meeting was held for the first time at the suggestion of Russian President Vladimir Putin on the sidelines of a session of the UN General Assembly in New York.

Then in 2009 Brazil, Russia, India, and China held the first summit in Yekaterinburg. A year later South Africa joined forces and began to fully participate in the summit in 2011, making his name change to BRICS.

Initially, BRIC focused more on investment opportunities, but BRICS later turned into a geopolitical block, with the aim of strengthening the voices of developing countries. The alliance views important decisions in the world often dominated by developed countries, such as the United States and the West.

Currently, the member states of BRICS have increased by Iran, Egypt, Ethiopia, and the United Arab Emirates. They officially joined as member states of BRICS in January 2024.

At a glance, a relationship expert from Parahyangan Catholic University, Idil Syawfi, saw from the narrative that Foreign Minister Sugiono wanted to build was that Indonesia's joining BRICS did not conflict with active free foreign politics and non-blocking spirit.

"But, if we look deeper at BRICS, it can be said to be a revisionist movement or a group of countries that are dissatisfied with the system built by the West today," said Idil.

However, economist from Samuel Sekuritas Indonesia Fithra Faisal Hastiadi said Indonesia's decision to 'promote' to enter BRICS was not a kind of confrontation with theold power, but it was considered a balance of strength so that there was no multi or over-domination of a country against another country.

"This is a logical consequence of our active free politics, because last May we had submitted a proposal to OECD. In the end, we realized our neutrality," said Fithra.

President Prabowo Subianto believes that Indonesia's membership in BRICS can expand global partnerships while at the same time encouraging economic growth. Previously, the former Minister of Defense also targeted eight percent growth. To make this happen, said Fithra, it would take IDR 10,000 trillion in the next five years. However, from within the country it can only meet IDR 3000 trillion.

The deficiencies must be met from components or foreign variables. By approaching BRICS and OECD, domestic economic targets can be achieved," he explained.

"Indonesia joining BRICS also provides great economic potential," said Fithra. As is known, the current job opportunities for the formal sector in Indonesia are increasingly limited. Although the unemployment rate this year has decreased, only 4.8 percent, but actually the existing jobs are not qualified because the formal sector is only 40 percent compared to the informal sector 60 percent.

So that when joining elite partnerships, you can get a large investment. Currently, the big potential is petro dollars," said Fithra.

However, Fithra emphasized that Indonesia's entry into BRICS will not immediately open up the industry and create jobs. But he is optimistic that when many investments enter, it has the potential to contribute to generating industries in Indonesia.

"When the industry rises, it can absorb energy and when this industry opens it is categorized as a formal job that produces income or higher income," he said.

The decline in the number of middle class in Indonesia in the last five years was due to their income being eroded due to the lack of formal employment. Fithra believes that when they can finally return to formal employment, their income can also be raised and in the end add to the middle class.

"With an investment flow of IDR 7 thousand trillion in the next five years, it can create around 10 million, even 15 million new middle class so that it can restore middle class losses in the previous period," he explained.

Meanwhile, according to the Executive Director of the Center of Economic and Law Studies (CELIOS) Bhima Yudhistira, Indonesia's official registration into BRICS has actually strengthened Indonesia's dependence on China.

"Even without BRICS in terms of investment and trade in Indonesia, China's portion is already very large. Indonesian imports from China jumped 112.6 percent in the last 9 years, from 29.2 billion US dollars in 2015 to 62.1 billion US dollars in 2023. Meanwhile, investment from China jumped 11 times in the same period," said Bhima.

"Depending on China also makes the economy more fragile. When China's economy is projected to decline by 3.4 percent in the next four years based on the World Economic Outlook IMF, there are concerns that Indonesia joining BRICS will actually weaken economic performance. This condition is ideally responded to by strengthening the diversification of partner countries outside China instead of becoming members of BRICS," he said.