Indonesia, once a vocal advocate for a unified ASEAN stance on the South China Sea dispute, appears to be stepping back from the contentious issue, prioritising economic ties over maritime assertiveness. This shift, which began under former President Joko “Jokowi” Widodo and has continued under President Prabowo Subianto, raises critical questions about the future of regional multilateralism and the balance of power in Southeast Asia. As economic pragmatism takes precedence, the implications for ASEAN’s cohesion and the broader geopolitical landscape are profound.
A Retreat from Maritime Assertiveness
Indonesia’s evolving approach to the South China Sea has been marked by a gradual de-emphasis of territorial and maritime concerns in favour of economic cooperation, particularly with China. During Jokowi’s tenure, the narrative of Indonesia having no direct territorial dispute with China in the region was consistently reinforced. Early in his administration, a nationalist tone dominated maritime policy, exemplified by the hardline stance of former Marine Affairs and Fisheries Minister Susi Pudjiastuti. Her “seize and sink” policy targeting foreign vessels engaged in illegal fishing sent a clear message of sovereignty, as did the symbolic renaming of part of the South China Sea as the “North Natuna Sea.”
However, this assertiveness waned over time. Susi’s removal from her post signalled a pivot, with economic considerations and diplomatic relations taking centre stage. Public disagreements within Jokowi’s cabinet—particularly between Vice President Jusuf Kalla and then-Coordinating Maritime and Investment Affairs Minister Luhut B. Pandjaitan—highlighted tensions over whether such a confrontational maritime policy risked straining ties with neighbouring countries, including China. The latter’s perspective ultimately prevailed, reflecting Indonesia’s growing economic interdependence with Beijing. Under President Prabowo Subianto, who assumed office in 2024, this trend has intensified. His administration has largely delegated the South China Sea issue to direct claimant states, distancing Indonesia from a leadership role in regional negotiations. A recent joint statement with China, which included provisions for joint development in areas of “overlapping claims,” has drawn sharp criticism for undermining ASEAN’s multilateral framework. This move suggests Indonesia is increasingly willing to pursue bilateral arrangements, even at the cost of regional unity. 
Economic Priorities Over Territorial Sovereignty
The driving force behind Indonesia’s recalibrated stance is its deep economic relationship with China. As Indonesia’s largest trading partner and a significant source of foreign direct investment, China’s economic influence cannot be overstated. In the first half of 2022, Indonesia’s exports to China surged by 34.2 percent, underscoring the importance of this partnership. Major infrastructure projects, often backed by Chinese funding, further cement this bond, with Jakarta prioritising short-term economic gains over long-term strategic interests in the South China Sea. This economic pragmatism is evident in the reduced intensity of Indonesia’s naval operations in the North Natuna Sea. While patrols continue, they lack the assertiveness seen during Susi’s tenure. Instead, the focus has shifted to investment-heavy initiatives and cooperative ventures, reflecting a broader trend in Indonesian foreign policy where economic imperatives often outweigh security concerns. For a country seeking to position itself as a global middle power, maintaining balanced relations with major players like China and the United States has become a delicate but necessary act. This balancing act, however, comes with trade-offs. By adopting a more neutral stance, Indonesia avoids alienating either superpower, but it also risks diluting its influence within ASEAN on critical issues like the South China Sea. The decision to step back from active engagement in the dispute may preserve diplomatic flexibility, but it also leaves smaller claimant states, such as the Philippines, more exposed to China’s growing assertiveness in the region.
Implications for ASEAN’s Multilateral Framework
Indonesia’s disengagement from the South China Sea dispute has far-reaching consequences for ASEAN’s ability to present a united front. Historically, Indonesia played a pivotal role in advocating for a collective approach, including efforts to finalise a Code of Conduct (CoC) with China through multilateral negotiations. However, these efforts now appear more performative than substantive, with little progress towards a binding agreement that could govern behaviour in the disputed waters. Without Indonesia’s leadership, ASEAN’s cohesion on this issue is fraying. The lack of a unified regional response has allowed China to pursue bilateral negotiations with individual member states, further eroding the bloc’s bargaining power. For countries like the Philippines and Vietnam, which have been more outspoken against China’s expansive claims, Indonesia’s retreat leaves them increasingly isolated. The joint development clause in the recent Indonesia-China agreement, for instance, sets a worrying precedent, potentially encouraging other ASEAN nations to prioritise bilateral deals over collective action. This fragmentation undermines the very foundation of ASEAN’s multilateral framework. If Indonesia, one of the bloc’s largest and most influential members, continues to prioritise national economic interests over regional solidarity, the prospects for a meaningful CoC or a cohesive strategy to counterbalance China’s influence diminish further. The South China Sea, already a flashpoint for geopolitical tensions, risks becoming even more contested as external powers exploit the divisions within ASEAN.
Geopolitical Strategy and Regional Stability
Indonesia’s evolving stance also reflects its broader geopolitical strategy. Aspiring to be a global middle power, Jakarta has sought to navigate a neutral path between the United States and China, engaging in partnerships with both while avoiding overt alignment. This approach has allowed Indonesia to benefit from economic cooperation with China while maintaining security ties with Western partners. However, it complicates taking a firm position on the South China Sea, as any assertive stance could jeopardise these carefully curated relationships. The implications of this neutrality extend beyond ASEAN. Indonesia’s reluctance to engage actively in the dispute may embolden China to push its claims more aggressively, knowing that regional opposition is fragmented. At the same time, it could prompt greater involvement from external powers like the United States, Japan, and Australia, who have their own strategic interests in countering China’s influence in the Indo-Pacific. While Indonesia may view its disengagement as a pragmatic choice, it risks ceding influence over a critical regional issue to others. Moreover, Indonesia’s shift signals a troubling trend of prioritising economic gains over territorial sovereignty—a pattern that other ASEAN nations might emulate. If short-term economic benefits continue to overshadow long-term strategic interests, the region could see a further erosion of maritime norms and an increase in unilateral actions by claimant states. This would not only destabilise the South China Sea but also weaken ASEAN’s relevance as a regional actor.
Where to From Here?
The question remains whether Indonesia can—or will—reassess its approach to the South China Sea. While economic ties with China are undeniably vital, a complete retreat from the issue risks long-term consequences for regional stability and Indonesia’s own strategic interests. Re-engaging with ASEAN’s multilateral processes, even if incrementally, could help restore balance to Jakarta’s foreign policy. Supporting a binding CoC, for instance, would demonstrate a commitment to regional norms without necessitating direct confrontation with China. Furthermore, Indonesia could leverage its position as a middle power to mediate between claimant states and external actors, fostering dialogue while safeguarding its economic priorities. Such a role would not only reinforce ASEAN’s centrality but also enhance Indonesia’s global standing. However, this would require a willingness to prioritise long-term regional stability over immediate economic gains—a shift that neither Jokowi’s nor Prabowo’s administrations have shown an inclination to make.
Indonesia’s pivot away from the South China Sea dispute marks a significant departure from its historical role as a regional leader within ASEAN. Driven by economic pragmatism and a desire to maintain balanced geopolitical relations, Jakarta’s disengagement has left a void in the bloc’s collective approach to one of Southeast Asia’s most pressing challenges. While this strategy may yield short-term benefits, it risks undermining long-term regional stability and ASEAN’s ability to negotiate from a position of strength. As the South China Sea continues to be shaped by bilateral dealings rather than multilateral consensus, the influence of external powers is likely to grow, further complicating the geopolitical landscape. Unless Indonesia reconsiders its stance, the dream of a unified ASEAN response to the dispute may remain elusive, leaving the region vulnerable to escalating tensions and diminishing its own strategic autonomy. For now, Indonesia’s retreat serves as a stark reminder of the delicate interplay between economic imperatives and security concerns in shaping foreign policy.
