Jakarta. President Joko "Jokowi" Widodo recently wrapped up his US trip and brought home some good news on Jakarta-Washington’s ties.

Indonesia and the US have just embarked on a new era of bilateral relations. The two countries agreed to upgrade their relations from a strategic partnership to a comprehensive strategic partnership (CSP). The upgrade took place during Jokowi's bilateral talks with his US counterpart Joe Biden at the White House earlier this week. The CSP is expected to bolster bilateral ties across many fronts, particularly from an economic standpoint. 

Following the CSP announcement, Jokowi and Biden said they were committed to developing action plans related to critical minerals. This action plan is set to lay the groundwork for the launch of future negotiations on a critical mineral agreement. The resource-rich Indonesia has been pursuing this agreement so electric vehicles (EVs) made from Indonesian minerals can enjoy the tax credits under Washington’s Inflation Reduction Act (IRA).  

“In principle, [the two leaders] agreed that it is important to strengthen cooperation on critical minerals. For that reason, a work plan will be developed towards the establishment of the critical mineral agreement,” Foreign Minister Retno Marsudi said in a press statement following the Jokowi-Biden in-person meeting.

“If there is a critical minerals agreement in place, Indonesia can supply EV batteries to the US in a sustainable manner, and for the long term,” Retno added.

More Green Investment
Jokowi did not come home empty-handed from an investment standpoint. The president held investment talks with Darren Woods, the chairman of the American oil and gas giant Exxon Mobil. According to Jokowi, Exxon is planning to invest up to $15 billion to build a green petrochemical refinery and carbon capture storage (CCS) facility. 

“I’m pleased to hear that the CCS facility will be the largest in Southeast Asia. Exxon’s petrochemical complex is also expected to be one of the most advanced in the world,” Jokowi said in a statement following his talks with Woods.

These green investments are expected to help Indonesia slash carbon emissions. The Southeast Asian country is aiming to reach net zero emissions by 2060. The US is Indonesia’s fifth-largest foreign investor in January-September 2023. Indonesia reported that it had received $2.4 billion in foreign direct investment (FDI) from the US over the said period.

Making Nusantara A Smart, Green City
Some good news is also coming from Indonesia’s new capital Nusantara. The city’s authority body announced that they had signed a memorandum of understanding (MoU) with American tech giant Microsoft in San Francisco, ahead of the Asia-Pacific Economic Cooperation (APEC) forum. The MoU will see Microsoft helping the authority body make Nusantara a smart city as envisioned by President Jokowi. 

“Microsoft's role in Nusantara includes support for new renewable energy technology, electric vehicle systems, and autonomous vehicles. In terms of inclusivity, Microsoft is interested in developing digital literacy by providing training,” a press statement on the MoU signing reads.

As part of the freshly announced CSP ties, the US is planning to fund an Indonesian trade mission to the US. As well as an American business development mission to Indonesia to discuss best practices as the Southeast Asian country plans its new city. According to a White House fact sheet, this trade mission builds upon USAID’s technical assistance to develop smart building guidelines and green space management.

Committed to Conclude IPEF Trade Talks in 2024
Jokowi attended the leaders’ summit of the US-led Indo-Pacific Economic Framework (IPEF) in San Francisco. The IPEF is an economic initiative aimed at strengthening cooperation across four pillars: trade, supply chains, clean economy, and fair economy. Member countries -- including Indonesia -- have been negotiating agreements across these pillars. 

The recent ministerial IPEF meeting in San Francisco saw the signing of the agreement on the supply chain pillar, which had already substantially completed its negotiations earlier this year. At the San Francisco meeting, members also reached a substantial conclusion on the clean and fair economy pillars. This leaves the trade pillar remaining, although Jokowi promised Indonesia would work to wrap up the negotiations in 2024.

"Indonesia is committed to concluding the negotiations of the first [IPEF] pillar [of trade] in 2024 and also implementing the joint agreement," Jokowi said in the presence of IPEF leaders on Thursday local time.

According to Chief Economic Affairs Minister Airlangga Hartarto, IPEF partner countries are committed to diversifying investments and strengthening supply chains, among others. They also have pledged to ensure a widely distributed economy across the Indo-Pacific region.

“Together, we [IPEF countries] have made huge progress in reaching a consensus towards a clean and fair economy. For instance, on developing economic corridors and spurring sustainable investment in clean technology and agriculture, as well as improving the transparency of taxation and anti-corruption efforts,” Airlangga said.

The IPEF members include South Korea, the US, Japan, Australia, New Zealand, Singapore, Thailand, Vietnam, Brunei, Malaysia, the Philippines, Indonesia, India, and Fiji. They collectively represent 40 percent of the global gross domestic product (GDP) and 28 percent of global trade in goods and services.

The US is Indonesia’s second-largest trading partner. In 2022, the bilateral trade totaled $39.8 billion, up by 7.44 percent from the previous year. Indonesia also enjoyed a $16.57 billion surplus with the US, marking a 13.92 percent increase from 2021, the Trade Ministry reported.