Indonesia has just reached an important milestone of its G20 presidency – the Think20 Summit, which took place in Bali on September 4-6. Think 20 (T20) is the “idea bank” for the G20 – a key mechanism through which G20 policymakers harness the combined resources of the global academic, research and think tank community to solve global problems. As Co-Chairs of the T20 Taskforce 1 on Open Trade and Sustainable Investment, we hope that G20 governments will take note of the many sensible recommendations in the T20 Communiqué.
The G20 – the group of 19 countries and the EU – is a unique grouping in which developed and developing countries share a common platform to discuss proposals to improve global economic governance. 2022 marks the start of a very first event – a series of developing countries taking over the presidency for four consecutive years. Indonesia, followed by India, then Brazil and South Africa. The expanded leadership opportunities for the Global South are clear: A chance to advance the G20’s promises of economic justice for developing countries and lead the world out of recession by implementing inclusive, accessible and adaptive policies.
India needs to reflect on its own strengths and weaknesses as it prepares for its presidential year from December 2022. host of the G20 should not be seen only as a gigantic opportunity to boost tourism and investment. It requires dedicated and consistent political commitment at all levels, including the academic and business community. There is an external perception that India has underinvested in global multilateral engagement, including the G20 and the WTO. As the fifth largest economy in the world, with the relatively rare positive growth rate, India needs to engage more broadly.
There are lessons from Indonesia’s experience.
First, Indonesia’s achievements are proof that it’s good not to walk alone. Independent of its own large, expanding domestic market, Indonesia is a trading nation. It actively participates in most regional trade and economic cooperation groupings in East Asia and the Pacific: ASEAN and ASEAN’s own embedded network of free trade agreements, the ASEAN + 6 East Asian Summit, the 15-strong mega-regional Regional Comprehensive Economic Partnership (RCEP) and the aus 21-member Economic Cooperation Association under APEC. ASEAN integration, which always comes first, provides a critical test bed for what works, what doesn’t, and why. Three decades of familiarity with cooperation and capacity building mean that Indonesian institutions are relatively outward-looking and have strong people-to-people relationships across Asia and the Pacific.
Second, intra-Asia ties are ASEAN-centric, but sustained by strong educational ties with Australia and long-term investment partnerships with Japan. Australia is the top international travel destination for Indonesian students. Japan is among Indonesia’s largest investment partners after Singapore, with investments increasingly geared towards strengthening Indonesia’s role in global supply chains.
In contrast, India is perceived as having less multilateral or regional economic engagement, relatively little interest in opening the domestic economy to world trade, and limited governmental, academic or corporate expertise on the issue. It has a large network of trade-related agreements, but many of them are comparatively superficial or have limited sectoral coverage. Chambers of Commerce tend to be event management and lobbying for their members who are afraid of non-defensive arguments. Even in those areas where India excels globally – information technology and pharmaceuticals – there seems to be a reluctance to lead if the comfort of continued profits is disrupted.
These fears have to be overcome and the moment seized. Like Indonesia, India can use its exemplary diplomacy to build goodwill and consensus. Strong business support can help New Delhi in G-20 efforts. Indian technology and pharmaceutical companies have proven to be globally respected, reliable partners during the Covid-19 pandemic. Deepening these links will help Indian policymakers and other stakeholders engage more closely and directly with their Asian counterparts. India can increase its engagement with the Indian Ocean Rim Association (IORA) and members of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) can be exposed to the G20 processes at India’s invitation.
The signs of change are already visible. First, G20 policy is notoriously repetitive and driven by the G7. At India’s initiative, the Japanese-funded, Jakarta-based Economic Research Institute for ASEAN and East Asia (ERIA) has announced a new four-year G20 research forum to focus on development issues. This open global approach from a trusted common platform for rigorous economic studies is India’s inaugural contribution to developing countries in the G20. Second, India’s Ministry of Commerce has set out an ambitious agenda for more trade and multilateral engagement, targeting $2 trillion in exports by 2047.
Finally, digital leadership can be India’s enduring legacy for the Global South. The rules for digital commerce are being written. As the world’s leading IT and business services outsourcing hub, India has a particular interest in how these rules are drafted and implemented.
It will help India shed its negotiating reputation as a country that explicitly seeks bilateral reciprocity and compromise rather than coalition building. Geopolitics is getting more complicated, not less. India must quickly learn to redouble its energies to keep the G20 together and achieve a result that every G20 leader can take home to their own domestic constituencies.
The authors are Co-Chairs of T20 Taskforce 1 on Open Trade and Sustainable Investment, Indonesian G20 Presidency