May 29, 2025 10:40 pm
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Indonesia’s $10 Billion Deal with China Raises Sovereignty Concerns and ASEAN Tensions

A $10 billion deal between Indonesia and China, finalized this week, has sparked concerns among maritime security and international law experts. Critics warn the agreement could undermine Indonesia’s sovereignty in the North Natuna Sea, exacerbate illegal fishing, and increase political tensions within the ASEAN bloc.

“Indonesia risks economic subjugation by China, potentially paving the way for increased military influence in the South China Sea,” said Merisa Dwi Juanita, founder of Bara Maritim, an independent maritime security research institution.

Diplomatic Outreach in Beijing

Indonesian President Prabowo Subianto, recently inaugurated, embarked on his first official foreign visit to China on November 8. During high-level talks with Chinese President Xi Jinping in Beijing, both leaders emphasized their commitment to strengthening bilateral ties.

“We aim to enhance this relationship for the mutual benefit of our peoples and the prosperity, peace, and stability of Asia,” Prabowo stated.

However, the joint statement following the visit has alarmed analysts. Experts suggest it marks a shift in Indonesia’s stance on the South China Sea, implicitly acknowledging China’s controversial “nine-dash line” territorial claims. This could provoke reactions from ASEAN neighbors, including the Philippines, Malaysia, Brunei, and Vietnam, who also have overlapping claims in the region.

The $10 Billion Agreement

The business forum in Beijing facilitated agreements between Indonesian and Chinese firms worth approximately $10 billion. The deals focus on fisheries, oil and gas exploration, maritime safety, and sustainable mineral extraction.

Critics argue that these agreements could inadvertently validate China’s claims in waters falling within Indonesia’s Exclusive Economic Zone (EEZ). Aristyo Darmawan, an international law professor at Universitas Indonesia, described the deal as a “concession of sovereign rights” to China, violating international law as outlined in the U.N. Convention on the Law of the Sea (UNCLOS).

“Since 2017, China has proposed joint development projects in disputed areas. Indonesia’s participation could weaken its position on sovereignty and territorial rights,” Darmawan wrote in an op-ed.

Indonesia officially rejects China’s claim to the waters around Natuna Island, which lies within its EEZ but is included in China’s nine-dash line.

Concerns Over Illegal Fishing

Merisa Dwi Juanita also expressed concerns over the potential rise in illegal, unreported, and unregulated (IUU) fishing by Chinese vessels.

“Indonesia’s overlapping claims narrative complicates law enforcement and could exacerbate losses for local fishermen,” she warned, calling for stronger maritime defenses and better protection for local fishing communities against aggressive actions by China’s coast guard.

Regional and Legal Implications

The Indonesian Foreign Ministry maintains that the agreement aligns with the 2002 Declaration on the Conduct of Parties in the South China Sea, which promotes peaceful cooperation. It insists the deal does not validate China’s nine-dash line claim and respects Indonesia’s sovereignty in the North Natuna Sea.

However, analysts argue the agreement may deepen disunity within ASEAN, particularly as it contrasts with a 2022 Indonesia-Vietnam EEZ agreement that took over a decade to negotiate. Critics warn that the partnership with China could delay ratification of such agreements and disrupt regional solidarity in negotiations with Beijing.

Darmawan described the deal as a strategic win for China, potentially eroding Indonesia’s sovereign rights by transferring decision-making to a joint committee. He urged Jakarta to independently develop the Natuna Islands rather than engaging in joint ventures with Beijing.

While Indonesia sees the cooperation as a step toward regional stability, questions remain about its long-term impact on national sovereignty and ASEAN unity.

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