China’s telecommunication equipment giant Huawei has solidified its standing in Indonesia, raising concerns that Southeast Asia’s largest economy is becoming increasingly reliant on a telecoms provider that is facing greater scrutiny from the West.
Indonesia has signed a flurry of agreements with Huawei in recent months, underlining the firm’s eagerness to strengthen its grip on the country’s US$27 billion (S$36 billion) telecoms and digital services industry.
The most notable deal was the October memorandum of understanding (MOU) with the Presidential Staff Office to train 100,000 Indonesians in technology-related fields through vocational programmes, the first agreement of its kind for the Indonesian government.
Moeldoko, one of President Joko Widodo’s top aides, said during the signing ceremony that Indonesia needed at least 9 million employees in the information and communication technology (ICT) sector, “so the government cannot work alone to realise this”. In August, the president said US$2 billion would be allocated to support the ICT sector in the current financial year.
“The recent MOU between Indonesia and Huawei on spearheading 5G is something that we have already anticipated as Huawei is a proactive vendor in the region. Huawei’s reputation as a cutting-edge technology provider seems to have influenced Indonesia’s decision,” said Melinda Martinus, lead researcher in sociocultural affairs at the Asean Studies Centre at Singapore’s ISEAS-Yusof Ishak Institute.
“We should not be worried about Huawei’s growing presence and competitiveness in Indonesia and Southeast Asia. However, we should be concerned that Indonesia and Southeast Asia will become heavily reliant on Huawei as the only technology vendor.”
Huawei first entered Southeast Asia, including Indonesia, some two decades ago when telecoms operators started to strengthen their mobile connections.
It helped them develop infrastructure to support internet networks, from 2G to 4G, and analysts said these partnerships are unlikely to ebb in the 5G era despite the West’s resistance to Huawei.
“Indonesia’s telecommunications infrastructure, from upstream to downstream, is largely propped up by Huawei and ZTE, so if
Greater access to Indonesia’s telecoms market would reward Huawei with growth opportunities, as only about 70 per cent of Indonesia’s 270 million people are now online. And by working together with the government, Huawei would also gain trust that allows it to participate in future projects.
The Widodo administration, for example, is keen on building a 5G-powered new smart-capital in east Borneo. Involvement in the US$33 billion project would be potentially lucrative for any telecoms company.
“Huawei’s chance to score a telecoms contract for the new capital is quite big, since they already have made a huge contribution in Indonesia’s technology development in the past years,” said Heru Sutadi, executive director at Indonesia ICT Institute.
Indonesia also has an infrastructure project named Palapa Ring to build a national fibre optic network that is accessible by all corners of the archipelago.
“Huawei’s equipment is largely used in Palapa Ring, so it paves the way for Huawei to work together with the government to develop the new capital, although we don’t know when the construction would begin because of the pandemic and economic recession,” he added.
Indonesia also holds a favourable view about Huawei as its equipment is better priced compared with that offered by its Western rivals. In the 2G and 3G era, telecoms operators used equipment made by various brands including Canada’s Nortel, Motorola, and Siemens. Now, they largely use products from Huawei, ZTE, Ericsson or Nokia, Heru said.
Britain last week announced it would remove all existing equipment made by Huawei from its 5G infrastructure by 2027 due to security concerns, essentially banning it from the next-generation network development and leaving phone carriers to rely on Nokia and Ericsson.
In July, British officials said US sanctions against Chinese telecoms equipment providers made it hard to verify the security of their supply chain.
The United States has for years deemed Huawei and ZTE as national security risks due to alleged intelligence the companies provided to Beijing. It has persuaded its allies, including Australia and Japan, to also shun Huawei.
Huawei and ZTE have repeatedly dismissed claims that they carried out espionage for Beijing.
Meanwhile, Indonesia has joined its Southeast Asian neighbours, including telecoms operators in Malaysia, the Philippines, Thailand, Cambodia, Myanmar and Laos, in forming partnerships with either Huawei or ZTE to develop their 5G networks.
One exception is Vietnam, where state-owned operator Viettel decided to launch its own 5G network using equipment made by Ericsson and Nokia, as well as 5G-enabled chipsets made by Qualcomm.
Resistance is also growing in Singapore, with three of the city state’s largest telecoms companies picking Ericsson and Nokia over Huawei as their main 5G equipment suppliers.
Martinus of the ISEAS-Yusof Ishak Institute said Southeast Asian states need to avoid taking sides.
“It is critical for Asean to keep its technology market open, competitive, and diversified, as Asean is committed to remaining neutral to its external partners,” she said, referring to the Association of Southeast Asian Nations.
“I believe in the future there will be geopolitical tensions sparked by technology competition. Asean should anticipate the war on digital payment in years to come, for instance, as many American and Chinese providers such as Google, PayPal, Alipay and Tencent have already made inroads to Southeast Asia.”
This article was first published in Asia One . All contents and images are copyright to their respective owners and sources.
