Will ASEAN Membership Be Turning Point for Timor-Leste’s Economy?

thegeoeconomics.com | July 28, 2025

Suryo Bimantro, COGGS Intern

AFTER MORE THAN a decade as an observer and applicant, metal rich Timor-Leste is set to officially join the Association of Southeast Asian Nations (ASEAN) this year, with its membership scheduled to be formally ratified at the 47th ASEAN Summit in October 2025. Timor-Leste’s entrance into the Southeast Asian organization represents its decade-long struggle and progress as a “juvenile nation” that achieved national sovereignty and independence in the 2000s. Accepting Timor-Leste would also signify ASEAN’s emphasis on regional inclusivity and integration among nations within the region, despite significant economic and institutional disparities. This move would prioritize the development of Southeast Asian regionalism and unification above all else.

Such integration could potentially help improve Timor-Leste’s struggling economy. According to a 2025 report by the International Monetary Fund (IMF), Timor-Leste is ranked as one of the poorest nations in the Southeast Asian region, with a total GDP of approximately $2.1 billion USD and a GDP per capita of only $1,490 USD. ASEAN membership could also bring viable solutions to the critical issues the country is currently facing.

This article’s main purpose is to explain how Timor-Leste’s integration into ASEAN could offer opportunities for multilateral cooperation that would assist in national development and help address the challenges the nation continues to face. After all, multipolarity within ASEAN cannot be achieved if member countries focus solely on self-serving development.

ASEAN perceives its goal for economic cooperation as a priority for all its members without exclusion. This would provide Timor-Leste with the grand opportunity to learn from ASEAN states with longer experiences in maintaining and developing their economies. ASEAN has the capability to provide intensive training sessions for Timor-Leste’s government officials—sessions that provide expert insights and knowledge-sharing discussions within important subjects such as international trade, finance, tax management, resource management, and various other subjects that could help the Timor-Leste government to prepare its entry into the ASEAN economic framework, the next stage for its potential development within the Southeast Asian region itself.

Currently, this intensive training program has been done this year, specifically during the 11th–13th of March, 2025, in Timor-Leste’s capital city, Dili. This program involved several key actors, which include the Deputy Secretary-Director of the ASEAN Economic Community, the Asian Development Bank Country Director, the Malaysian Ambassador of Timor-Leste, the ASEAN Ministry of Foreign Affairs and Cooperation of Timor-Leste, and the rest are the ASEAN Secretariat staff, who are positioned as the trainers within the program. Every actor mentioned has the sole mission of preparing the economic and institutional readiness of Timor-Leste’s existing ministries and agencies as they finally integrate the nation into becoming a part of the ASEAN economic domain. If ASEAN’s intensive training program succeeds, it could bolster several solutions for some of Timor-Leste’s ongoing internal issues.

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Beyond Oil & Gas

According to the Ministry of Trade and Industry of Timor-Leste, the country is suffering from an overreliance on gas and oil exports. Specifically, around 90% of Timor-Leste’s exports consist of gas and oil, with little room for other industries to participate in international trade. An overreliance on oil and gas may demonstrate a country’s wealth in natural resources, but it also reveals vulnerability and a lack of progress within a country’s economy. Fundamentally, globalization has made the world economically interconnected. If the prices of both oil and gas were to decrease significantly in the future due to the global transition toward clean and renewable energy, then Timor-Leste’s export revenues could suffer a downturn, causing a halt in its economic development.

This applies similarly if the prices of oil and gas were to increase, in the form of the infamous Dutch Disease—an economic phenomenon where an overreliance on a specific sector drives up a country’s currency value. This could alleviate the country’s poverty rate and stimulate internal development in the short term. However, in the long term, there’s a risk that it would allow cheap foreign imports to overtake the country’s industries, preventing the private sector from growing or competing fairly, while foreign businesses become powerful stakeholders and slowly monopolize the economy from within. The people of Timor-Leste would not only suffer significantly from higher poverty rates, but they would also face rising inflation, a lack of innovation and sustainable development, and a cycle of exploitation that is indirect in nature.

With ASEAN’s capacity-building program and intensive training sessions, member states could take advisory roles in managing Timor-Leste’s overreliance on oil and gas by helping the country discover new natural resources, develop industrial skills, implement human resource capacity-building methods, and pursue various other initiatives to strengthen Timor-Leste’s market diversification and improve its dwindling private sector.

To further increase the chances of success for these diversified markets, ASEAN member states could open trade barriers between Timor-Leste and themselves—or even call upon nations within the Asia-Pacific region, such as Japan and South Korea, to begin investing in Timor-Leste’s diversified markets while engaging in more bilateral or multilateral trade activities. What’s the point of diversifying an economy if you can’t even diversify your consumers?

Obviously, oil and gas industrial dependency won’t just disappear in the short term; this is why ASEAN economic cooperation must prove itself to be stable, efficient, and continuous in providing strong results with Timor-Leste’s ministries and agencies.

Tapping into Minerals

As mentioned previously, an overreliance on two natural resources wouldn’t aid Timor-Leste’s survivability in the long term before it eventually turns into a fallen state. This is why more markets, especially within the private sector, need to be formed to expand Timor-Leste’s international trade and human resource capacity—markets that will be formed from the rich and plentiful mineral resources within the lands of Timor-Leste itself.

According to a 2003 study by Francisco da Costa Monteiro, Director of Energy and Minerals within Timor-Leste, Timor-Leste’s natural resources are abundant, encompassing not only the vast oil and gas reserves within the land but also a variety of rich minerals discovered within Timor-Leste’s coastal environments. These minerals are divided into two categories—metallic and non-metallic—to simplify understanding.

Metallic Minerals	Gold, copper, manganese, silver, and chromite.
Non-Metallic Minerals	Sand, gravel, limestone, clay, bentonites, kaolinites, marble, gypsum, and phosphate.

The fact that Timor-Leste’s rich minerals are scattered throughout the country yet it could barely develop its economy proves the vast, untapped potential it currently has. Firstly, its metallic minerals could provide market ideas that could diversify the economy and expand trade flows with other countries.

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Gold

Copper

Manganese

Silver

Chromite

Gold could serve both as an export-oriented market and a domestic manufacturing market. A lot of developed countries see the value of gold in many luxury brands and jewelry industries.

ASEAN must remember to advise Timor-Leste’s development regarding their human resource capacity in manufacturing to ensure gold will not just solely be used for foreign extraction, but can also be used as a new job market for gold manufacturing domestically.

According to the International Copper Study Group (ICSG), copper mining would reach an approximate number of 23.5 million tonnes within 2025, a 2.3% increase from 2024. This significant rise proves that copper mining could be a great asset for Timor-Leste’s developing economy. It would attract foreign investments, trade, and cooperation from both ASEAN and the entire global domain potentially.

Copper are used for manufacturing vehicles such as motorcycles and cars while also being a foundational material for phones and computers, objects that are central to the modern Southeast Asian contemporary culture nowadays.

Despite the harsh labor, this could prove to be a great economic diversification mechanism for Timor-Leste, though its sustainability over the future is questionable due to the rise of clean and renewable energy alternatives. That’s where the ASEAN economic cooperation comes in and discusses the issue with Timor-Leste.

Another form of useful mineral that Timor-Leste’s officials could unearth to diversify it’s economy would be the manganese mineral, a mineral that could strengthen metallic materials such as steel, a very important mechanism to have within foreign aviation, shipment, and even military industries if properly maintained.

Just like these other materials, silver holds a wide range of usage in terms of manufacturing itself. Silver is used to manufacture phones, computers, laptops, televisions, circuit boards, batteries, and so much more. It’s possible to improve upon a country’s trade and innovation, which is truly remarkable.

Just like other materials here, chromite also serves as a hardening material for aerospace, aviation, transport, and other manufacturing industries.

Through these discoveries alone, Timor-Leste proves itself to be a hotspot for many manufacturing-based industries. Through ASEAN economic cooperation, ASEAN could assist in Timor-Leste’s maintenance of these valuable minerals, creating jobs in the mining sector, logistics, manufacturing, sales and marketing, shipment and trade, and even finance. This could raise a new wave of skilled workers who could improve their livelihoods every time minerals are extracted or manufactured—a true capacity-building program born from the country’s rich natural resources.

ASEAN must provide sufficient advisory not only on proper management but also by connecting Timor-Leste with potential trade partners within and outside the region to ensure that trade flows and revenues increase rather than remain stagnant. Besides trade partners, advisory efforts should also focus on talent building through education and training programs for the youth of Timor-Leste in order to prepare for the introduction of new technology and manufacturing-based businesses across the country.

The Case of Corruption

The last and most crucial problem that ASEAN could assist Timor-Leste with would be the cycle of corruption, which could potentially destabilize all these capacity-building efforts. According to the Corruption Perceptions Index (CPI) in 2024, Timor-Leste ranks 70th out of a total of 180 countries around the world in terms of corruption, proving it to be less corrupt in comparison to other countries—though this result might be due to the country’s small population.

Through ASEAN economic integration, Timor-Leste could potentially lower that ranking even further through ASEAN’s collaborative platform, ASEAN-PAC (Parties Against Corruption), which was previously labeled as SEA-PAC (Southeast Asian Parties Against Corruption) in 2004.

The collaborative platform serves as a regional cooperation mechanism that provides extensive knowledge-sharing on anti-corruption methods and strategies; training programs to develop skill sets to counter corruption schemes; exchanges of expertise between countries through certified and experienced personnel and officials to help implement anti-corruption strategies within Southeast Asia; and conferences to gather ideas and strategies among ASEAN member states to further anti-corruption development across the region.

If Timor-Leste does not view its integration into ASEAN-PAC as a possibility, then all potential revenue growth from mineral resources, international trade, and many of its diversified markets could be at risk from the grasp of internal corruption—especially given that the country upholds democracy as its primary form of governance.

The bigger the economy, the merrier the people. The merrier the people, the more confident they are in raising children. The more confident the people become in having children, the more the population increases. As the population increases, centralized supervision becomes harder to manage within a full-blown democracy. Immense population growth begins to exert more and more plurality of morals and ethics as society grows, creating more hidden blind spots for those intelligent enough to exploit vast revenues for themselves among thousands or even millions of others around them.

[ Suryo Bimantro is an intern at COGGS and based in Surabaya, Indonesia. Opinions expressed those are his own. ]

References:

https://asean.org/asean-secretariat-supports-timor-lestes-asean-integration-with-phase-2-of-capacity-building-programme/.

Top Export-Import Countries. 2023. “Top Export-Import Countries.” Trade Information Portal. 2023. https://timor-lestetradeportal.com/id-id/site/display/808.

‌Da Costa Monteiro, Francisco, Vicenti Da, and Costa Pinto. 2003. “Exploring Timor-Leste: -Minerals Potential.” https://www.pecc.org/resources/minerals-a-energy/1264-exploring-timor-leste-minerals-potential-paper/file
Chen, Jackson. 2025. “Global Copper Surplus to More than Double in 2025 – ICSG.” MINING.COM. April 30, 2025. https://www.mining.com/?p=1177704.

‌Woolwine, C.S. 2019. Cyclic. https://cms.kpk.go.id/storage/tinymce/uploads/pdf/1733102405_E-Booklet-ASEAN_PAC.pdf

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Vietnam’s Challenges to be Critical Mineral Powerhouse

thegeoeconomics.com | July 26, 2025

Iftah Al Aqliyah

AS THE WORLD moves towards a green energy future, demand for critical minerals such as nickel, silicon, lithium, copper, and other rare earth elements (REE) is increasing because these are the key components in the production of products like electric vehicles (EVs), wind turbines, and solar panels. Located in Southeast Asia, Vietnam, is a major market for China, the US, Japan, South Korea, and the European Union. Beyond being a key market, the aspiring economic power also serves as a strategic partner in the region’s energy transition. The critical minerals project supports the development of green energy technology industries, boost environmental standards and place the nation in the map of global clean energy transition. This is evidenced by Vietnam’s commitment to achieving net-zero carbon emissions by 2050 at the COP26 Summit in Glasgow and the receipt of funding through the Just Energy Transition Partnership (JETP) program amounting to US$15.5 billion, while also launching the Power Development Plan VIII (PDP8). However, Vietnam faces significant challenges in meeting domestic demand for critical minerals and ensuring sustainable management.

Increase in Critical Minerals in Vietnam

Vietnam’s participation in commitments under the Action program for Transition to Green Energy and Mitigation of Carbon Dioxide and Methane Emissions from Transport is driving major development in renewable energy in 2021-2050. On a regional scale, projections from APEC Outlook show that the expansion of clean energy generation and electric vehicles (EV) will increase demand for critical minerals such as nickel, copper, cobalt, lithium, silicon and rare earth elements (REE) in the Asia Pacific region, including Vietnam. Demand for critical minerals on a regional scale is expected to increase in 2031-2040 compared to 2020 by 4.7 times (Huy, 2023). According to Phung Quoc Huy et al. (2024) total critical minerals demand is expected to reach 415 kilotons (kt) from 2021 to 2030 and increase to 2,133 kt from 2031 to 2050, or 15 times the 2021 level. Silicon and copper are the minerals most in demand due to the expansion of solar energy and the construction of power grids. It is estimated that copper accounts for 60% of total mineral demand, particularly for transmission systems, wind turbines, and electric vehicles (Huy et al., 2024). In addition, the need for nickel, cobalt and lithium for electric vehicle batteries will increase, especially as the local automotive industry such as VinFast grows. Although Vietnam has the second largest REE potential in the world, its use is still not maximized in terms of value-added exploration, production, processing and export.

Challenges in Critical Minerals Management

Vietnam’s domestic processing capacity : The nation’s domestic processing capacity is still low despite having many mineral reserves. Production of nickel, cobalt and copper has not met the surging demand. According to statistics, Vietnam produced only 16,881 tons of copper in 2021, despite demand for copper reaching more than 260,000 tons during the 2021-2030 period (Huy et al., 2024). On the contrary, cobalt production in the country is still below 200 tons per year.

Infrastructure and Technology Limitations: Vietnam has not successfully mastered the refining technology of minerals such as REEs that require complex and expensive chemical processes. Most mining facilities in Vietnam focus on extraction, not downstream. This hinders Vietnam from developing domestic value and acting as a value-added global supplier (Hiep, 2023)

Weak Regulation in Vietnam: The regulatory framework in Vietnam is still not strong and inconsistent in its implementation which hinders the overall development of the minerals sector. The complexity of licensing procedures, poor inter-agency coordination, and corrupt practices at the local and national levels exacerbate the investment and environmental monitoring situation. These conditions create hesitation for local and foreign investors (Dung et al., 2021).

Political Pressure and Dependence: Vietnam’s REE potential has attracted the attention of major countries such as the United States, China and Japan. For example, Vietnam signed an MoU with the US on a partnership for REE exploration and development (Nguyen et al., 2019). This joint venture certainly offers benefits and investment opportunities, but there is a risk of external dependency and possible exploitation of natural resources without fair and sustainable technology transfer.

copper oil lamp, macro, decoration, vintage, tradition — A copper-made lamp.

Vietnam’s ability to manage critical minerals is crucial to the continued transition to renewable energy. Rising interest in lithium, cobalt, copper and REEs is a result of reducing carbon emissions. However, limited production, infrastructure and technology, and weak regulations are barriers to achieving certain targets. Therefore, Vietnam needs to make necessary refomrs by strengthening policies and building sustainable international cooperation.

(Iftah Al Aqliyah is an intern at COGGS and student at Department of International Relations, UPN “Veteran” Jawa timur University, Surabaya, Indonesia)

References

Dung, N. T. K. D., Luan, P. V., Chinch, V. T., & Duoe, T. V. (2021, November 10). An Overview of Rare Earth Ores Beneficiation in Vietnam. 10.29227/IM-2021-02-20

Guthrie, C. (2023, October 23). Rare earth arrests rock Vietnam’s critical minerals plans. Mining Magazine.

Hiep, L. H. (2023, November 8). Vietnam’s Rare Earth Ambitions: Economic and Strategic Drivers. FULCRUM. Retrieved Juli Jumat, 2025, from https://fulcrum.sg/vietnams-rare-earth-ambitions-economic-and-strategic-drivers/

Huy, P. Q. (2023). Estimation of Required Critical Minerals for Clean Energy Technology in the APEC Region and Risks of Supply Chain Disruption. Asia Pacific Energy Research Centre. https://www.researchgate.net/publication/378302856_Estimation_of_Required_Critical_Minerals_for_Clean_Energy_Technology_in_the_APEC_Region_and_Risks_of_Supply_Chain_Disruption

Huy, P. Q., Sweetnam, G. E., & Hien, T. T. (2024). Shifting Toward Clean Energy Technology: Assessing Vietnam Critical Minerals Demand and Domestic Resources. IOP Conference Series: Earth and Environmental Science. 10.1088/1755-1315/1395/1/012001

Nguyen, N. B., Boruff, B., & Tonts, M. (2019, June 27). The Regulatory Framework and Minerals Development in Vietnam: An Assessment of Challenges and Reform. MDPI, 11. 10.3390/su11184861

Nguyen, U. (2023, April 13). Vietnam’s Rare Earth Mining Industry: An Overview. Vietnam Briefing. Retrieved July 25, 2025, from https://www.vietnam-briefing.com/news/rare-earth-mining-vietnam.html

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Singapore’s Dual Identity: Heart of Global South, and Soul of North?

thegeoeconomics.com | July 24, 2025

Alvino Adian Denata

SINGAPORE, A SMALL nation in Southeast Asia that achieved independence in 1965, has become one of ASEAN’s most prominent economic powerhouses. With a high average income, quality of life and a good bureaucracy, Singapore has a good reputation in the global arena, compared to neighbouring countries, one of the proofs is that Singapore’s passport is the strongest passport in the world. The rapid development in the fields of technology, health, education and fast infrastructure makes the condition of Singapore become stable and become a country in the spotlight of the world. This article will briefly discuss Singapore’s journey from a small colonial trading post to a global financial centre, and will also analyse how it has evolved to challenge traditional classifications of the country and highlight the complexities of its dual identity.

Historical Context : From Colony to Economic Power House

In 1819, Stamford Rafles of the British colony, first landed in the area today known as Singapore to establish a post point for strategic trade needs, especially for British colonies in the Southeast Asian region. Until 1824, the territory officially fell to the British from the Sultanate of Johor. Within just few years, Singapore, along with Penang and Malacca, formed the Straits Settlements under the British which later became a Crown Colony. Over the years Singapore developed as a port and a point of attraction for traders from various parts of the world, until the end of World War II where the Japanese power managed to weaken British power, which was used by Singapore to achieve self-government under the British Commonwealth. Singapore joined the Malaysian federation on 16 September 1963, which lasted for two years. Then decided to become independent on 9 August 1965.

Under the leadership of Lee Kuan Yew, Singapore significantly transformed into a highly developed country, starting with implementing rapid industrialisation and building industrial zones to attract foreign investment, as well as focusing on human resource development. Singapore also focused on opening up to multinational companies by providing infrastructure, legal and tax guarantees that became a major attraction. By investing heavily in education, they are able to produce a skilled and productive workforce. Singapore has made its way into the world’s spotlight after experiencing an average GDP increase of 7% since independence and achieving a 9.2% increase per year in the first 25 years. Continuing to focus on education, infrastructure and technology, Singapore is fast becoming a first world country in the third world region in less than half a century.

Identity Classifications: Global South or Global North?

However despite Singapore’s rapid economic development, the country is still classified under the Global South classification, due to its geographical and cultural ties. So, what really is the difference between the Global South and the Global North?

The global south is defined as a region occupied by developing or even underdeveloped countries. It is generally located in the southern hemisphere, and is often associated with a history of colonialism. In some scholars’ views, the global South is regarded as a region that serves as a means of exploitation for the North in the world order of global capitalism. On the other hand, the North is defined as a group of developed countries that have large economic, political, economic and dominance powers. The North is considered as the controller of the world, as a form of dependence, seen in the utilisation of the South’s raw natural resources that provide many benefits to the North, while the return is the destruction of the earth’s environment.

The division of these two economic groups is not entirely correct, because many criteria overlap and sometimes do not match the grouping labels they get compared to the facts on the ground, such as Singapore. As a reminder, this grouping is not only oriented towards regions, but rather economic inequality and strength in the global arena. From the facts and notions constructed, this classification creates a metaphorical narrative, which cannot be fully interpreted. In the current era, many developing countries have finally erased the boundaries of the North and South in the contemporary era, which means that identities and classifications are no longer appropriate. So is this classification actually based on the division of the world, economically, or is it just a paradox for the sake of global domination of the big countries in the north, which massively control the major world bodies.

The Paradox of the North and the South: Singapore’s Perspective

Despite having a strong history and culture with the global South, Singapore is well qualified to enter this world-dominated region from an economic and institutional perspective. With a GDP per capita of USD 82,000 (2023), Singapore can even rival the GDP figures of the United States and Switzerland. With rapid alignment in technology, standard of living and quality, Singapore is getting closer to the North in this regard. Singapore is also an economic centre with institutions such as MAS, which can compete with similar institutions in the US. Singapore is home to over 1,000 multinational companies, with a stable legal, political and economic climate. With a human development index score (reaching 0.939 in 2022), Singapore has been able to improve the level of health services, education and reduce crime, which is almost equivalent to the welfare of Nordic countries.

In terms of more general international relations theory, namely dependency theory, the South tends to be highly dependent and trapped in a long cycle with the North, while Singapore is the centre of all sectors that the South depends on the North. From the explanation above, clearly, the substance and function of Singapore is a North World country. This grouping is really just a homogenising label that forgets other factors.

Singapore has a unique situation that doesn’t fit neatly into usual categories. It isn’t clearly part of the Global South, which usually includes countries that are less developed or have trouble getting resources, nor is it like the typical Global North countries because of its location and culture. This mix of things creates a confusing situation. Even though Singapore is very wealthy, similar to many Northern countries, its income inequality is closer to that of poorer nations. This is shown by its Gini coefficient, which is around 0. 38 after taxes and transfers.

Singapore relies heavily on labour from South Asia, which is often paid low salaries and works in sectors such as construction and domestic care. The government conducts elections, but the People’s Action Party (PAP) has been in the lead for many years. The system is often criticised for not providing much freedom, which is in contrast to South Korea’s liberal system. However, the system helps maintain the country’s stability, which is considered important in the South. Singaporeans enjoy a lifestyle influenced by global trends such as Western media and products, but remain connected to Asian traditions. It shows that with strong leadership, investment in human capital, and openness to international trade, a small country lacking natural resources can be successful. But it also raises questions about equity, resilience, and preserving cultural identity in an increasingly globalised world. Singapore’s success is a good example for developing countries, showing that rapid modernisation can be achieved with tight management and a practical economic plan. However, its small size, lack of natural resources, and unique history make it difficult for other countries to replicate its model. In addition, the use of strict government control has fuelled discussions about the balance between freedom and development. Singapore shows that economic growth can happen alongside cultural and geographical differences, challenging the usual idea that only Northern countries set the standard for what it means to be developed.

Conclusion

Singapore is a clear example of how the global classification between the ‘Global South’ and the ‘Global North’ no longer fits today’s reality. On the one hand, geographically and historically, Singapore is at the centre of the global South-rooted in a context of colonialism, territorial dependency and limited natural resources. But on the other hand, the country has evolved into an entity that operates with the ‘soul’ of the global North-high standards in terms of technology, education, economic stability, and institutional structures.

This contradiction becomes clearer when we realise that even though Singapore has the same or even better development indicators as the North, it still falls under the South. This suggests that this classification is more of a geopolitical construct than an accurate reflection of a country’s condition. Moreover, Singapore demonstrates the irony of modernity: a highly developed country that still faces high income inequality; an economically efficient and competitive country, but with tight political control; a country that is considered a model of development, but is difficult for other developing countries to emulate because of its uniqueness.

Singapore is not only an exception, but also a challenge to the dominant narrative of development. As such, Singapore stands as a paradox of global identity: it is a ‘Global South country that has become a globalised nation. So why is the country with the world’s strongest passport still being debated?

[ Alvino Adian Denata is an intern at COGGS and student at Department of International Relations, UPN “Veteran” Jawa Timur, Surabaya, Indonesia. The opinions expressed are the author’s own. ]

References

Chase-Dunn, C. &. (1995). Discusses global economic structures, core-periphery model relevant to Global North-South. World-Systems Analysis. Annual Review of Sociology, 387-417.

Elkan, R. v. (1995). Singapore’s Development Strategy. In M. K. Bercuson, Singapore A Case Study in Rapid Development (p. 75). Washington DC: International Monetary Fund.

SG101. (2025, July 16). 1959-1965: Early Economic Strategies. Retrieved from https://www.sg101.gov.sg/: https://www.sg101.gov.sg/economy/surviving-our-independence/1959-1965/

Zhou, P. (2025, May 8). The History of Singapore’s Economic Development. Retrieved from https://www.thoughtco.com/: https://www.thoughtco.com/singapores-economic-development-1434565

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Indonesia Morowali Industrial Park: Largest Nickel Factory’s Economic Gain, Ecological Loss

thegeoeconomics.com | July 24, 2025

Andhini Octa Maharatih

AS INDONESIA ASPIRES to achieve its dream, the archipelagic nation of Southeast Asia requires heavy investment to support its economic growth. With natural resources such as nickel, coal, gold, and minerals, more than 38 foreign mining companies, both public and private, have invested in Indonesia due to the low cost of raw materials, relatively low wages, and strategic location rich in natural resources. This has undoubtedly contributed to Indonesia’s economic growth and development. In 2024, the Ministry of Investment and Downstream Industry recorded investment growth of 15.24% and downstreaming of 21.6%, making it the largest contributor to economic growth in Indonesia. China is one among of the five major countries eager to invest in Indonesia.

Indonesia Morowali Industrial Park

PT Indonesia Morowali Industrial Park (IMIP), built by Shanghai Decent Investment Ltd under the Tsingshan Group and engaged in the nickel industry to be used as materials such as stainless steel, UV batteries and carbon steel, specifically in Morowali, Central Sulawesi. Established since 2014, IMIP has created extensive employment opportunities for the people of Sulawesi, almost 93% of whose workers are from Indonesia and has become one of the largest nickel companies in Indonesia with a percentage of 50%. In addition, compliance in paying royalties and taxes makes this company increasingly provide long-term benefits to the country’s foreign exchange that continues to flow. PT IMIP also certainly has a significant impact on economic growth recorded 71% and ranks 10th as a company that influences economic growth achieved by national strategic projects.

Workers Safety inside World’s Largest Nickel Factory

However, despite significant economic growth, a number of workplace accidents remain, despite compliance with occupational safety and health regulations. In 2023, a workplace accident occurred when a furnace exploded, sparking a fire. This fire resulted in numerous fatalities, with more than 13 workers killed and others suffering serious and minor burns. A similar incident occurred in 2022, when a nickel shelter exploded at the company’s unit. This accident left numerous workers injured, forcing them to silence their voices for the sake of the company’s reputation. The explosion generated a cloud of smoke that was inhaled by residents due to the company’s proximity to residential areas.

Not only in 2023, but in 2025, work accidents also occurred in the IMIP area, which is prone to landslides caused by heavy rainfall and vulnerable points that can cause flooding. Reports from the Ministry of Environment revealed that there are practices that can endanger the surrounding community and the environment. There is a practice of open dumping, which drains floodwater into the sea without intensive waste treatment, causing some residential areas to be inundated. Disposal of nickel slag and tailings in several vulnerable areas is also not being addressed by the government, which of course can result in heavy metal pollution that is detrimental to marine life and soil fertility.

In addition to the discovery of open dumping practices, a work accident resulted in the deaths of three workers due to a landslide that occurred in the tailings pond disposal area due to heavy rain. The community is naturally concerned about this because, in addition to being close to residential areas, tailings are hazardous waste, which, if not intensively managed, could expose residential areas to toxic waste. The public believes the frequent accidents are a result of poor safety measures. Some are demanding an evaluation and improvement of the safety of the tailings waste facility to prevent similar incidents in the future.

Indonesian mining performance data shows that PT IMIP’s working conditions rank eighth with score 29 among nickel companies in Indonesia, with a low level of occupational safety monitoring for its workers. These recurring incidents have prompted media outlets to investigate the frequent accidents. However, the media are not permitted to delve deeper into the company’s safety procedures. In response to public disappointment, PT IMIP frequently engages in social and environmental sustainability initiatives to maintain public acceptance. These initiatives include the provision of cleaning facilities, garbage trucks, mangrove planting in coastal areas, community involvement in waste management, and more. This has led to speculation that the company is deliberately greenwashing itself to maintain a positive public image despite the high number of workplace accidents and the potential for waste to disrupt the natural ecosystem.

Therefore, the state needs to oversee the ongoing down streaming process. Full government oversight and firmness are required to provide special treatment for problematic companies. ESG issues are currently being touted internationally, in connection with the 2030 SDGs. This is not only about preserving the environment but also about creating a safe space for indigenous communities to enjoy the natural resources inherited from their ancestors. Developing countries are often faced with the trade-off between investor-friendly approaches and the sacrifice of the environment and long-standing indigenous communities due to their ambitions to generate economic growth on the international stage. However, the state also needs to be firm in taking action against foreign companies that violate regulations by thoroughly investigating the issues, building adequate facilities, and ensuring public freedom of expression.

[ Andhini Octa Maharatih is a COGGS intern and student at Department of International Relations, UPN Jawa Timur Veteran University. ]

References:

https://kemenlh.go.id/news/detail/negara-tidak-boleh-lengah-menteri-lh-sidak- kawasanindustri-nikel-di-morowali-temukan-pelanggaran-lingkungan-serius https://www.bkpm.go.id/id/info/siaran-pers/rosan-realisasi-investasi-terus- bertumbuhindonesia-konsisten-jalankan-hilirisasi https://responsibleminingindonesia.id/id https://jdih.esdm.go.id/common/dokumenexternal/UU%2032%20Tahun%202009%20(P PLH).pdf https://mongabay.co.id/2025/06/25/klh-temukan-pelanggaran-lingkungan- serius-di-imip/ https://imip.co.id/wp-content/uploads/2025/02/IMIP-ESG-Report- 2023.pdf

Indonesia Morowali Industrial Park: Largest Nickel Factory’s Economic Gain, Ecological Loss Read Post »

Cryptocurrency in Global South Trade: The Iran Case Study Analysis | Read Now|

thegeoeconomics.com | July 22, 2025

Vericko Dhuha Zahir Negara, COGGS Intern

[Abstract : This research looks at how cryptocurrency’s role is becoming more important as an alternative in international trade, especially for countries that are not well-supported by the usual global financial system. As the SWIFT network is being used more often as a tool for political reasons to apply sanctions and control economies, many countries particularly in the Global South are looking for alternative solutions. Cryptocurrency, which is based on blockchain technology, allows people to send money directly to each other without needing banks. This reduces reliance on traditional financial institutions, cuts down on costs, and makes it easier to send money across borders quickly. Using the World-Systems Theory and the concept of Decentralized Finance, this study shows how blockchain-based currencies give countries like Iran more control and stability by helping them avoid sanctions and manage their economy better. The research used a qualitative-descriptive approach, looking at information from academic papers, news articles, and reports from organizations to spot trends. The results show that cryptocurrency’s role helps trade happen in ways that traditional systems don’t allow, and it changes how global economics works by being a clear, fast, and politically neutral option compared to conventional systems. ]

INTERNATIONAL TRADE IS an important aspect for a nation to increase its economic growth. One of the biggest elements of international trade is the Society for Worldwide Interbank Financial Telecommunication also known as SWIFT, which has been the backbone of banks from various nations. However, SWIFT is not a neutral system; it has been used as an international political tool in the form of sanctions and other economic limitations (Cipriani et al., 2023). SWIFT works as a safe communication provider between banks, because of that almost any transnational currency operates under SWIFT. As a result, anytime when a nation or company has limited actions by SWIFT it can result in an economic crisis or a bankruptcy. This phenomenon of economic limitations has increased over time due to SWIFT not being a neutral system. SWIFT has increasingly become a political control tool to give sanction and limit any country’s economic activities if that country is considered a threat. This results in cost issues and regulatory restrictions that blocks developing countries from reaching not only western market but also the global market to gain a higher profit. For example, most Global South nations are submitted to this system which creates unequal dependency and makes them

vulnerable to sanction and other political-economic pressure. For that reason, many nations and companies tried to find a way to do international trade without relying on SWIFT’s system. This led them to blockchain technology, which uses cryptocurrency that was invented by an unknown individual called Satoshi Nakamoto back in 2009. Blockchain eliminates the needs of banks correspondent, documents, and time needed. Cryptocurrency offers real-time transaction or remittance, low cost, and direct access from buyer to seller without relying on banks.

saffron, saffron strands, kitchen, cook, taste, aroma, red, nature, spoon, meal, refine, tender, expensive, seasoning, food, real, real saffron, saffron, saffron, saffron, saffron, saffron — [Iranian saffron and pistachios are famous for quality and highly in demand in the US market, despite sanctions]

Theoretical Framework

This research was conducted using the World-System theory as a way of understanding the world as a hierarchically structured capitalist system, with a dominant core and an exploited periphery (Wallerstein, 2004). According to Wallerstein, the capitalist world system began around the 16th century in Europe, through colonial expansion, international trade, and the formation of modern nation-states. Since then, this system has continued to develop into a global system with one hegemony that switches over time. World-systems theory supports an interdisciplinary approach by integrating historical, political, economic, and cultural analysis within a measured framework. On top of that, this research will also apply the Decentralized Finance (DeFi) concept. DeFi is a new model in the finance world that utilizes blockchain technology and smart contracts to provide financial services without intermediaries like banks (Zetzsche et al., 2020). This technology allows users to access financial services by peer-to-peer with just the internet and digital wallet. DeFi allows users to avoid traditional or conventional ways of international transaction or remittance which is more costly and time-consuming. As a whole, DeFi is a model that changes how transnational finance activities work.

Methods

Every data was collected through in-depth literature studies, news articles, academic publications, and any documents related to blockchain, cryptocurrency, and SWIFT. On top of that, data analysis was carried out by identifying patterns, themes, and narratives that emerged from the collected data, which were then interpreted. This approach allows the author to describe things in detail while keeping it concise. In addition, the qualitative-descriptive method enables the author to remain adaptable to the different matters of the subject regarding international trade. This method aims to provide understanding of the dynamics of the phenomenon being studied.

The Case of Iran

Global South countries’ challenges are often stacked on top of another with systemic issues, international actors interfering, lack of facilities or technology, and internal economic issues. This creates a demand for trusted and self-custodial currency which led to digital coin using Blockchain technology (Böhmecke-Schwafert & Moreno, 2023). Cryptocurrency and blockchain offer faster, cheaper, and more accessible cross-border transactions, such as remittances and trade, while avoiding international restrictions. Due to many Global South countries facing both internal and external trade challenges, this pushes them to switch to a currency that can avoid those challenges. The implementation of Blockchain in the Global South can improve the Global South’s position and profit as a raw material supplier within the global supply chain, rather than being limited by conventional trade systems. Blockchain’s transparency and traceability facilitate Global South in international trade especially for agriculture and natural resources (Eliason, 2022). Even with the risk of being hacked and losing digital coins, the trend of utilizing cryptocurrency is not slowing down, instead it creates other ways to store digital coins such as using cold wallets. Global south countries develop domestically controlled blockchain and support cryptocurrency legal matters to increase digital currency exposure and trust around the world. On top of that, blockchain and cryptocurrency should also support local manufacturers, SMEs, cross-border trade, and remittances among Global South citizens (Eliason, 2022).

Since the United States withdrew from the JCPOA nuclear deal in 2018, Iran has been re-imposed on \economic sanctions. These sanctions primarily target Iran’s oil sector and financial system. As a result, Iran’s currency exchange rate has plummeted, while inflation has sky-rocketed. In this economic state, both the Iranian government and civilians have begun seeking alternative, more stable stores of value and exchange rates. One widely used solution is cryptocurrency. There are several key reasons why crypto has become so attractive to Iran. First, cryptocurrencies are used as a hedge against inflation and currency devaluation. Many Iranians store their wealth in crypto, which is considered more stable than conventional currencies. Second, cryptocurrency allows the government and businesses to evade international sanctions, particularly from the US. Since 2019, the government has officially supported Bitcoin mining, taking advantage of cheap domestic electricity. On top of that, Iran uses crypto as a digital currency for export commodities. In August 2022, Iran began using crypto directly to pay for imports. The government is also exploring the use of gold-backed digital coins with Russia to strengthen bilateral transactions and avoid the US dollar and SWIFT. This move by Iran sparked a response from the international community. The US government expanded its list of sanctioned entities, including companies in the United Arab Emirates, Turkey, and Hong Kong that help Iran sell oil and launder money through crypto. The US Treasury Department has also increased cooperation with blockchain intelligence agencies to track suspicious transactions. However, the effectiveness of this law enforcement remains limited as Iran actively seeks new ways to evade detection, including through anonymous decentralized finance protocols. Because of that, International policy needs to be more integrated to both support cryptocurrency as an alternative for international relations actors to have a new trade system that is operated under blockchain technology.

Conclusion

Cryptocurrency has caused a big shift in how countries trade internationally, especially for those facing difficulties in the current global financial system. SWIFT, which is a system that has been used a lot in international banking, is sometimes controlled by politics and can limit certain countries from accessing the global market, especially those in the Global South. Cryptocurrency offers a different way for these countries to take part in the economy. It works through blockchain technology, which doesn’t need third parties like banks. This makes transactions faster, cheaper, and more open. This is especially helpful for countries that are under sanctions or facing financial limits, like Iran. Cryptocurrency also helps more people and businesses around the world to take part in financial activities. With decentralized finance, people can connect directly with others without needing traditional banks. This is especially useful for small businesses and even governments. On top of that, blockchain’s ability to track transactions helps in areas like farming and exporting raw materials, which are important for many countries in the Global South. This makes their role in global trade stronger. Though there are risks like hacking and unclear rules, more people are using cryptocurrency, showing how important it is. In the end, cryptocurrency is a brand new technology that gives people more control over their money and challenges the conventional financial systems. It creates new paths for trade that are fairer, more open, and not controlled by political power or banks.

[ Vericko Dhuha Zahir Negara is a COGGS Intern and Student at International Relations
Faculty of Social and Political Sciences National Development, University “Veteran” of East Java, Surabaya, Indonesia]

References

Marco Cipriani, Linda S. Goldberg, & Gabriele La Spada (2023). Financial Sanctions, SWIFT, and the Architecture of the International Payment System.
Slatvinska Valeria, Demchenko Vitaliia, Tretiak Kateryna, Hnatyuk Rostyslav, & Yarema Oleg (2022). The Impact of Blockchain Technology on International Trade and Financial Business. DOI:10.13189/ujaf.2022.100111
Patrick Schueffel (2021). DeFi: Decentralized Finance- An Introduction and Overview
Dirk A. Zetzsche, DouglasW.Arner, & Ross P. Buckley (2020). Decentralized Finance
Immanuel Wallerstein (2004). World-System Analysis An Introduction.
Rose Mahdavieh (2022). State Adoption of Cryptocurrency: a Case Study Analysis of Iran, Russia, and Venezuela.

Moritz Böhmecke-Schwafert & Eduardo García Moreno (2023). Exploring Blockchain-based Innovations for Economic and Sustainable Development in the GlobalSouth: A Mixed-Method Approach based on Web Mining and Topic Modeling.

Antonia Eliason (2022). BLOCKCHAIN, TRADE, AND THE GLOBAL SOUTH:

ENTRENCHING SUPPLY CHAIN ROLES.

Reuter (2025). S. issues additional Iran-related sanctions, Treasury website shows.
Arab News (2022). How Iran is cashing in on cryptocurrencies to evade US sanctions.

Cryptocurrency in Global South Trade: The Iran Case Study Analysis | Read Now| Read Post »