SINGAPORE-INDONESIA ECONOMIC RELATIONS

Abstract

Commercial emporia have largely flourished alongside agrarian states throughout history. This dichotomy has continued in the Southeast Asian region till today. The natural economic complementarity of a land-based economy with abundant natural resources and sea-based economy equipped with expertise in trading and commerce; and the interdependence in the political and economic sphere can be possible sources of conflict. Confrontations at various levels were the unavoidable destiny of the first historical empires of Majapahit and Srivijaya, just as they have affected Singapore and Indonesia much later when they were ruled by British and Dutch during the colonial rule where the two rival colonial systems have similarly keenly competed with one another. The difficult coexistence of these two types of states has produced an unstable equilibrium which exerts pervasive influence over the nature of economic and political relations within the region. Singapore and Indonesia represents these two types of states in modem Southeast Asia. Singapore and Indonesia cannot be more different from each other. Their different physical endowments, socio-economic and political realities and history have coloured their perception of the world differently. Yet, the largest and the smallest states in Southeast Asia have developed a special and intriguing relationship with each other since their advent as independent nations in 1945 and 1965 respectively. Their difficult relationship in earlier years has transformed to a relationship which has been described as "excellent" by leaders in the two countries in recent years. Multiple points of contacts have been made, the most interesting and massive development being that in the economic field. This academic exercise thus, aims to examine their relations in the economic arena.