Lesson video

Hello and welcome.

My name is Ms. Harrison, I'm so excited to be learning with you today.

Today's lesson is called cost and benefits of changing international relations.

Grab everything you might need for today's lesson and let's begin our learning.

By the end of today's lesson, you'll be able to explain cost and benefits of changing international relationships and the role of foreign investment in Indonesia.

Before we can begin this learning, we need to define the keywords that we'll be using throughout today's lesson.

The keywords are investment, globalisation, and transnational corporations.

Investment, this is money, resources, or support provided by other countries or companies, especially TNCs, to help grow Indonesia's economy.

Globalisation, this is the process of countries becoming more connected through trade, technology, and international relationships.

Transnational corporation, TNCs are large companies that operate in several countries.

They often have headquarters in one country and factories or offices in others.

Now that we've defined these keywords, we can begin our learning.

The first question we are going to explore in today's lesson is, how has global trade helped and harmed Indonesia? International relationships are the connections between countries through trade, politics, investment.

Trade is the exchange of goods and services.

Politics involves working together on issues like climate change or security.

And investment means one country putting money into another's business or infrastructure.

These links help countries to grow, solve global problems, and stay connected.

Lucas said, "Globalisation has helped with international relations." And he's correct, it has.

It's allowed for communication to be faster, for trade to be quicker, and much more.

Aisha has said, "Good international relationships can affect how much influence a country has," and she's right.

The better their international relationships, the more influencer country has.

What can you notice about the rate of value of exported goods and services in Indonesia over time? Pause the video here whilst you have a think, and press play when you're ready to continue? Fantastic.

Izzy said, "The value of Indonesia's exports to other countries has increased a lot over the last 60 years." I hope you managed to identify that as well.

Indonesia is connected to major global markets, including the EU, USA, China, and ASEAN countries.

These trade links allow Indonesia to explore products like palm oil, coffee, wood, fuel, and food.

For example, palm oil goes to the EU and ASEAN, while textiles and electronics are exported to the USA and China.

These trade relationships have helped Indonesia's economy grow by creating jobs, increasing income, and improving access to global goods.

For instance, exporting palm oil brings in a lot of money and partnerships with other countries encourages investment.

But there are also negative impacts.

The high demand for palm oil has led to large scale deforestation, which harms the environment and the wildlife.

Some workers face poor conditions, and Indonesia can become too dependent on just a few key products or countries.

Price changes in global markets can also affect the economy quickly, so overall, global trade has brought big opportunities to Indonesia, but it also comes with serious environmental and economic challenges that need to be managed.

What is it key export from Indonesia to the EU? Is it A, cars, B, crude oil, C, palm oil, D, coffee? Pause the video here whilst you decide and press play when you're ready to continue.

Excellent.

The answer is C, palm oil.

Well done if you identified that correctly.

Let's look at some of the key opportunities that global trade has created for Indonesia economically, socially, and politically.

First, export growth has helped to strengthen Indonesia's industries.

Selling products like palm oil, textiles, and coffee to global markets has boosted production and supported economic growth.

Secondly, this growth in trade has led to more job opportunities, especially in urban areas.

Sectors like manufacturing and services have expanded attracting people to cities for work.

Third, trade agreements with countries and international groups have attracted long-term investment.

This supports infrastructure development, new businesses, and technology upgrades.

Finally, through trade and strong international relations, Indonesia has gained global political recognition.

It's now a member of the G20, reflecting its growing importance on the world stage.

A good example of how trade has helped Indonesia is the Indonesia-Japan Economic Partnership Agreement signed in 2007.

This agreement aimed to boost trade, investment, and international relations.

As a result, major Japanese companies like Toyota, Honda, and Panasonic expanded their operations in Indonesia.

In places like Karawang, this led to the growth of manufacturing hubs and created thousands of new jobs, especially in the automotive and electronic sector.

It shows how international trade can directly support economic development and employment.

The graph shows Japanese investment in Indonesia, and I've marked when their trade agreement occurred.

And Lucas said, "Since the trade agreement, investment has increased rapidly," and he's correct.

True or false, the Indonesia-Japan Economic Partnership Agreement caused Japanese companies to leave Indonesia and shut down factories? Pause the video here whilst you decide and press play when you're ready to continue.

Excellent, this statement is false.

I would now like you to explain why.

Pause the video here and press play when you're ready to continue.

Fantastic, the reason why the statement is false is because, the Indonesia-Japan Economic Partnership Agreement actually encouraged more Japanese companies like Toyota, Honda, and Panasonic to invest in Indonesia, especially manufacturing hubs like Karawang creating thousands of jobs.

Well done if you managed to explain that correctly.

While international trade has helped Indonesia grow, it has also created serious challenges, especially for certain groups who don't benefit at all.

Firstly, cheap imports from countries like China can threaten local small businesses in Indonesia, they often struggle to compete with lower prices.

Secondly, Indonesia is more exposed to global economic problems. When there's a global financial crash, it can quickly lead to job losses and economic damage at home.

Third, trade benefits are often uneven.

Cities gain far more from trade than rural areas, widening the gap between urban and rural areas.

And finally, although exports bring in money, the wealth isn't shared fairly.

Many people, especially in poorer communities, don't see the benefits.

What is one challenge created by global trade for Indonesia? Is it A, all villagers now have more factories, B, wealth from exports is equally shared, C, cheap imports threaten small businesses, or D, every region grows at the same speed? Pause the video here whilst you decide, and press play when you're ready to continue.

Excellent.

The answer is C.

Cheap imports threaten small businesses.

Well done.

Global economic crisis can have a major impact on Indonesia by reducing demand for its exports.

When countries around the world face economic problems, they buy fewer goods from abroad, and this leads to job cuts and export based industries in Indonesia and slows down the country's economic growth.

The graph shows how this happens in real terms. During the Asian financial crisis in the late 1990s, foreign direct investment in Indonesia dropped sharply.

A similar pattern happened during the 2008 global financial crisis, and again, during a more recent economic downturn in China, one of Indonesia's key trade partners.

How do you think this affects global relationships? Pause the video here whilst you decide and press play when you're ready to continue.

Excellent, global economic crisis can weaken international relationships by reducing trust and cooperation between countries.

When a crisis hits, countries often focus on protecting their own economies by cutting imports, reducing investments abroad, or prioritising domestic industries.

This can make trade partners like Indonesia feel unsupported or even exploited.

For example, during the 2008 financial crisis, many countries reduced foreign direct investment in Indonesia, which caused job losses and slow development.

These actions can create tension and reduce willingness to cooperate in the future.

However, crises can also encourage stronger partnerships in the long term if countries work together to recover by providing aid, stabilising trade, or forming new agreements to prevent future problems. So while economic shocks can harm relationships in the short term, they also highlight the importance of strong, fair, and supportive global connections.

Lucas and Sofia are having a discussion about whether foreign investment in Indonesia can affect its international relationships.

Who is correct? Lucas said, "Foreign investment is always stable when you add it all together, and so it doesn't really affect Indonesia's relationship with other countries." Sofia said, "Foreign investment can fall during global crises like the 2008 crash, which can weaken Indonesia's ties and cooperation with other countries." Pause video here whilst you decide who is correct and press play.

Excellent, Sofia is correct.

Well done if you identified that correctly.

I would now like you to fill in the blanks with the words below about how has global trade helped and harmed Indonesia.

One word is used twice.

Pause the video and press play when you're ready to continue.

Fantastic, let's check our answers.

Your answers should read like this, "Global trade has helped Indonesia grow by increasing jobs and exports to other countries.

However, the benefits are sometimes uneven, with cities often gaining more than rural areas.

During the 2008 financial crisis, foreign investment dropped sharply, showing how global events can impact Indonesia's economy.

Despite this, Indonesia continues to play a bigger role in international trade and is now a member of the G20." Well done on this task, you've done brilliantly.

We're now going to explore our second question of today's lesson.

What are the benefits of TNCs for Indonesia? TNCs or transnational corporations play an important role in supporting Indonesia's development.

They bring a range of benefits to the economy, especially in terms of jobs, investment, skills, and global trade links.

Companies like Nike and Toyota create thousands of factories and service jobs.

These opportunities help reduce unemployment and provide stable income for workers.

TNCs also connect Indonesia to global trade and production networks.

This strengthens Indonesia's role in international markets and increases export opportunities.

Many TNCs offer training and skill development for local workers.

This helps improve the quality of the workforce and gives people better long-term prospects.

Finally, large companies such as Chevron invest heavily in infrastructure and energy projects.

This kind of investment supports economic growth and modernization.

Overall, TNCs have brought a clear economic benefits to Indonesia, helping it grow, compete globally, and develop its workforce.

I would like you to identify the two missing labels on this diagram.

Pause the video here and press play when you're ready to continue.

Excellent, they are network and investment.

Well done on this task.

TNCs don't just bring jobs, they can help grow the entire economy, and this happens through a chain reaction known as the multiplier effect, where one investment leads to wider benefits across society.

It begins when a TNC opens a factory in Indonesia, creating jobs for local people in areas like manufacturing, transport, or services.

The workers then spend their wages in the local area, buying food, paying rent, and using local services.

This spending helps local businesses grow.

As demand increases, they may hire more staff, creating even more employment.

The government also benefits, collecting more tax from wages and business profits.

This money is then used to improve public services like schools, hospitals, and roads.

With stronger infrastructure and a growing economy, the country becomes more attractive of further investment, both local and foreign.

This entire process is known as the multiplier effect where a single investment spreads economic benefits throughout the community and beyond.

What does the term multiplier effect mean? A, when globalisation increases the number of foreign companies that are willing to invest in a country.

B, when investment in an area leads to more jobs with more spending in the area which encourages more jobs.

C, when a TNC multiplies a number of businesses it controls by increasing its investment in other countries.

Or D, when one business closes and the job losses this causes means other businesses in the area also have to close too.

Pause the video here whilst you decide and press play when you're ready to continue.

Fantastic, the answer is B, when investment in an area leads to more jobs with more spending in the area which encourages more jobs.

Well done If you identified that correctly.

Toyota, a Japanese transnational corporation, opened two major car plants in Karawang, West Java, employing over 8,000 workers.

This investment didn't just provide factory jobs, it also supported local businesses such as parts, suppliers, shops, restaurants, and services, and this boosted the local economy creating even more jobs.

The impact can be seen in the minimum wage data on the right.

Karawang Regency has the highest minimum wage in the table, higher than nearby cities like Jakarta and Bandung.

This shows how the presence of TNCs like Toyota can raise wage levels in an area by increasing the demand for labour and strengthening local economies.

In contrast, areas with less investment like Central Java have much lower wages.

Karawang is a clear example of how foreign investment can boost regional development when managed effectively.

True or false, Toyota's investment in Karawang have little impact on local wages? Pause the video here whilst you side and press play when you're ready to continue.

Excellent, this statement is false.

I would like you to explain why.

Pause the video here and press play when you're ready to continue.

Fantastic, the reason why the statement is false is because Toyota's investments in Karawang raised wages, which helped boost spending in local shops and services.

It also supported small businesses and suppliers, creating wider economic benefits for the area.

Well done if you managed to explain that correctly.

TNCs don't just create jobs, they also invest in developing skills and education.

Many TNCs in Indonesia partner with universities and training centres to help build more skilled workforce.

They offer internships, apprenticeships, and fund vocational education.

Companies like Samsung and Unilever have played a big role in this.

For example, Samsung launched the Samsung Innovation Campus in Indonesia.

It focuses on young people aged 17 to 24, helping them gain essential skills in information and communication technology.

By supporting education and training, TNCs help improve job opportunities and prepare Indonesia's workforce for future industries, especially in technology and manufacturing.

This kind of investment strengthens the economy and ensures that local people benefit from global businesses.

Energy TNCs play a major role in empowering Indonesia's economy.

They help reduce the country's reliance on imported energy by investing in local production skills.

It starts with investment.

Energy TNCs bring large amounts of money into Indonesia to develop the energy sector.

This money is used to fund oil and gas projects, boosting Indonesia's energy supply and production capacity.

As a result, Indonesia can meet of its own energy needs, reducing the need to import expensive fuel from other countries.

Energy TNCs also provide expertise and training, helping to build local skills and improve the workforce in technical industries.

Finally, the profits generated can be reinvested in infrastructure and job creation, helping both the economy and local communities.

Energy TNCs provide long-term benefits by supporting development, improving energy security, and creating skilled employment opportunities.

Chevron has been one of the most important energy focused TNCs in Indonesia, investing in oil, gas, and renewable energy projects across the country.

In Sumatra, Chevron operated a major oil field until 2021.

The project led to the development of pipelines and roads, which improved local infrastructure and supported wider regional growth.

In East Kalimantan, Chevron developed an offshore gas field.

It provided energy, but also invested in the local workforce, training Indonesians in advanced drilling techniques boosting their technical skills.

Further south, Chevron supported a geothermal energy project in West Java.

This helped reduce emissions by investing in cleaner renewable energy, parts of Indonesia's effort to move towards more sustainable energy sources.

Chevron's work in Indonesia shows how energy TNCs can contribute to both economic development and environmental progress when projects are well managed.

What is one way Chevron has positively impacted Indonesia? A, it only hired foreign workers to manage energy projects.

B, it stopped all energy operations in Indonesia before 2010.

C, it built roads, trained local workers, and supported cleaner energy projects.

Or D, it exported all its resources without helping local areas.

Pause video here whilst you decide and press play when you're ready to continue.

Excellent, the answer is C, it built roads, trained local workers, and supported cleaner energy projects.

Well done if you identified that correctly.

Sofia has answered the question, how do TNCs positively impact education in Indonesia? I would like you to correct her mistakes.

Sofia has said, "TNCs do not help education in Indonesia because they only build factories and do not train anyone.

Most people who work for them already have university degrees, so they don't need to help education.

Also, they only bring workers from other countries instead of Indonesians." Pause video here whilst you attempt this task and press play when you're ready to continue.

Fantastic, let's check our answers.

You may have said some of the following things.

Sofia said TNCs don't help education in Indonesia.

You may have said, many TNCs do help through training and partnerships with schools and universities.

They only build factories and don't train anyone.

You may have said, TNCs like Samsung and Unilever run training centres, internships, and skills programme in Indonesia.

Sofia said, most people already have university degrees.

Many TNCs support vocational education and train young people without degrees, is a correction you might have made.

TNCs only bring workers from other countries.

You may have said, TNCs in Indonesia typically hire local staff and invest in local workforce development.

Well done on this task.

I hope you manage to identify some of those mistakes and come up with some of these corrections.

You've done brilliantly.

We're now going to explore our final question of today's lesson.

What are the costs of TNCs for Indonesia? While TNCs can bring investment and jobs to Indonesia, they also raise serious concerns, especially in terms of how they treat works in the environment.

Some TNCs exploit cheap labour and natural resources, especially in countries with weak laws.

In Indonesia, large scale industrial activity has led to pollution, deforestation, and harm to ecosystems. Some TNCs operate in ways that would be unacceptable in their home countries.

This includes poorer working conditions, low pay, and little regard for environmental impact.

Even when a company claims to meet ethical standards, there are often issues among local suppliers where wages may be lower and working conditions worse.

These concerns highlight the need for stronger labour protections, environmental enforcement.

Although some TNCs may have made some efforts to improve their practises in Indonesia, there is still a long way to go to ensure all workers and communities are treated fairly.

Not all profits made by TNCs in Indonesia stay in the country.

Many TNCs send large share of their profits back to their home country, and this process is known as repatriation of profits.

While Indonesia benefits from jobs, investment, and infrastructure, a significant amount of money leaves the economy, and this limits how much the country can reinvest in local development, services, or business growth.

Repatriation of profits is one of the key criticisms of TNCs, especially in developing countries, because it means the full economic benefit of their operation isn't felt locally.

How do you think this will affect Indonesia? Pause the video here whilst you have a think and press play when you're ready to continue.

Fantastic.

Andeep said, "If money is leaving Indonesia, then there is less money that can be invested in schools, infrastructure, and improving quality of life," and he's correct.

Well done if you came up with a similar response.

True or false, all profits made by TNCs in Indonesia stay in the country? Pause video here and press play when you're ready to continue.

Fantastic, this statement is false.

I would now like you to explain why.

Pause here and press play when you're ready to continue.

Excellent.

The reason why the statement is false is because while TNCs may invest in local infrastructure and create jobs in Indonesia, a significant portion of the profits they earn is often repatriated back to their headquarters in their home country.

This means that not all the financial benefits of foreign investment stay within Indonesia's economy.

Well done if you managed to explain that correctly.

While TNCs bring jobs and investment to Indonesia, there are also serious concerns, especially when laws are relaxed like the Omnibus law.

Many TNCs take advantage of cheap labour, often paying workers low wages for long hours, at the same time, foreign nationals are usually given the highest paid jobs while local workers remain in lower positions.

Environmental damage is another issue.

Some TNCs cause pollution, deforestation, and nondegradation, especially in industries like mining and energy.

Even when companies promise to follow higher environmental standards, enforcement is often weak, so the damage still happens.

TNCs are also known for avoiding taxes, meaning less money goes to the Indonesian government for public services.

However, on the positive side, some TNCs have started to invest in sustainably and cleaner production methods, but these efforts are not always checked properly or made a priority.

So although TNCs can support development, they often create problems too, especially when profits are put before people or the environment.

Many global clothing brands now recognise the need to improve how they operate In countries like Indonesia where much of their clothing is made.

In the past, some brands faced criticism for poor working conditions and low pay.

In response, many have introduced new policies to create safe, respectful, and well-managed factory environments.

This includes better lighting, ventilation, regular breaks, and protection against abuse or unsafe conditions.

A key goal is to pay fair wages enough for workers to afford basic needs like food, housing, education, and healthcare.

This helps raise the quality of life for factory workers and their families and reduces poverty in local communities.

Many clothing brands also say they're committed to reducing environmental harm by using less water, cutting pollution, and limiting waste.

They aim to be more transparent, meaning they share information about where and how their clothes are made.

Some follow international labour and environmental standards, working with independent groups to check that the factories are meeting expectations.

This includes ensuring that child labour is not used.

Workers have the right to form unions and factories are not polluting the environment.

While progress has been made, not all brands fully live up to these promises.

Problems still exist in some factories, especially amongst smaller suppliers, but overall, there is growing pressure on TNCs to act more ethically, and consumers now expect companies to treat people and the planet with more care.

Although many global clothing brands promise fair treatment and better conditions, not all factories meet these standards, especially in countries like Indonesia.

Investigations by groups such as Clean Clothes Campaign and Oxfam have shown that some garment workers still face serious challenges even when making clothes for big international brands.

Many workers are working over 60 hours a week, often with very little time off.

Since COVID-19, job security has become worse with many works at high risk of being laid off.

In some factories, workers have no union representation, meaning they can't speak up or negotiate for better conditions or pay without fear of losing their jobs.

Most importantly, many are still earning less than a living wage.

That means their pay isn't enough to cover basic needs like food, rent, healthcare, and education.

These findings show that while some progress has been made, there are still big gaps between what brands say and what actually happens on the factory floor.

Which of the following are costs that local workers supplying global brands may face in Indonesia? A, long working hours exceeding 60 hours per week.

B, high wages and secure job contracts.

C, high risk of job loss.

D, no union representation.

Pause the video here whilst you decide and press play when you're ready to continue.

Excellent, the answers are, A, long working hours exceeding 60 hours per week, C, high risk of job loss, and D, no union representation.

Well done if you managed to identify those correctly.

Textile factories in Indonesia that supply global fashion brands can also pose serious environmental damage, especially during the fabric dying and production process.

Many of these factories release toxic chemicals and dyes directly into rivers and waterways.

This pollution harms wildlife, contaminates drinking water, and affects the health of nearby communities.

The fast fashion industry also uses large amounts of water and energy, making clothing quickly and cheaply means high demand for resources, which puts extra pressure on the environment.

There is also a huge amount of waste, off cuts from the production and low quality items that aren't often sold end up in landfill sites contributing to the growing problem of textile waste.

While some factories are improving their practises, much of the industry still operates in ways that are harmful to people and the planet.

This shows that the environmental cost of cheap, fast fashion is often felt most in producing countries like Indonesia.

Different stories help us to understand how TNCs affect different local people.

Rina, a 24-year-old mother earns just 91 pound a month sewing clothes for a global brands in a West Java factory.

She works 12 hour shifts with few breaks.

And her wages barely cover food and rent, leaving little for her child.

Constant pressure from TNCs to cut costs means her job is always at risk with no safety net if contracts end.

Budi, a 65-year-old fisherman now struggles to support his family as fish in the Citarum River have died off due to toxic waste dumped by factories.

Once thriving waters are now polluted by textile companies supplying global brands, leaving him with barely enough to catch, to sell, or eat.

What is one direct consequence of pollution from factories along the Citarum River for local people like Budi? A, it increases fish populations, helping local fishermen.

B, it provides Budi with higher paying jobs in factories.

C, it kills fish, making it hard for Budi to earn a living.

D, it gives Budi access to cleaner water and better sanitation.

Pause the video here whilst you decide and press play when you're ready to continue.

Excellent, the answer is C, it kills fish, making it hard for Budi to earn a living.

Well done.

Lucas and Sofia are discussing what Rina and Budi's stories suggest about costs and benefits.

Who is correct? Lucas said, "Rina's story shows how TNCs may exploit workers through long hours and low pay, while Budi's experience shows that environmental damage caused by pollution from factories linked to global brands." Sofia says, "TNCs seem to help both Rina and Budi by creating jobs and boosting the local economy, so their impact is mostly positive." Pause the video here whilst you decide and press play when you're ready to continue.

Fantastic, Lucas is correct.

Well done if you managed to identify that.

I would now like you to complete the table below on potential costs of TNCs in Indonesia.

We're going to focus on economic costs, social costs, and environmental costs.

Pause the video here whilst you attempt this task and press play when you're ready to continue.

Excellent, let's check our answers.

For economic costs you might have said, TNCs in Indonesia often send profits back to their home countries through profit repatriation, meaning Indonesia doesn't fully benefit from these profits.

This reduces the potential for reinvestment in local industries.

Social cost, TNCs may offer jobs to local workers, but these jobs can be low wage and insecure.

Additionally, workers may face poor working conditions as TNCs and their supplies may prioritise cost cutting over employee welfare.

Environmental cost, factories producing textiles for TNCs often release harmful chemicals into the water and air, contributing to pollution.

The large amount of waste produced by these factories can also contaminate local ecosystems and harm biodiversity.

Well done if you managed to include some of those points in your answer.

You've done brilliantly.

We've now come to the end of our lesson on costs and benefits of changing international relations, and you've done brilliantly.

Before we end this lesson, let's summarise everything we've learned today.

Indonesia economy has grown through global trade and investment, creating jobs and improving infrastructure.

However, globalisation doesn't benefit everyone.

Cheap imports can harm local businesses, and some workers face low pay and poor conditions.

TNCs bring investment and jobs, but they can also exploit workers and damage the environment.

Their impact depends on how they are managed.

Well done in today's lesson, you've done brilliantly.

And I look forward to learning with you again very soon.