The Significance of the Vietnam-Indonesia Exclusive Economic Zone Demarcation

On 22 December 2022, Indonesia and Vietnam announced that after 12 years of negotiation, they had finalised their Exclusive Economic Zone (EEZ) boundary delimitation based on the 1982 United Nations Convention on the Law of the Sea (UNCLOS). Their agreement has symbolic, practical, and strategic significance.

Prior to this, the two countries had longstanding, overlapping EEZ claims in the waters surrounding the Natuna islands in the South China Sea. After agreeing on the Indonesia-Vietnam continental shelf boundary in 2003, Vietnam wanted to use the same boundary for their EEZ delimitation, while Indonesia wished to use a different one, proposing the median line between its Natuna Island (about 178 nautical miles from the Indonesian island of Kalimantan) and Vietnam’s Con Dao island (less than 48 nautical miles from the Vietnamese coastline). Vietnam contended, however, that the use of the island-island median line was unfair. The two sides finally agreed on using separate measurements for their continental shelf and EEZ boundaries. However, given the classified nature of bilateral negotiations, it is unclear at this point how they applied the median line method to settle their differences.

The timing of the demarcation is symbolic. Indonesia and Vietnam sped up their negotiation to time the delimitation with the 40th anniversary of UNCLOS. While both sides agreed to expedite the process in 2018, it was delayed due to the Covid-19 pandemic and negotiations resumed only in 2021. The 14th round of negotiations was in July 2022, and the 15th was in September 2022.

For Indonesia and Vietnam, upholding UNCLOS matters because it enables them to assert their respective sovereign international maritime rights and enforce their maritime interests. In her 2021 press statement, Indonesian Minister of Foreign Affairs Retno Marsudi made it clear that “Indonesia will continue to reject claims that are not based on international law”. Vietnam’s Permanent Representative to the United Nations, Ambassador Dang Hoang Giang, has similarly emphasised the importance of UNCLOS to Vietnam’s long-term development.

For Indonesia and Vietnam, upholding UNCLOS matters because it enables them to assert their respective sovereign international maritime rights and enforce their maritime interests.

However, in 2016, Hanoi and Jakarta squandered a rare opportunity to uphold UNCLOS when the Arbitral Tribunal in the Philippine-China South China Sea arbitration case brought by the Philippines ruled that China’s claims under the latter’s so-called “nine-dash line” were invalid. The Tribunal’s ruling was final and binding, but China flatly rejected the outcome as “null and void” and having “no binding force” despite its being a signatory to UNCLOS. Although Indonesia had confirmed its view that China’s claims were invalid, it was silent at the time on the status and implications of the arbitral outcome. Meanwhile, Vietnam merely acknowledged the award by reiterating its support for “peaceful means, including legal and diplomatic processes”.

Practically, the successful Indonesia-Vietnam EEZ demarcation will help both countries to resolve illegal, unreported, and unregulated (IUU) fishing, which has been a serious bilateral irritant and a broader issue involving third-party countries, including China and Thailand. Before the December delimitation, differing interpretations of where their EEZs overlapped had led to conflicts over IUU fishing activities. Earlier, the Indonesian and Vietnamese coast guard forces had already agreed on regular exchanges and prompt sharing of information about maritime law enforcement at sea, particularly for IUU fishing activities. The new EEZ agreement will likely boost their cooperation.

There are important economic and legal benefits in settling the EEZ issue. Soon after the EEZ agreement, Indonesia’s energy minister said that Indonesia aimed to export natural gas from the Tuna offshore block – which lies in Indonesia’s EEZ in shallow waters but is close to the EEZ border of Vietnam – to Vietnam by 2026. The expected gas reserves lie under Indonesia’s continental shelf and UNCLOS Article 77(1) provides for Indonesia, as the coastal state, to legally exploit and explore its natural resources. However, delimiting the EEZ with Vietnam provides further clarity for any structures involved in the gas exploration and exploitation activities, as these will be in the waters.

The Indonesia-Vietnam EEZ demarcation is of strategic importance not just for their bilateral relations but also for the region at this time of big power tensions and China’s continued assertiveness in the high seas and its territorial claims. The EEZ agreement will hopefully build greater strategic trust between Vietnam and Indonesia, and perhaps deepen cooperation between their naval and coast guard forces. This will build on earlier positives like the first coordinated exercise between the Vietnamese and Indonesian navies (29 August-3 September 2022) in the waters off Indonesia’s Batam and Bintan islands.

The successful EEZ delimitation with Indonesia may encourage Vietnam to soon conclude similar agreements with the Philippines and Malaysia. Indeed, if Southeast Asian SCS claimant states could settle their bilateral maritime boundary disputes, collectively as ASEAN, they might have a stronger position in negotiating a Code of Conduct for the South China Sea (COC) or some other mechanism with China.

Notably, parts of Vietnam’s and Indonesia’s EEZs overlap with China’s so-called “nine-dash line”. By concluding their EEZ delimitation agreement without considering China’s position, Vietnam and Indonesia have essentially rejected China’s territorial claims and indirectly increased the pressure on China to comply with the 2016 arbitral ruling, even if they did so more than five years after the fact. The more Southeast Asian nation-states show their commitment to and adherence with UNCLOS’s principles, norms, and rules, the more the region can demonstrate resistance and agency against China’s increasingly bold claims and actions in the SCS and beyond.

2023/20