Key Partner: Indonesia
On 14 July 2022, Indonesian Finance Minister Sri Mulyani Indrawati and OECD Secretary-General Mathias Cormann renewed in Bali the OECD-Indonesia Framework of Cooperation Agreement (FCA) for another five years and launched a new, fourth Joint Work Programme (JWP) to guide co-operation in 2022-2025.
The Programme will support Indonesia in advancing the implementation of its Medium-Term National Development Plan 2020-2025, attain a resilient and sustainable recovery from the COVID-19 crisis that leaves no one behind, and move closer to OECD standards and good practices.
The OECD’s relationship with Indonesia has grown significantly since 2007, when the OECD designated it a Key Partner, together with Brazil, China, India and South Africa. Indonesia was the first Key Partner to sign an FCA with the OECD in 2012, renewed in 2017. Three prior JWPs between the OECD and Indonesia – 2015-16, 2017-18 and 2019-21 – have allowed the co-operation to deepen considerably and to evolve in a more structured manner, taking a whole-of-government approach.
The new Programme focuses on the following priority areas:
- Sound macroeconomic policy, tax compliance and good governance
- The business climate and digitalisation
- Human capital and social inclusion
- Sustainable development
Since Indonesia became a Key Partner in 2007, the country’s engagement with the OECD has deepened significantly. In 2009, Indonesia became a member of the OECD Development Centre to engage in knowledge sharing on innovative policies to boost development. Indonesia was the first of the OECD’s Key Partners to sign a FCA (2012), followed by a Privileges and Immunities Agreement (2013). It welcomed the OECD’s first regional office in Southeast Asia, opened in Jakarta in 2015. Indonesia also supported the creation of the OECD Southeast Asia Regional Programme in 2014 and served as one of its first co-chairs from 2014-2017.
Indonesia’s participation in OECD activities
Indonesia is an Associate and a Participant in nine OECD bodies and adheres to more than ten OECD legal instruments. Indonesian ministers regularly attend and contribute to the OECD Ministerial Council Meetings. The country participates actively in the substantive work of the OECD’s specialised Committees and attends high-level events organised at the OECD Headquarters and in the Southeast Asian region. Moreover, it is fully integrated into the OECD’s regular work programme and covered in flagship publications and statistical databases. This engagement provides an excellent basis to further develop the co-operation in the future.
This co-operation has supported to Indonesia’s reform efforts in several priority areas, reflecting growing alignment between Indonesian laws and regulations and OECD standards. Indonesia’s participation in the Base Erosion and Profit Shifting (BEPS) project of the Committee on Fiscal Affairs, and the discussions concerning the Recommendation on Principles of Corporate Governance of the Committee on Corporate Governance, have contributed to the removal of bank secrecy for tax purposes and requirements to disclose beneficial ownership information. This in turn has reduced opportunities for corruption and money laundering.
OECD Economic Surveys and Investment Policy Reviews have supported recent sweeping business climate and labour market reforms. The Programme for International Student Assessment (PISA) has spurred reforms of the education sector, whilst the Clean Energy Finance and Investment Mobilisation Programme has been contributing to the government’s low carbon development policy. Such collaboration has also raised the visibility of OECD statistical databases and indicators, in turn fostering more reliance on evidence-based policymaking.
The partnership between Indonesia and the OECD has helped to increase the impact of OECD contributions to global and regional governance and dialogues, such as the G20, the Asia-Pacific Economic Co-operation (APEC) and the Association of Southeast Asian Nations (ASEAN).