The Australian Government will provide an estimated $365.7 million in total ODA to Indonesia in 2016-17, including an estimated $296 million in bilateral funding managed by DFAT.
Indonesia is one of Australia’s most important bilateral relationships. Australia and Indonesia have an extensive framework of cooperation spanning political, economic, security, development, education and people-to-people ties. Sustainable and inclusive economic growth in Indonesia benefits Australia and contributes to regional growth and stability.
Indonesia has experienced steady economic growth in recent years. It has reached middle income status and achieved substantial development progress. However, economic growth is now slowing and inequality is rising. At least 100 million people in Indonesia continue to live on $2 or less per day. Slow growth will make it more difficult for Indonesia to meet its goal to graduate from middle income status by 2025. Furthermore, low growth means the poor will find it harder to escape poverty.
In line with our transition to an economic partnership, Australia will support Indonesia’s efforts to leverage its own resources to generate growth and distribute those benefits to a larger number of its people. Australia will work with Indonesia by providing policy and technical advice that will improve the quality of Indonesia’s investments in infrastructure, economic governance, human development and social policy.
Indonesia’s National Medium-Term Development Plan 2015-19 (RPJMN) is part of the country’s National Long-Term Plan 2005-2025 and sets out the Government’s vision and priorities for the country. The nine priority areas include good governance, improved productivity and competitiveness, human resource quality and self-sufficiency. It has a focus on Eastern Indonesia to help address regional disparities in development, whilst maintaining growth momentum in other parts of the country.
Australia’s Aid Investment Plan 2015/16-2018/19 aligns with RPJMN priorities.
Our development cooperation program in Indonesia is structured around the following three objectives, as outlined in the Aid Investment Plan
Objective 1: Effective economic institutions and infrastructure
Improving economic institutions and infrastructure is essential to Indonesia’s ongoing development. Australia is supporting Indonesia to boost inclusive growth and productive jobs through its public policy and regulatory settings. By supporting areas such as financial sector stability, revenue mobilization, improved government spending and tax collection we will contribute to better economic productivity. We are also working to increase access to agricultural markets for poor farmers in Eastern Indonesia, driving economic growth and improving food security in the region.
Bottlenecks in infrastructure constrain growth. Our support will help address disincentives to infrastructure investment, including through technical assistance and policy advice on regulatory provisions, planning and evaluation. Better infrastructure will require a multifaceted approach including more efficient and timely use of government resources, better project selection and preparation, and productive partnerships between the public and private sector.
Investments for effective economic institutions and infrastructure
Objective 2: Human development for a productive society
Indonesia needs to drive the development of human capital to create the conditions for higher growth. Our innovative education program will work with schools to identify local challenges and opportunities, developing new approaches to tackle problems. Our Australia Awards Scholarships deliver considerable educational dividends for Indonesia’s future leaders as well as valuable people-to-people linkages. Areas of study will continue to focus on a broad range of fields relevant to economic, strategic and development outcomes.
We are also working with Indonesia to prevent, detect and control emerging infectious diseases, a threat to Indonesian and Australian security, and we will continue to prepare for and provide support to Indonesia during times of humanitarian need.
Investments for human development for a productive society
Objective 3: An inclusive society through effective governance
We will work with Indonesia to ensure that the poor and marginalized in society benefit from economic growth, helping to meet poverty reduction targets by improving basic services and employment opportunities. We will help develop better quality economic and social protection policies based on research and analysis. We will continue to pursue programs for women’s economic and political empowerment, which help women gain jobs and other sources of financial security. Marginalised groups will benefit from improved disability access and support as well as better local service provision. Having helped improve citizens’ access to legal services, our law and justice work will shift to support for counter-terrorism and prison and court reforms.
Investments for an inclusive society through effective governance
- In 2015, 866 Australia Awards scholarships were provided to Indonesian citizens.
- 21,943 poor women and men accessed new agricultural technologies and resources in 2014.
- In 2014, 464,034 people had improved access to clean water or sanitation.
- Our women’s empowerment program supported the development of 950 local women’s groups across Indonesia, which will help their 17,409 female members to participate in policy-influencing activities in areas such as increasing women’s access to jobs and strengthening women’s leadership to reduce violence against women.
- In 2014-15, 25,078 additional births in Eastern Indonesia were attended by a skilled birth attendant. There has been a 31 per cent increase in the number of births delivered in a facility from 2009 to 2014, and over the same period the number of maternal deaths decreased by 40 per cent.
Our changing program
Our aid program in Indonesia reflects the priorities of the Indonesian and Australian governments. Following the release of the 2015-16 aid budget we consolidated our activities to focus on three main areas – economic growth, human development, and stability and inclusion. This rebalancing reflects the successful development trajectory of Indonesia and the progression from a traditional aid donor-recipient relationship to a broader economic partnership.
Reorienting our program to Indonesia’s priorities has extended its reach and effectiveness, and has resulted in substantial changes in some sectors. We will stop building infrastructure using grant funding and will instead focus on working with Indonesia to get better results from its own substantial infrastructure spending. We will increase the quality and implementation of economic policy by tightening our economic governance programs. Our rural enterprise work will focus more closely on private sector development, including through partnerships with Indonesian banks and Australian companies.
We have reframed our support for service delivery, reduced stand-alone sector programs and are focusing more on helping communities address challenges to improving health and education outcomes.
We will continue our successful work on women’s political and economic empowerment and social protection, with a shift towards labour migration and mobility. We will design a new program to support the rule of law and counter violent extremism. We have closed our disaster preparedness and management program, but retain scientific research and response cooperation in this area.